Audit Reports


Report No. 1 of 2023 - Union Territory Finances Audit Report, Government of the Union Territory of Puducherry

Date on which Report Tabled:
Wed 20 Sep, 2023
Date of sending the report to Government
Wed 07 Jun, 2023
Government Type
Sector Finance


Chapter I - Fiscal position

This Chapter describes the basis and approach to the Report and the underlying data, provides an overview of structure of Government accounts, budgetary processes, macro-fiscal analysis of key indices and UT’s fiscal position including the deficit/surplus.

The fiscal position of the Union Territory is viewed in terms of three key fiscal parameters – Revenue Deficit/Surplus, Fiscal Deficit/Surplus and the Ratio of Outstanding Debt to GSDP.

There was a revenue surplus ` 196 crore in 2017-18 which turned into revenue deficit of ` 899 crore during 2021-22.  Since the revenue deficit has been on increasing trend, it is unlikely that the UT would achieve the target of eliminating revenue deficit as envisaged.

The ratio of fiscal deficit to GSDP during the year stood at 2.81 which was within the envisaged target of 3 per cent

The ratio of total outstanding debt to GSDP stood at 26.27 per cent at the end of 2021-22 which was higher than the target of 25 per cent.

Chapter II - Finances of the Union Territory

This chapter provides a broad perspective of the finances of the UT, analyses the critical changes in major fiscal aggregates relative to the previous year, overall trends during the period from 2017 -18 to 2021-22, debt profile of the UT and key Public Account transactions based on the Finance Accounts of the UT.

Revenue receipts: Revenue receipts increased by ` 1,969 crore (33.43 per cent) in 2021-22 over the previous year. Buoyancy of revenue receipts to GSDP increased from 4.64 in 2020-21 to 6.63 in 2021-22.

Own resources: The annual growth rate of own tax revenue increased by 66.12 per cent during 2021-22 over the previous year. 

The arrears of revenue as on 31 March 2022 under the principal heads of revenue amounted to ` 1,067.90 crore, of which ` 674.92 crore was outstanding for more than five years.

Grants-in-aid: The Grants-in-aid from GoI decreased by ` 43 crore in 2021-22 over the previous year.  The Grants-in-aid from GoI constituted 31.03 per cent of the Revenue receipts.

Total expenditure: The total expenditure increased from ` 6,201 crore in 2017-18 to ` 8,911 crore (43.70 per cent) in 2021-22.  The expenditure on General, Social and Economic Services constituted 31.46 per cent, 31.63 per cent and 36.91 per cent of the total expenditure respectively.

Revenue expenditure: During 2021-22, the Revenue expenditure increased by ` 1,488 crore (20.50 per cent) over the previous year. Revenue expenditure constituted 98.17 per cent of the total expenditure.  As a percentage of GSDP also, it increased from 20.34 in 2020-21 to 23.34 in 2021-22.  The buoyancy of Revenue expenditure with reference to Revenue receipts during 2021-22 was 0.61.

Committed expenditure: The committed expenditure constituted 54.92 per cent of Revenue expenditure and 61.13 per cent of Revenue receipts during 2021-22.

Subsidies: Implicit subsidies to the tune of ` 23.41 crore were provided during the current year.

Capital expenditure: Capital expenditure was on a decreasing trend.  As against the Capital expenditure of ` 315 crore incurred during 2017-18, the expenditure incurred during 2021-22 was ` 163 crore which constituted only 1.83 per cent of total expenditure.

Incomplete projects: An amount of ` 124.94 crore was blocked in 60 incomplete projects by Public Works and Electricity Departments.

The percentage of aggregate expenditure to GSDP increased from 19.29 per cent in 2017-18 to 23.77 per cent in 2021-22.  In respect of General Category States, it was 16.13 per cent in 2017-18 and 15.84 per cent in 2021-22. Expenditure on Education, Sports, Art and Culture decreased from 12.29 per cent in 2017-18 to 10.83 per cent of the aggregate expenditure in 2021-22 and it was also less than the General Category States in both the years.

Debt profile:  The outstanding debt (including Public Account liabilities) increased from ` 8,799 crore in 2017-18 to ` 12,593 crore in 2021-22 and the rate of growth also increased from 6.02 per cent to 15.68 per cent during the same period. Out of the total debt receipt of ` 2,516 crore during 2021-22, an amount of ` 891 crore (35.41 per cent) was utilised for repayment of debt leaving a balance of ` 1,625 crore available for capital spending.

Maturity profile: The Maturity profile of Public debt indicated that nearly 66.18 per cent of the total Public debt was repayable within the next seven years.

Interest burden: The burden of interest payments decreased from 12.85 per cent in 2020-21 to 11.16 per cent of Revenue receipts during 2021-22. 

Debt repayment:  The debt repayment to debt receipts which was 73.06 per cent in 2019-20 decreased to 35.41 per cent in 2021-22.  The sudden downfall in the debt repayment to debt receipts during 2021-22 was mainly due to release of ` 1,096 crore as back-to-back loan in lieu of GST compensation shortfall by GoI.

Chapter III - Budgetary Management

This chapter is based on the Appropriation Accounts of the UT and reviews the appropriations and allocative priorities of the UT Government and reports on deviations from provisions relating to budgetary management prescribed in the Government of UT Act, 1963 and GFR 2017.

Summary: The total provision authorised by the UT legislature including original and supplementary budget was ` 10,530.68 crore, out of which an expenditure of ` 9,818.24 crore was incurred resulting in savings of ` 712.44 crore. 

Expenditure without budget provision: An amount of ` 14.14 crore was re-appropriated under six sub-heads without any original or supplementary budget provision and expenditure of ` 14.14 crore was incurred therein.

Unnecessary supplementary provision: Supplementary provision of ` 50 lakh or more aggregating ` 554.95 crore obtained in 20 grants/appropriations during the year 2021-22 was proved excessive to the extent of ` 460.58 crore.

Unnecessary/excessive re-appropriation: In 70 sub-heads, unnecessary provision of more than ` 10 lakh were made by re-appropriation to the tune of ` 45.33 crore wherein the expenditure incurred was ` 716.69 crore under these heads which was within the total provision of ` 836.08 crore.  Out of these 70 sub-heads, no expenditure was incurred under 15 sub-heads.

Anticipated savings not surrendered: In respect of 23 grants/appropriations with saving of ` 705.76 crore (saving of ` one crore and above), ` 592.74 crore (83.99 per cent of savings) was not surrendered and in respect of 19 grants/ appropriations with a savings of ` 476.58 crore, no amount was surrendered.

Grants having huge savings:  Out of total 33 grants, there was savings of ` 587.62 crore (82.48 per cent of total savings of ` 712.44 crore) in 13 grants/ appropriations exceeding ` 10 crore in each case (above ` 50 crore in four grants).  In 138 sub-heads, savings exceeded ` 50 lakh in each case and by more than 50 per cent of the total provision wherein out of total provision of ` 687.54 crore, savings amounted to ` 553.67 crore (80.53 per cent). 

Persistent savings: Out of 33 grants, savings of more than ` 50 lakh was noticed persistently under 18 grants during the last five years. 

Rush of expenditure: In respect of 97 sub heads, expenditure exceeding ` 50 lakh and by more than 50 per cent of the total expenditure for the year was incurred in March 2022. 

Chapter IV - Quality of Accounts and Financial Reporting Practices

This chapter comments on the quality of accounts rendered by various authorities of the UT Government and issues of non-compliance with prescribed financial rules and regulations by various departmental officials of the UT Government.

Funds kept outside Public Account: The service charge of ` 9.41 crore received by the Transport Department for driving licence, registration certificate, taxation and permit were kept outside the Government Account.

Non-inclusion of clear cut liabilities: The Public Works Department had a committed pending liability of ` 76.68 crore as of March 2022 towards payment to contractors.

Funds transferred directly to implementing agencies: During 2021-22, GoI transferred ` 222.64 crore directly to various implementing agencies in the UT of Puducherry for implementation of Schemes of GoI.  As funds are not routed through the UT budget, Finance Accounts do not capture the flow of these funds or the related expenditure.

Utilisation Certificates:  The Utilisation Certificates in 769 cases amounting to ₹ 502.16 crore were outstanding.  Of this, 199 cases amounting to ` 37.91 crore were pending for more than nine years.

Temporary advance: As of 31 March 2022, 1,100 temporary advances amounting to ₹ 130.70 crore drawn by various DDOs remained unadjusted.  Of this, 296 advances amounting to ₹ 17.65 crore remained unadjusted for more than 10 years.

Indiscriminate use of Minor Head 800: During 2021-22, under 10 Major Heads, expenditure aggregating to ` 2,389.24 crore (90.45 per cent of the total expenditure of ` 2,641.53 crore under these heads) were classified under the Minor Head ‘800 - Other Expenditure’.  Similarly, under 10 Major Heads, Revenue receipts aggregating ` 17.47 crore (95.05 per cent of the total receipts of ` 18.38 crore under these heads), were classified under Minor Head ‘800 - Other Receipts’.

Non-submission of accounts: The annual accounts of 61 out of 70 Bodies/Authorities due up to 2021-22, were not received by Audit.  The pendency was more than five years in respect of 17 Bodies/Authorities.

Misappropriation and losses: The UT Government reported 322 cases of misappropriation, loss, theft and defalcation upto March 2022 involving Government money of ` 27.98 crore in various Departments. In respect of 50 cases, amounting to ` 27.25 crore, FIRs were lodged but results of investigation are awaited.

Chapter V - Union Territory Public Sector Undertakings

This chapter presents the summary of financial performance of Government Companies.  It also deals with CAG’s mandate to conduct a supplementary audit of the audit on the accounts of Public Sector Undertakings (PSUs) conducted by statutory auditors who were appointed by the CAG.

Nature of PSUs and Investments: As on 31 March 2022, there were 13 Government Companies (Public Sector Undertakings - PSUs). Out of which, there are 12 working companies and one non-functional Government Company in the Union Territory of Puducherry.  The total investment (Equity and Long term loans) in PSUs was ` 731.81 crore.

Dividend declared: The UT Government had not formulated any policy for payment of minimum dividend on the share capital contributed by it.  The return in the form of dividend on the aggregate investment of ` 712.39 crore of UT Government in the PSUs was a meagre 0.79 per cent.

Rate of Real Return: Since the PSUs incurred overall loss during 2021-22, the Rate of Real Return on Government Investment calculated on historical value was negative at (-) 4.58 per cent as compared to present value which was also negative and worked out to (-) 1.73 per cent.

Profit earned: Out of 12 working PSUs, five PSUs earned a profit of ` 38.48 crore and seven PSUs incurred a loss of ` 49.87 crore, leading to overall loss of ` 11.39 crore.

Timeliness in preparation of accounts: Accounts of all the 12 Government Companies were in arrears for various reasons.  During 2021-22, four companies submitted their five arrear accounts for audit.

Non-compliance of Accounting Standards: The statutory auditors reported that one company did not comply with mandatory Accounting Standards.


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