[Answered] Effective utilisation of public funds is crucial to meet development goals. Critically examine the reasons for under-utilisation and mis-utilisation of public funds and their implications.

There’s a deep rot in our system that’s something that pretty much every single Indian is aware. Public funds allocated for everything ranging from food grain to cancer research inexplicably ends up being under-utilised or misappropriated. This can be observed in many policies and schemes. All this lead to a stage of public funds and failure of social cause for which public fund was issued. Misutilisation, underutilisation and misappropriation are major problems that lead to public fund wastage.

Misutilisation:

1. Misuse of public funds includes expenditures that are made without proper authorization or that are unlawful or contrary to applicable legislation, regulations, policies and procedures.
2. Purchases that are wastefully unnecessary and that are not in keeping with the business or operational needs of the organization may also constitute a misuse of public funds.
3. Misuse of public assets includes making inappropriate or unauthorised use of government property, and also includes a failure to safeguard such assets.

Under-utilisation:

1. Under-Utilisation of Plan expenditures by the States can be attributed to the institutional and procedural blockages in the process of implementation of Plan schemes and insufficiencies in the planning process being followed at the district level.
2. The deficiencies in decentralized planning being carried out in the schemes, resulting due to insufficient staff for undertaking planning activities, inadequate attention to their capacity building and minimal role for community participation in the planning process.
3. Blockages in budgetary processes in the schemes, such as delay in the flow of funds, in releasing sanction orders for spending, decision-making in the States being centralized, insufficient delegation of financial powers to the district/sub-district level authorities and uniform norms of Centrally Sponsored Schemes for all States.
4. Further, lack of need based budgeting in the schemes, which is often carried out without proper analysis of unit costs on the ground, implied allocations for some of the schemes being decided in a top-down and unrealistic manner.

Misappropriation:

1. Misappropriation of public funds includes MPs investing MPLAD funds in private trusts and societies created by them.
2. Recommending projects that are prohibited, insisting on choosing the implementing agencies and handing over the cheques to them, wanting to control payments to contractors and constantly resisting transparency and accountability, all add up to misappropriation.

In 2012, the CAG revealed that the then governing body had allocated 216 coal blocks to public and private enterprises illegally between 1993 to 2006. The amount of public money misused led to massive public and media outrage. Similarly in various advertisements by government, schemes and policies public funds are wasted and utilised in an improper way.