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Gujarat Municipal Finance Board made Rs 300 cr from people’s funds

This was the fund that was supposed to be utilised for development of different amenities in urban local bodies in the state

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The Comptroller and Auditor General’s report on local bodies made a shocking revelation on Thursday that the state government’s Gujarat Municipal Finance Board (GMFB) parked funds unethically and earned an interest of Rs 301 crore in five years. This was the fund that was supposed to be utilised for development of different amenities in urban local bodies (ULBs) in the state.

The CAG reported that against the total available grant of Rs 31,467.26 crore received between 2012 and 2017, GMFB disbursed Rs 31,441.69 crore to ULBs. During the same period, the GMFB had temporarily parked the funds in the Gujarat State Financial Services Limited (GSFS) for the period ranging from 10 days to 994 days, and earned an interest of Rs 301.57 crore.

The CAG mentioned, “This action of GMFB to hold the funds and invest them in GSFS was not in order as it violated the directives of the finance department which stipulated parking of only surplus funds in GSFS.”

The CAG also noted that GMFB had diverted Rs 25 crore from the interest earned from the grant for its own establishment expenditure. “Audit observed that the average establishment and contingent expenditure of GMFB was Rs 4.46 crore whereas the average interest income was Rs 4.52 crore during 2012-17,” the report said.

The CAG report also said the GMFB sanctioned loans to municipalities (nagarpalikas) in the state without assessing their repaying capacity. Monitoring, evaluation and mid-course correction of the functioning of GMFB were not done. The GMFB also failed to monitor the working the municipal corporations as per its statutory provision resulting in poor financial health and service delivery system of the local bodies.

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