• Report: CAG Audit Report on State Finances (2024–25).

• Article 148: Appointment, oath, and conditions of service of the CAG.
• Article 149: Duties and powers of the CAG regarding accounts of the Union and the States.
• Article 151: Audit reports of the CAG relating to the accounts of a State are submitted to the Governor, who causes them to be laid before the State Legislature (subsequently examined by the Public Accounts Committee – PAC).

• Total unspent/surrendered funds over the 5-year period (2020–21 to 2024–25): Over ₹2.36 lakh crore.
• Persistent annual unutilised funds (savings) ranged between 17.70% and 25.98% of the total budget provision.
• The budget expanded by 71.64% over the period, but absorption capacity lagged significantly.
• In FY 2024–25 alone, ₹56,156 crore remained unspent out of a total provision of ₹2.88 lakh crore, with ₹2,815.91 crore not even surrendered by departments.

• Unrealistic Budgeting: Substantial gaps between Budget Estimates (BE), Revised Estimates (RE), and Actual Expenditure reflect poor data-driven fiscal planning and an absence of rigorous ground-level needs assessment.
• Routine Over-Estimation via Supplementary Grants: Despite large structural unspent balances, departments routinely sought supplementary demands (e.g., adding ₹16,800 cr to ₹19,833 cr annually), indicating poor expenditure profiling and non-compliance with budgetary discipline.
• Lax Surrender Compliance: Failure to surrender unspent funds in a timely manner (e.g., ₹2,815.91 cr not surrendered in 2024–25) prevents the Finance Department from reallocating scarce resources to other needy developmental sectors.

• Growth Retardation: In public finance, revenue surplus or high revenue mobilization is counterproductive if matched with low capital absorption. Idle funds restrict economic multiplier effects in critical infrastructure (roads, irrigation, logistics).
• Social Sector Deficits: Underutilisation in health, education, and social safety nets deprives vulnerable populations of timely benefits, exacerbating regional and socio-economic disparities despite fiscal resources being legally earmarked.
• Capital vs. Revenue Imbalance: Persistent savings frequently lead to the “March Rush,” wherein departments hastily park funds in civil deposits or off-budget accounts at year-end to avoid lapsing, violating financial propriety.

• Weak Absorptive Capacity: Procedural delays, land acquisition hurdles, lengthy tendering processes, and bureaucratic clearance delays lead to stalled project execution.
• Institutional Fragmentations: Line departments frequently lack specialized project monitoring units (PMUs) and capacity for realistic multi-year Medium-Term Expenditure Frameworks (MTEF).

• Ex-Post Financial Audit: The CAG functions as the guardian of the public purse, highlighting deviations from legislative authorization under the Appropriation Acts.
• Legislative Oversight: The Public Accounts Committee (PAC) examines these CAG findings to hold the executive accountable, ensuring executive spending matches legislative intent both quantitatively and qualitatively.

• Implementation of Outcome Budgeting: Shift evaluation from financial outlay to measurable physical outcomes and qualitative impacts.
• Adoption of MTEF: Integrate Medium-Term Expenditure Frameworks to ensure multi-year horizon planning rather than ad-hoc annual estimates.
• Automated Real-Time PFM: Enforce strict adherence to modern Public Financial Management Systems (PFMS) and Single Nodal Agency (SNA) models to monitor unspent cash balances and check “parking” of funds.
• Incentivising Accurate Estimations: Establish departmental disincentives for seeking supplementary grants when previous allocations remain severely unspent.

Budget absorption, BE/RE/actuals, supplementary grants, surrender of savings, Articles 148, 149 and 151 and the CAG–PAC accountability loop are recurring themes for OPSC Prelims (Polity & Economy) and OPSC Mains GS Paper II & III, where outcome budgeting, MTEF and PFMS-based cash management are standard public-finance reform points.

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