Deep Governance Failures in Bihar: ₹70,000 Crore Unverified, Emergency Funds Misused, Records Withheld Across Key Departments
An extensive financial audit by the Comptroller and Auditor General of India has exposed sweeping violations of constitutional norms, financial rules, and accountability protocols in the Government of Bihar.
Key departments have failed to account for over ₹70,000 crore in public funds, have misused emergency reserves, and withheld statutory records required for audit verification.
As of March 31, 2024, 49,649 Utilisation Certificates (UCs) worth ₹70,877.61 crore had not been submitted across departments, including for grants dating back more than 20 years (Chapter IV, Section 4.5, Page 119).
Departments with major outstanding balances included the Rural Works Department, Education, Panchayati Raj, and Health.
The CAG observed that “in the absence of UCs, there is no assurance that funds disbursed have been utilized for the intended purpose.”
The Rural Works Department alone accounted for ₹1,357.21 crore in unverified grants. The department also returned ₹316.84 crore in unspent funds at the end of the financial year, violating Rule 61 of the Bihar Budget Manual, which prohibits fiscal year-end spending rushes (Section 2.3.3.2, Page 36).
Further, the department operated multiple bank accounts outside treasury oversight, including Account No. 1313310100000037 (Rural Works Division, Araria) and Account No. 1461010000126 (RWD Madhepura), among 93 such accounts holding ₹7,380 crore in idle balances (Section 4.10, Pages 128–129).
The audit cited serious breaches of Article 266(1) and Article 283(1) of the Constitution, which require that all public funds be credited to and disbursed from the Consolidated Fund of the State.
It also invoked Section 18 of the CAG’s (Duties, Powers and Conditions of Service) Act, 1971, in reporting that multiple departments failed to produce essential audit records including bills, vouchers, contractor ledgers, and scheme-wise expenditure data.
In a separate finding, ₹8.37 crore was withdrawn from Bihar’s Contingency Fund for routine administrative expenses such as festival advances, furniture purchases, and salary arrears.
These withdrawals violated Article 267(2) of the Constitution, which restricts contingency spending to urgent and unforeseen expenditure.
“Such instances dilute the integrity of the Contingency Fund mechanism and contravene constitutional limitations,” the audit stated (Section 4.1, Page 115).
Irregularities also marred the implementation of Centrally Sponsored Schemes. The audit found that ₹22,470.94 crore in scheme-related expenditures processed via the Grants-in-Aid route lacked voucher-level documentation, even though the state received ₹18,231.24 crore in Central shares and ₹12,673.60 crore in state shares through the Single Nodal Agency model (Section 4.19, Page 135).
Several departments failed to provide PFMS-validated reports or reconcile actual expenditures, undermining accountability in flagship programs like the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), Sarva Shiksha Abhiyan, and Pradhan Mantri Awas Yojana.
Despite these systemic weaknesses, Bihar posted a revenue surplus of ₹2,833.06 crore in 2023–24 — the first since 2018–19.
But this surplus was called into question after auditors flagged ₹3,158 crore in capital expenditures incorrectly booked under revenue heads, a misclassification that distorted the state’s key fiscal indicators (Section 4.8, Page 124).
The misclassification undermines the credibility of compliance with the Bihar Fiscal Responsibility and Budget Management (BFRBM) Act, 2006.
The report also highlighted a steep increase in capital outlay -- ₹36,453.02 crore, up 15.65% from the previous year -- but pointed out that ₹9,689 crore of this was funded through off-budget borrowings by state Public Sector Undertakings such as the Bihar State Food and Civil Supplies Corporation.
These borrowings were not routed through the Consolidated Fund, lacked legislative approval, and were not disclosed in debt statements, violating Article 266(1) of the Constitution and BFRBM transparency norms (Section 4.1, Page 115).
Across all findings, the CAG recorded repeated violations of financial controls, audit resistance, and disregard for statutory obligations.
No formal response from the concerned departments was appended to the audit report.
“The persistent non-compliance with constitutional and statutory requirements points to structural weaknesses in the financial governance architecture of the state,” the report concluded (Chapter V, Page 137).
The CAG has recommended immediate reconciliation of idle funds, submission of all pending utilization certificates, initiation of departmental disciplinary proceedings, and structural reforms in fund flow management and audit cooperation protocols.