The report of the Comptroller and Auditor General (CAG) of India on state finances for the year ended March 31, 2009 has pulled up the Orissa government for its below par performance in the areas of financial reporting, financial management and budgetary control and monitoring of flow of Central funds to the state implementing agencies.

The CAG report has pointed out that the state government's compliance with various rules, procedures and directives were unsatisfactory which was evident from the delays in furnishing utilization certificates against the grants from various grantee institutions.

Delays were also noticed in submission of annual accounts by some autonomous bodies and departmental undertakings.

There were instances of embezzlements, losses and misappropriations which were pending for settlement.

Besides, there have been instances of excess expenditure, expenditure without provision of funds, unnecessary and inadequate supplementary provision, substantial surrenders, surrender of savings, non-surrender of anticipated savings and rush of expenditure. Detailed bills were not submitted by the state government against large amount of advances drawn on abstract contingent bills.

Besides, large amounts were lying unspent in personal deposit accounts at the end of 2008-09.

The CAG report has suggested that budgetary controls should be strictly observed to avoid such deficiencies in financial management.

According to the report, there was overall savings of Rs 9312.05 crore by the state during 2008-09 as a result of savings of Rs 9313.13 crore offset by excess of Rs 1.08 crore in two grants under revenue section and one grant under capital section which needs regularization under Article 205 of the Constitution of India.

The report has observed that the savings were mainly due to the slow programme implementation.

There were instances of savings exceeding Rs 10 crore in 12 grants which included huge savings of Rs 4832.16 crore in seven cases under five grants.

The state government has also drawn flak from the CAG for having failed to put in place a system or agency to monitor the flow of Central funds to the state implementing agencies.

"Funds flowing directly to the implementing agencies through off-budget routing inhibits FRBM (Fiscal Responsibility and Budget Management) requirements of transparency and therefore bypass accountability.

There is no single agency to monitor its use and there is no ready available data on the amount actually spent in any particular year on major flagship and other important schemes", says the report.

The report has called for putting in place a system urgently to ensure proper accounting of these funds and the updated information should be validated by the state government as well as the Accountant General.