₹435 crore drain: CAG flags widespread ‘systemic lapses’ and revenue leakage in Haryana government

Beyond the monetary figures, the audit reveals: weak internal controls; revenue administration failures; policy non-compliance; delayed financial reporting; governance deficiencies in state public sector enterprises; and monitoring failures in flagship urban missions. The report underscores an urgent need for corrective action to prevent recurring fiscal leakage and restore accountability in public finance management across Haryana.

The CAG report’s key highlights

* Civil departments: Policy violations and unfruitful expenditure

₹1.97 crore loss in plot allotment

The Haryana Shehri Vikas Pradhikaran (HSVP) violated policy guidelines by allotting a plot to a claimant oustee at a rate far below prescribed norms. The plot was subsequently transferred to a non-oustee within four months, causing a loss of ₹1.97 crore to the exchequer.

₹22.63 crore shortfall in forest funds

The forest department incorrectly demanded net present value and failed to demand possession value for diverted forest land, contravening guidelines. This led to a shortfall of ₹22.63 crore in the State Compensatory Afforestation Fund.

₹8.29 crore avoidable penalty on EPF contributions

Delays by 191 drawing and disbursing officers in making timely payments to Haryana Kaushal Rozgar Nigam Limited resulted in late remittance of Employees Provident Fund (EPF) contributions to the Employees Provident Fund Organisation (EPFO). The consequence: ₹8.29 crore in penalties, an entirely avoidable burden on the state exchequer.

₹25.86 crore locked in incomplete public works

Non-compliance with Public Works Department Code provisions led to four projects in Kurukshetra, Rewari, Kaithal and Panipat remaining incomplete for four to five years. The entire ₹25.86 crore expenditure was rendered unfruitful, highlighting project management failures within the Public Works Department (Buildings and Roads).

₹12.66 crore excess premium under welfare scheme

The Women and Child Development Department failed to maintain and update beneficiary lists under Surakshit Bhavishya Yojna, resulting in excess premium payment of ₹12.66 crore to Life Insurance Corporation of India (LIC).

* Revenue sector: massive under-assessments and stamp duty leakages

State revenue overview

For 2022–23, Haryana’s total revenue receipts stood at ₹89,194.69 crore, up from ₹78,091.69 crore in 2021–22.

₹62,960.80 crore — Tax revenue

₹8,742.63 crore — Non-tax revenue

₹10,378 crore — Share of Union taxes

₹7,113.26 crore — Grants-in-aid

However, beneath this growth lies significant leakage.

₹260.24 crore revenue loss detected in test checks

Test checks of 117 units relating to sales tax/VAT, stamp duty and registration fee revealed under-assessment and short levy of ₹260.24 crore across 2,516 cases. Departments accepted deficiencies amounting to ₹79.04 crore in 1,980 cases during the year.

VAT irregularities

Concessional tax rates allowed without verification of statutory forms led to ₹1.97 crore under-assessment, with an additional ₹5.90 crore penalty leviable.

Incorrect assessment of turnover resulted in further ₹87.87 lakh under-assessment.

Stamp duty: systematic undervaluation and evasion

Stamp duty irregularities alone account for over ₹60 crore in shortfall:

Misclassification of 73 collaboration agreements – ₹23.37 crore short levy

218 deeds wrongly assessed at agricultural rates – ₹17.82 crore shortfall

Seven developers evaded mandatory registration – ₹13.99 crore loss

Incorrect exemptions to farmers – ₹2.23 crore loss

Exemption wrongly granted to Dakshin Haryana Bijli Vitran Nigam Limited – ₹1.36 crore

Prime khasra land assessed at agricultural rates – ₹1.31 crore short levy

Public sector enterprises: profit growth masking structural weakness

As of March 2023, Haryana had 37 SPSEs. Of these 19 SPSEs reported profits of ₹1,049.20 crore (up from ₹648.75 crore in 2021–22), 11 reported losses of ₹51.05 crore, and the net worth of four SPSEs was completely eroded.

Yet governance gaps persist:

• 25 government companies and two statutory corporations had accounts pending for one to six years.
• Three SPSEs had no independent directors.
• Audit committees absent in three SPSEs.
• No whistle-blower mechanism in one SPSE.
• Delays in appointment of key managerial personnel in multiple entities.

CSR spending without need assessment

Out of 11 eligible SPSEs, only nine complied with CSR mandates. Projects largely focused on education and rural development. However:

• No need assessments were conducted before selecting CSR projects.
• Seven SPSEs failed to comply with reporting and disclosure norms.

* Smart City mission: Funding gaps and monitoring collapse

Faridabad Smart City Limited and Karnal Smart City Limited

Under the Smart Cities Mission, Faridabad and Karnal were selected for development.

Major findings:

Planned mobilisation: ₹3,896.82 crore

Actual mobilisation: ₹1,825.86 crore (46.86%)

The SPVs failed to leverage government grants or mobilise funds via PPP, debt or land monetisation.

Project delays and violations

167 projects planned (₹1,881.75 crore)

152 awarded

112 completed (as of June 2024)

Only 45 completed on time

67 delayed (from 3 to 1,506 days)

Karnal Smart City Limited incurred ₹356.87 crore on projects outside the ABD area, violating Smart City Mission guidelines.

Monitoring failure

• Only 10 city-level monitoring meetings held against 133 required.
• No third-party impact assessments conducted.
• Records relating to citizen consultation not made available to audit.

The CAG recommended improved convergence with central/state schemes, strict adherence to timelines and measurable impact assessments.