Patna, March 30: The report of the comptroller and auditor general (CAG) of India on state finances of Bihar for the fiscal ending March 31, 2010, has come as a rude shock for the Nitish Kumar-led government, which has been showing off good financial management of the state under its regime.

The report, tabled by deputy chief minister Sushil Kumar Modi, in the Assembly on Wednesday hints that the government is not sticking to the financial rules.

The report said: “The state government’s compliance with various rules, procedures and directives was not satisfactory, as indicated by the huge amount of pending utilisation certificates for grants given to various institutions. The government has provided grants-in-aid to various bodies and institutions without ensuring proper utilisation for the intended purposes.”

It also stressed increased financial accountability and also that grants should not be provided to institutions failing to submit utilisation certificates within a stipulated time.

The report touched a raw nerve of the NDA government when it pointed to the large amount of pending direct contingent bills. It was an issue, which cropped up before the last Assembly polls when Opposition parties alleged a scam to the tune of over Rs 10,000 crore and the ruling alliance had rubbished the charges saying that they were procedural deficiencies.

CAG has suggested that the state government should initiate strong measures to ensure timely submission of the DC bills and take effective measures to settle them.

Incidentally, the state government had already directed officials to clear outstanding DC bills last year when the matter was pending before Patna High Court.

The CAG report also stressed the need to reduce non-plan expenditure, saying it accounts to around 74 per cent of the expenditure. It pointed towards the need to restore fiscal discipline.

The report, however, said the Bihar Fiscal Responsibility and Budget Management Act, 2006, has brought about fiscal stability, greater transparency and sustainable debt management.