Bihar govt diverted over Rs. 8,800 crore from SC funds for development projects: CAG report

Money meant for PMS and similar scholarships was used for building roads and government buildings instead

Bihar GovernmentImage

Bihar government in 2018-19 diverted over Rs. 8,800 crores from an SC/ST scholarship fund to invest in road, embankment, medical colleges and government buildings projects, said the Indian Express on November 1, 2021. Scholarships under this fund have been denied to many eligible students for the last six years on account of fiscal shortages.

According to the Comptroller and Auditor General’s (CAG) 2018-19 report on Bihar’s finances, money from the Scheduled Caste Sub Plan (SCSP) fund was diverted despite Planning Commission provisions detailing the use of the fund for extending the centrally-sponsored Post-Matric Scholarship (PMS) to Schedules Caste and Scheduled Tribe students with an annual family income of less than Rs 2.5 lakh.

The PMS provides financial aid for educational and professional courses from Class 10 all the way to post-graduation. 60 percent of the scholarship is funded by the Union Social Justice and Empowerment Ministry and helps around 60 lakh students in India annually. Around five lakh of these students are from Bihar.

Yet, on August 10, the Indian Express reported that the state government had halted the same since 2018-19 due to a “technical snag” with the national application portal. Further investigation showed SC/ST students have been unable to avail the aid for six years.

As per the CAG report, the state government diverted Rs 2,076.99 crore from the SCSP fund to the electricity department and also loaned it Rs. 460.84 crore. Further, it diverted Rs. 3,081.34 crore for major road projects, Rs. 1,202.23 crore was diverted for constructing embankment, flood control projects and Rs. 1,222.94 crore was diverted for medical colleges. Another Rs. 776.06 crore were used for constructing an agricultural department office and other buildings.

“The Committee observes from the findings of the CAG that funds earmarked for development for SCs and STs have been diverted for other purposes. The Committee takes a serious view of the matter and recommends that NITI Ayog should ensure that funds earmarked for respective development schemes for SCs/STs must not be diverted for other purposes under any circumstances,” said the report.

The 2021-22 Bihar Budget highlights quote State Finance Minister Tarkishore Prasad as saying, “Fund for SCs/STs are allocated under separate sub-heads and it cannot be used for any other purposes.”

His department also agreed on August 23, 2016 that diversion of funds from SC/ST heads is barred. In its official statement, the department said concerned officials hold regular meetings to check any irregularities in Allocation for Welfare of Scheduled Castes (AWSC) expenditure.

While the state government said it has once again begun applications under the scholarship scheme, the incident has caught judicial attention. Earlier, the administration cited a fund crunch when the scholarship issue was brought to light in a PIL. Following the CAG report, the Court asked the government to reply to the petitioner’s query as to how the state diverted the SCSP fund while citing a fund crunch.

As per the regulations of the PMS scheme, a state government can avail any amount of money from the central government above its annual committed liability of about Rs. 115 crore. Since Bihar barely spent around Rs. 60 crore annually between 2017-18 and 2019-20 – less than its committed state liability – Bihar government did not qualify for any Central share in this period.


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