Effective utilization of public funds is crucial to meet development goals. Critically examine the reasons…

Question

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

Ghissu Editorial · Accepted Answer

Funds go unused because of poor planning, late releases, weak capacity and lax monitoring, and are misused through opaque discretion and corruption, which delays development, raises fiscal costs and erodes trust. The CAG found 16.78% of grants, ₹15,512 crore, unspent in scientific and environmental ministries in 2023-24.

**Introduction**

Public money is held in trust. Yet the CAG found scientific and environmental ministries left ₹15,512 crore, or 16.78% of their grants, unspent in 2023-24, while welfare audits keep finding payments to ineligible beneficiaries.

**Reasons for Under-utilisation and Mis-utilisation**

SKETCH: fishbone | Poor Use of Public Funds
effect: Idle or diverted funds
- Weak planning
- Late releases
- Low capacity
- Weak monitoring
- Rent-seeking

1. **Planning and release delays**: Budgets made before projects are ready and late releases cause idle money and a March rush, which Rule 62 of the GFR, 2017 calls a breach of financial propriety.
2. **Weak capacity**: Understaffing and slow procurement left Uttar Pradesh using only 49.14% of e-NAM and 9.62% of RKVY funds in 2017-22 (CAG).
3. **Poor monitoring**: 41,002 utilisation certificates worth ₹16,761 crore were pending in those ministries in March 2024.
4. **Discretion and corruption**: Opaque discretion invites diversion; subsidised rice worth ₹135.16 crore went to 83,545 ineligible or deceased beneficiaries in Telangana (CAG, 2025).

**Implications for Development and Governance**

1. **Development deficit**: Unbuilt classrooms and idle health centres slow the SDGs and hurt the poorest first.
2. **Fiscal cost**: The Coal Controller's Organisation parked ₹122.75 crore in a current account and lost ₹11.77 crore in interest (CAG, 2025).
3. **Trust deficit**: Visible misuse breeds **political cynicism**, weakens tax morale and normalises petty corruption.
4. **A caveat**: Refusing wasteful year-end spending protects money, so outcomes, not outlays, are the yardstick.

**Conclusion**

Under-utilisation is chiefly a failure of capacity and mis-utilisation a failure of probity; both betray public trust. Judging public money by outcomes rather than expenditure turns budgets into development.

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

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