Public Accounts Committee reported failure to transfer ₹9,222 crore in cess collections to designated reserve funds

PAC Chairman and Congress leader KC Venugopal. File | Photo credit: ANI

The Public Accounts Committee (PAC) on Tuesday (September 8, 2026) expressed concern over the reported failure to transfer unnecessary and levy collections to designated reserve funds, with members questioning the Union Finance Ministry’s explanation on the issue and reiterating earlier recommendations that such collections be used only for the purposes for which they were collected.

According to the 2024-25 audit, ₹9,222 crore collected through various cesses and levies was not transferred to the four designated reserve funds during the year. The findings are part of paragraph 3.3.1 of the Comptroller and Auditor General (CAG) Report No. 6 of 2026.

According to sources, PAC chairman and senior Congress leader KC Venugopal said the committee had already highlighted the issue in its 69th report, submitted in August 2023. The report recommended scientific evaluations of the quantity and duration of waste collection, regular reviews to assess whether the intended targets have been achieved and regular crediting of waste revenue to reserve funds. Ignoring the directions of the PAC, which is a parliamentary standing committee, is an insult to Parliament, Mr. Venugopal said.

‘Collected from all’

He further argued that the collection of residuals should be used for the purposes for which they are collected and not to finance the government’s budget deficit. He also noted that the collection of taxes is not part of the divisible pool of taxes and therefore the states do not share them. According to him, this further exacerbates the problem as the central government has to use this amount to restore facilities available to the citizens. It is an amount collected from everyone, whether they are income tax payers or not, from the middle class to the poor, Mr. Venugopal pointed out.

Reserve Funds are created for specific purposes under statutory provisions or executive orders and are funded through budgetary support, grants, contributions, fees and charges levied on the Consolidated Fund of India.

In 2024–25, the Union Government collected ₹3,89,220 crore through taxes, fees and levies, representing 10.25% of its gross tax revenue. The CAG found that the biggest shortfall that year was associated with Pradhan Mantri Swasthya Suraksha Nidhi (PMSSN), where only ₹14,439 crore was transferred against collections of ₹21,085 crore, leaving a gap of ₹6,646 crore.

The audit also highlighted the Oil Industry Development Fund (OIDF). While the cumulative collection over the course of the petroleum industry since 1974-75 was ₹ 3,12,782 crore, only ₹ 902 crore was transferred to the Petroleum Development Board till 1991-92 and then none till 2023-24. Although the OIDF was first operationalized in 2024–25, the auditors found a short transfer of ₹201 million. As on 31 March 2025, ₹2,94,150 crore remained in the Consolidated Fund of India.

The audit further noted that 10 reserve funds and 21 deposit accounts with total credit balances of ₹ 844.93 crore remained dormant for three or more financial years.

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The Treasury Department’s argument

The finance ministry disputed some of the audit findings, claiming that Madhyamik and Uchchtar Shiksha Kosh (MUSK) were excluded from the assessment of health and education check transfers. It said that against collections of ₹84,339 crore in 2024-25, transfers to the three designated funds were ₹86,020 crore, resulting in a net transfer surplus of ₹1,681 crore. According to the ministry, the higher allocation to MUSK compensated for the PMSSN shortfall.

The ministry also said that the allocations made in the Revised Estimates for 2025-26 would address earlier shortfalls. He further argued that maintaining large unutilized balances in reserve funds was fiscally imprudent at a time when the government borrowed about ₹15.74 crore in 2024-25 to finance an expenditure of ₹46.53 crore, adding that such balances increased the government’s liabilities.

Published – 8 Sep 2026 22:09 IST