Productive sector accounts for only 14% of development expenditure: CAG

The amount spent on the productive sector accounted for only 14 per cent of the total development expenditure incurred by Local Self-Government Institutions (LSGIs) during 2011-12, as per the Comptroller and Auditor General (CAG) of India report on LSGIs for the year that ended March 2012.

The utilisation of funds by LSGIs in the State on the implementation of Centrally-sponsored schemes was substantially low (11.94 per cent), says the CAG report, tabled in the Assembly on Thursday.

Substantial portion of the funds amounting to Rs.1,911.38 crore released by the Union government remained unspent by LSGIs, Kudumbasree, Poverty Alleviation Units and the Kerala Sustainable Urban Development Project.

Due to underutilisation of the funds during 2009-10, Rs. 279.73 crore was deducted from the budget allocation for 2011-12 under Development Expenditure and Maintenance Expenditure funds.

Later, addressing a press conference in the capital, Principal Accountant General (Social and General Sector Audit) R.N. Ghosh said high establishment expenses, including salary, was noticed in the urban local bodies.

The CAG found that the LSGIs did not adhere to the procedures laid down for reporting monthly progress of expenditure to the authorities concerned and were not preparing monthly accounts.

The CAG audit, which looked into the accountability framework, finances, and financial reporting issues of LSGIs, found that maintenance of primary financial records by the LSGIs was defective.

The database revealing the consolidated picture of the finances of LSGIs for the year 2011-12 was yet to be uploaded by the LSGIs.

The District Planning Committees had not prepared the draft development plan and had failed to discharge their constitutional obligations of preparing it and forwarding it to the government for integration with the State Plan. The State Plan lacked popular support at the grassroots level.


The CAG noted that the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) resulted in empowerment of women and fostering social equity in the State. The potential benefit of convergence of the MGNREGS with other rural development schemes had not been tapped for creation of sustainable outcomes.

There was delay in convening grama sabhas for identification and recommendation of works and for forwarding the labour budget. Of the 14.16 lakh households provided with employment at the end of March 2012, the CAG found that the State provided 100 days of employment only to 1.24 lakh households (8.76 per cent).

Due to lack of inclination to fund the material component, the selection of works was restricted to bush/jungle clearance, grass cutting which did not result in any enduring outcome. Work was not provided as and when demanded by the job seeker. Though the Act stipulates payment of unemployment allowance, it was found that it is generally avoided by merging the demand for work and provision of work.

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