Q2(a). Effective utilisation of public funds is crucial to meet development goals. Critically examine the reasons for under-utilization and mis-utilisation of public funds and their implications. (150 words). 10
In order to ensure the development of a country, the public funds should be utilized efficiently for the right purpose in the right manner. However, often the public funds are misused or underutilized for the following reasons.
1. Funds are released at the end of the financial year leaving little time available to spend them appropriately.
2. Funds are not distributed among the appropriate expenditure heads leading to excess of funds in some areas while some work remains incomplete due to lack of funds.
3. Internal audit system within government is inadequate and is unable to stop the misuse of funds.
4. Due to corruption and centralization, funds are diverted to areas where there is more scope of corruption and misuse.
5. Expenditure is given more importance than the outcome.
The implication of under-utilization and mis-utilisation of funds are:
• Poor quality of work
• Failure to achieve desired results
• Slower development of economy
• Less availability of funds in critical areas
• Loss of public trust
• Higher rates of taxes to make up for the misuse of funds (175 words)