More than Rs. 1.4 lakh crore of funds collected by the government under various cesses for purposes as varied as higher education, road development and the welfare of construction workers are lying unutilised, shows an analysis by The Hindu of a Comptroller and Auditor-General report on government finances and answers by Ministers in the Lok Sabha.
Despite these unutilised funds, the government has shown that it is still keen on cesses. It has already levied a 0.5 per cent Swachh Bharat cess and is proposing a 2 per cent regional connectivity cess in aviation and increasing the cess on sugar production.
At a time when students are protesting the discontinuation of the non-National Eligibility Test fellowship, the CAG report, tabled in Parliament on Tuesday, has found that a whopping Rs. 64,288 crore collected during 2006-15 under the Secondary and Higher Education Cess (SHEC) is lying unutilised. The SHEC is levied on all tax payers at the rate of 1 per cent.
“Neither a fund was designated to deposit the proceeds of SHEC thereto nor schemes identified on which the cess proceeds were to be spent… Thus, the possibility of the diversion of funds for purposes not mandated under the Finance Act cannot be ruled out,” says the CAG report. Over the years, the government has levied a number of cesses for spreading education, the welfare of workers, road development and research and development. The nature of a cess is such that if the money is not used for the designated purpose, it will remain dormant. “As a normal process, the cesses are allowed for a specific purpose. For example, the education cess can only be used for education. Using the funds in other areas would amount to misuse,” Sachin Menon, chief operating officer-tax, KPMG, told The Hindu .
At a time when cash flow is a necessity, unutilised funds lying locked away in such a manner would have a huge detrimental impact on finances, Mr. Menon said.
The CAG report finds that more than Rs. 39,000 crore, or 60 per cent, of the Universal Service Obligation (USO) Fund’s resources between 2002-03 and 2014-15, raised through a levy of up to 5 per cent of the revenue of all telecom service providers, is lying unutilised. The amount collected has not even been transferred to the USO Fund.
Additionally, answers given in Parliament by Labour and Employment Minister Bandaru Dattatreya in April 2015 show that “as per information received from the State governments, Rs. 2,859.86 crore, that is 17.63 per cent, has been spent for the welfare of the construction workers out of the total cess amounting to Rs. 16,214.51 crore collected till December 31, 2014”. In other words, around Rs. 13,300 crore is lying unutilised. The Primary Education Cess netted Rs.1,54,818 crore from 2004-05 to 2014-15. Of this, Rs. 13,298 crore is lying dormant.
The National Clean Energy Fund, the Research & Development Cess Fund, the Central Road Fund, the Income Tax Welfare Fund, the Customs & Central Excise Welfare Fund and several dormant funds have Rs. 14,500 crore lying unused.