Most of the media reporting around the latest Comptroller and Auditor General report on Union expenditure headlines Rs 54,282 crore. The less sexy but more telling number is far smaller: Rs 27.35 crore, which the Union government says it “saved” under the Defence Pensions Grant during 2024–25.The devil, as always, is in the detail. Read that section, and you realise that pension payments amounting to Rs 3,042.32 crore have not been included under the relevant head. Instead, that amount has been parked in an intermediary account labelled “suspense head”.Why? Because the Defence Pensions Grant did not have sufficient funds to accommodate the payment. Had those payments been recorded where they belonged, the purported “saving” of Rs 27.35 crore would in fact have become excess expenditure of Rs 3,014.97 crore.In other words, the government created a “saving” by the simple expedient of not counting the expenditure.If this was a one-off, it could be explained away as being caused by the year-end rush. It is not. The CAG report says that Rs 5,195.56 crore in pension payments was kept out of the final account in 2022–23, and Rs 2,441.74 crore was similarly kept out of the accounting in 2023-24, both using the same technique.In each case, the government carried over the expenditure to the following year, thus understating expenditure in the year in which the money was actually spent.To be clear, the CAG does not say the money has disappeared – pensioners have been paid their dues. The underlying point is that it is parliament that sanctions budgets and in return, the government is obligated to provide an accurate accounting of how that money was spent.In this instance, parliament has repeatedly been given an inaccurate account of what has been spent against what it had authorised.§The media focus on the one large figure – Rs 54,282.32 crore in supposedly “unaccounted expenditure” – makes the point while missing the point. The problem is not “unaccounted” expenditure; the issue is lack of paperwork. The sum in question represents grants for which as many as 33,973 utilisation certificates were outstanding as of March 31, 2025. A utilisation certificate is the confirmation, in prescribed format, that money released as a grant was used for the purpose for which it was sanctioned.The absence of such certification does not prove that the money was stolen – for all we know, receipts and other pertinent records may exist. What the CAG points to is that the government has not been able to provide the prescribed assurance that the money was used for the purpose that parliament authorised.Put simply, the report does not suggest the money has been stolen. Rather, it suggests that the audit trail is broken, and that is serious enough to merit headlines.Stay with that headline figure for a beat longer. Of the amount in question, Rs 38,287.52 crore – that is 70% – relates to the three most recent financial years. The Ministry of Housing and Urban Affairs accounts for Rs 18,272.91 crore, and the Ministry for Higher Education for another Rs 14,359.76 crore.Note that the topline figure of Rs 54,282.32 is based on information provided by only 15 ministries and departments, out of a total of 54 Union ministries. As many as 39 ministries have not been heard from, which means the final figure could be considerably higher.Of the 15 ministries that did report, 10 responded to the CAG’s questions with variations of a familiar response: the matter was being pursued, implementing agencies had been reminded, continuous efforts were being made, a technological system had been developed to monitor the certificates.Five ministries did not respond to the CAG’s questions.In summary, 35 ministries have not submitted relevant reports; the 15 ministries that did submit reports could not provide relevant documentation of how the money was spent; of these 15, ten provided boilerplate responses to the CAG’s questions while five ministries did not even bother to respond.The CAG report notes that such incomplete information is a recurring problem that has been repeatedly identified in previous audit reports.Also read: Rs 54,282.32 Crore Spending by Modi Government Unaccounted, Flags CAG ReportThe real value of the latest report lies not in some spectacular number that makes for bold-face headlines. What the report, seen in its entirety, does is to document several stages at which the connection between public money and its stated purpose has become blurred.A government raises money and presents a budget detailing how it proposes to spend that money. Parliament passes the budget, thus authorises how it can be spent. The executive spends it (or fails to spend it). The expenditure is entered in the accounts. Finally, the government is required to show that the money was spent for the purpose for which it was released.The CAG report shows that this chain can and does break at every stage. For example, take taxes that do not serve the stated purpose:During the financial year 2024–25, the Union government collected Rs 5.29 lakh crore (13.94% of gross tax revenue) through cesses and surcharges. These revenues are not shared with the states but are framed as additional taxes raised for specific purposes: health, education, infrastructure, or some other clearly defined public need.The CAG examined four earmarked funds and found that Rs 9,222 crore collected through cesses and surcharges had not been transferred to the specified funds. Thus: Of Rs 21,085 crore collected for the Pradhan Mantri Swasthya Suraksha Nidhi, Rs 6,646 crore was not transferred. The Prarambhik Shiksha Kosh, used to finance school education programmes, received Rs 1,270 crore less than was collected in its name. The Investor Education and Protection Fund received only Rs 30 crore against collections of Rs 1,135 crore — that is a Rs 1,105 crore shortfall.In lay terms, we are told that a cess is being levied on us for a particular, laudable, purpose. The bulk of the money, however, is not used for the purpose it was collected for. We pay for something and get something else that we did not ask for.Even more dramatic is the cess on crude oil. Since 1974-75, successive Union governments have collected Rs 3.13 lakh crore through this cess. Until 1991-92, just Rs 902 crore had been transferred to the body created for the development of the oil-industry, and nothing at all was transferred in the period between 1992-93 and 2023-24, under various governments.The Oil Industry Development Fund was finally made operational in the government accounts during 2024–25, when Rs 17,730 crore was transferred against that year’s collection of Rs 17,931 crore. Even after this, the CAG calculates that Rs 2.94 lakh crore collected through the oil cess remained in the Consolidated Fund as of March 2025.For decades, therefore, people paid tax for one specified purpose, but the money was used by the Union government for other purposes. What those purposes are, is unspecified.The same problem manifests with money collected for “compensatory afforestation” – the panacea the government trots out each time it wants to cut down a few thousand more trees. At the end of 2024–25, Rs 10,380.36 crore collected for this purpose had not been distributed to states and Union Territories, and a further Rs 2,192.95 crore has been parked in bank accounts when by rights it should have been transferred to the Public Account.The amount in the government’s books differed from the National Compensatory Afforestation Fund Management & Planning Authority (CAMPA) figures by Rs 599.53 crore. National CAMPA subsequently transferred Rs 6,382.81 crore during 2025–26. The CAG however found that the system used to collect and transfer the money was not in accordance with the rules of the Compensatory Afforestation Fund Act.Has the money vanished? There is no evidence to make a determination either way. What is clear, though, is that money collected to compensate for the destruction of forests sits for long periods outside the funds that are meant for that purpose. In other words, the forest is cut down, but the compensatory afforestation does not follow.§The next break occurs between allocation and execution. For instance, parliament approved voted expenditure of Rs 47.07 lakh crore for 2024–25. Actual voted expenditure was Rs 42.85 lakh crore, leaving savings of Rs 4.22 lakh crore.“Saving” suggests thrift and good money management. In the obfuscatory language of government, though, it can and often does mean something entirely different. It means that a key programme was delayed in implementation, or that having announced a programme, no proper proposals were prepared, or that the agencies supposed to implement a programme lacked the capacity to do the work.In other words, “savings” in government parlance is a euphemism disguising inefficiency.The CAG found that 30 minor or sub-heads, with a combined sanctioned provision of Rs 1.01 lakh crore, recorded no expenditure at all. Is that a saving, or an indication of incompetence?Take the case of drinking water: Across three Jal Jeevan Mission heads, parliament provided Rs 63,146.62 crore. Of that, a whopping Rs 40,531.57 crore (64.2% of the sanctioned amount) was unspent. “Savings”.The Department of Drinking Water and Sanitation spent Rs 26,257 crore out of a provision of Rs 77,389 crore. The “saving” was Rs 51,132 crore, but the net result is that the scheme to provide drinking water to all hasn’t fully delivered on its promise, and it is not for want of funds.Similarly, the Ministry of Housing and Urban Affairs recorded revenue “savings” of Rs 32,191 crore. Here, under one of the principal PM Awas Yojana-Urban heads, Rs 14,227 crore of the Rs 17,100-crore provision went unspent. More “savings”. Similarly, under another PMAY-Urban head, Rs 6,443 crore was allocated but only Rs 1,842 crore was spent. Too much “savings”.An unfinished house in the Musahar tola where some residents alleged ‘leakages’ in the BJP’s PM Awas Yojana allocations in 2022. Photo: Ajoy Ashirwad Mahaprashasta/ The Wire/File.Under the Ministry of Environment, Forest and Climate Change, the government provided Rs 622.50 crore for pollution control. The ministry spent only Rs 16.20 crore. The “saving” was 97.4% of the allotted funds. Meanwhile, five of the world’s top 10 most polluted cities are in India; expand the frame to the top 20 and India has 13 entries; expand further to the top 50 and India has 35 entries; look at the top 100 and India tops the list with 39 entries.In summary, the government has not been able to spend money collected and earmarked for drinking water, housing and pollution control. This is not a “saving” as much as it is a failure to convert much-hyped budgetary promises into quantifiable public capacity.This is not peculiar to the financial year under review. The CAG has identified such large “savings” over three consecutive years in transfers to states, railways, telecommunications, rural development, defence capital expenditure, agriculture and school education. In other words, the government is failing in its promise to provide capacity across a host of key sectors.Ministries routinely explain these gaps by citing “fewer proposals”, “fewer claims”, “lower requirements” or “lower demand”. None of it means anything. “Fewer proposals” can explain why money was not spent in a particular year. But when it is repeated for three years, it raises a larger question: why does the government continue to budget money when it hasn’t built the institutional capacity required to use it? And related, wouldn’t that money be better utilised elsewhere?§Even when money is actually spent, it is not recorded in a manner that allows Parliament and the public to understand how it was spent. On that note, the CAG has identified misclassification of receipts and expenditure amounting to Rs 12,754.47 crore.Take for example the Department of Atomic Energy, which booked Rs 3,089.97 crore of operational expenditure under capital heads.Capital expenditure is supposed to create assets (and is often pointed to as evidence of investment in future growth). Revenue expenditure pays for current operations. Putting operational spending under a Capex head makes government expenditure look rosier than it actually is by passing off an administrative cost as asset-building.Elsewhere, more than Rs 4,957 crore in expenditure and Rs 4,087 crore in receipts were booked under the omnibus classification “Other Expenditure” or “Other Receipts”. Such classifications are meant for transactions that cannot be placed under a more specific head for specified reasons. But when they consume most of the expenditure under a major account, “other receipts” becomes a curtain behind which much is hidden.Also read: Officers In Charge of CAG Reports on Ayushman Bharat Graft, Bharatmala Cost Irregularities TransferredThen there is the Defence Pensions Grant referred to earlier, which is expenditure already incurred but deliberately moved into suspense because the authorised head lacked money. That is, the department spent money that was not provisioned for in the budget.Here, the government first failed to predict its pension bill accurately, not once but in three successive years, and then it used creating accounting to convert an overspend into a “saving”.§Budgets contain provisions meant to ensure that a part of government expenditure reaches historically excluded communities.Take one instance: the Scheduled Castes Sub-Plan and Tribal Area Sub-Plan protect such allocations, and the budget has rules that prohibit ministries from moving this money to unrelated heads.The CAG found that the Ministry of Micro, Small and Medium Enterprises issued seven orders moving Rs 457.17 crore from the Scheduled Caste and Tribal sub-plan heads to other minor heads, in violation of those rules.Union Minister of State for MSME and Labour & Employment Shobha Karandlaje visits a stall during Walmart Vriddhi MSME Summit 2025, in New Delhi, Thursday, June 19, 2025. Photo: PTI.Rs 457 crore is minuscule compared to the lakh-crore numbers that pepper the report, but it is the breach most easily understood. In the budget presented to Parliament, the government said the money was for Scheduled Caste and Scheduled Tribe communities – the kind of announcement usually greeted by much desk-thumping from the treasury benches – and then it moved the money elsewhere. Got the brownie points, didn’t benefit those it was supposed to.§The CAG report acknowledges that the Union government’s revenue deficit and fiscal deficit both declined during 2024–25.But fiscal management is about more than the achievement of a deficit target. It is also the ability of Parliament to follow the money trail from the tax levied to the stated purpose; from budget allocation to delivery of the specified service to be delivered; from the grant to documented proof of its final use. On each of these, the CAG report is rife with red flags.Money raised for specified purposes did not reach the specified funds. Money approved by Parliament could not be spent. Expenditure already incurred was pushed into another financial year. Operational expenses were recorded under capital heads. Earmarked allocations were diverted. And in the final analysis, tens of thousands of grants do not have the required documentation to show how they were actually used.The Rs 54,282-crore headline figure, hence, is a symptom. The underlying problem is that the line connecting public money to public purpose is repeatedly broken.The annual Budget presentation in Parliament is televised theatre (the Finance Minister’s choice of sari alone generates much media). Every allocation is announced as an achievement: so many thousand crore for drinking water, housing, health, education, employment, forests. But when the audit finally arrives, in the form of heads, sub-heads, transfers, reconciliation and utilisation certificates, it arrives in the shadows, absent the theatre.The promise in the budget has done its political work; the failure to deliver on the promise does not garner the same attention.The question raised by this latest report is not where Rs 54,282 crore disappeared. The question is what remains of Parliament’s oversight over public money when taxes do not reach the funds named for them, allocations are not spent, expenditure is not recorded where it belongs, and grants cannot be followed to their stated purpose.In a word, what the CAG report points to is a word that has been increasingly surfacing in the public sphere: accountability. Or the lack thereof.Prem Panicker is a journalist and editor.The author was assisted by a chartered accountant whose name is withheld at his request.