Subject: Comptroller and Auditor General CAG

Why in the News

A draft audit report on the implementation of the PAReSHRAM and Nirman Shramik portals has found nearly 2,000 instances of alleged manipulation of marriage records used to fraudulently claim marriage assistance from the Odisha Building and Other Construction Workers’ Welfare Board. The report is expected to form part of the Comptroller and Auditor General’s (CAG) audit report for 2024-2025. It follows a finding from the same audit that 2,487 construction workers were recorded as dead and their nominees paid death assistance, while those workers went on drawing subsidised foodgrain after their recorded deaths. The audit’s own conclusion is the contested part. It attributes the leakage to system design flaws and lack of validation rather than to isolated fraud, which places the failure in the payment system rather than in the claimants.

What does the Odisha Building and Other Construction Workers’ Welfare Board do?

1. Its statutory basis: State welfare boards for construction workers are constituted under the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996, which provides for registration of workers and for welfare benefits to them.
2. How it is funded: Its money comes from a cess on the cost of construction, levied under the Building and Other Construction Workers’ Welfare Cess Act, 1996, and collected from builders rather than from the general budget.
3. The benefit in question: The board pays Rs 50,000 for the marriage of an unmarried registered female beneficiary, or for the marriage of two unmarried daughters above 18 years of a registered construction worker.
4. The size of the fund: The board had accumulated over Rs 4,000 crore by 2024.

What did the audit find on the marriage records?

1. Errors carried in from the legacy database: Analysis of the legacy database showed 676 marriage certificates with registration dates earlier than the date of the marriage itself.
2. The same defect in sampled districts: In five sampled districts, 126 marriage registration dates were found to be prior to the date of marriage.
3. What happened after the portal went live: 1,257 such cases were found across the State after the Nirman Shramik Portal became operational, and 333 in the sampled districts.
4. The money involved: Those post portal cases led to disbursement of Rs 6.29 crore.

What did the block level registers at Khariar show?

1. How the registers were kept: Marriage certificate issue registers at the Block Development Office, Khariar were maintained with blank pages and without the signatures of recipients.
2. The scale of disbursal there: 586 marriage benefits amounting to Rs 2.90 crore were disbursed at that office over 2020 to 2025.
3. The gap that leaves: Details of the certificates actually issued against those payments were not available, so there is no record tying a payment to a named certificate holder.

How does this connect to the earlier death assistance finding?

1. The finding: 2,487 construction workers were declared dead and their nominees were paid death assistance from the same fund.
2. What contradicted it: Those same workers continued to draw subsidised foodgrain under the National Food Security Act, 2013 and the State Food Security Scheme after the dates recorded as their deaths.
3. What the pair has in common: In both cases a claim was cleared against a document the paying system never tested against the database that would have contradicted it, so the same absence of validation produced two different frauds.

Why does the audit call this a design failure rather than isolated fraud?

1. The audit’s own words: The draft report states that system design flaws and lack of validation allowed ineligible individuals to exploit the scheme, in violation of marriage registration protocols.
2. The rule that was never enforced in software: Under the Orissa Hindu Marriages and Registration Rules, 1960, parties to a solemnised marriage must compulsorily submit an application in Form B before the Registrar within 30 days of solemnisation, so a registration date preceding the marriage date is impossible on the face of the record.
3. Why scale points away from individual fraud: A defect that recurs across the legacy database, across five sampled districts and again after the portal went live is a property of the validation rules, not a pattern of unconnected claimants.

Challenges to the Odisha construction workers’ welfare delivery system

1. No validation between the benefit portal and the marriage registrar: A claim is accepted on a certificate the paying system cannot check against the registration record that produced it. Eg. The chronological test built into the 1960 Rules exists in law but corresponds to no field the portal validates.
   The Fix: Reject at entry any claim whose certificate registration date precedes the marriage date or falls outside the thirty day window.
2. Migration of an uncleaned legacy database: Records created before the portal were carried across without being reconciled, so old defects became new approvals. Eg. The same date sequencing error appears both before and after the portal went live.
   The Fix: Reconcile the legacy register against the Registrar’s records once, completely, before any further disbursal against legacy entries.
3. Paper registers as the only proof at block level: Where a manual register is the sole record of issue, an incomplete register leaves no way to test whether a benefit reached the named person. Eg. Disbursal is recorded by hand at the block office even though the claim itself is filed on a portal.
   The Fix: Make a digital acknowledgement with beneficiary authentication the record of issue and retire the manual register.
4. A large accumulated corpus with weak drawing controls: A board holding a large cess fund without transaction level checks is an attractive target, since detection depends on a periodic audit rather than on a system alert. Eg. This leakage surfaced only at draft audit stage, years after the payments were made.
   The Fix: Set automatic exception alerts on duplicate beneficiary identifiers, out of sequence dates and repeat nominee accounts, reviewed monthly rather than at audit.

Conclusion

The finding is about design, not about a handful of dishonest claimants. A portal that accepts a document without testing it against the register that issued it will convert every weak record into a valid payment, and the audit reached that same conclusion for two separate benefits drawn from one fund. The report is still at draft stage, so the board and the State government have the opportunity to respond before it is finalised. The thing to watch is whether the final report carries a recovery figure alongside the leakage figure, since recovery is what separates an audit finding from a correction.

Back2Basics: Comptroller and Auditor General (CAG)

1. Constitutional basis: The office is created by Article 148 of the Constitution, and the holder is appointed by the President and removable only in the manner and on the grounds applicable to a Supreme Court judge.
2. Source of duties: Duties and powers are laid down by the Comptroller and Auditor General’s (Duties, Powers and Conditions of Service) Act, 1971, not by the Constitution alone.
3. What an audit examines: Beyond checking that expenditure was legally authorised, a propriety audit examines whether the spending was wise and justified, and a performance audit examines whether a scheme met its stated objectives economically and effectively.
4. How a finding becomes a report: Findings are first issued in draft to the audited entity for its response, and the finalised State report goes under Article 151(2) to the Governor, is laid before the State legislature, and is then examined by the Public Accounts Committee.

Matching Previous Year Question

“[2024, GS2, 10] “The duty of the Comptroller and Auditor General is not merely to ensure the legality of expenditure but also its propriety.” Comment.”

Why in the News

An audit has found that 2,487 construction workers in Odisha were recorded as dead under the State’s Nirman Shramik welfare scheme, their nominees were paid death assistance, and the same workers went on drawing subsidised foodgrains under the National Food Security Act, 2013 (NFSA) and the State Food Security Scheme after their recorded deaths. In 753 of those cases the beneficiary authenticated Aadhaar biometrically to collect ration after having been officially declared dead. Rs 5.10 crore in death assistance was paid to nominees. The finding sits in the draft information system audit report on the Implementation of PA-ReSHRAM and Nirman Sharamik Portal in the State, and is expected to form part of the Comptroller and Auditor General (CAG) audit report for the financial year 2024 to 2025. The contradiction the audit exposes is between two arms of the same State government: one closed the worker’s file as deceased and paid out on it, while the other kept reading the same worker’s fingerprints every month.

What is the Nirman Shramik welfare scheme?

1. About: The scheme delivers welfare benefits to registered building and other construction workers in Odisha, with registration governed by the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996.
2. Eligibility: A worker must be between 18 and 60 years of age, must have completed at least 90 days of work in the preceding 12 months, and must not be enrolled in any other welfare fund.
3. Benefits on registration: Registered workers are entitled to educational scholarships for their children, assistance for marriage, maternity and funeral expenses, and death compensation.
4. Death benefits: A nominee receives Rs 2 lakh as death benefit and Rs 5,000 as funeral assistance on the death of an eligible registered worker.

What did the audit actually find?

1. Payment on a death that the State’s own records contradicted: Nominees of 2,487 workers received death assistance while those same workers continued to draw subsidised foodgrains after the recorded date of death.
2. Biometric proof of life after the recorded death: In 753 cases the beneficiary was physically present and authenticated Aadhaar to obtain ration, which the audit treats as direct evidence that the person was alive.
3. The quantum of the payout: Rs 5.10 crore was released to nominees on the strength of those death records.
4. Two systems, two verdicts on the same person: The government’s welfare record treated the worker as dead while its ration system was still recognising the worker’s fingerprints.

Where does the audit place responsibility?

1. Fraudulent disbursement, in the audit’s own terms: The draft report concludes that the combination of a live Aadhaar authentication and a paid death benefit indicates fraudulent disbursement of the death benefit.
2. The certification failure is named: The report states that the pattern also indicates that medical officers issued death certificates against living persons.
3. Where the finding is headed: The finding sits in a draft information system audit report and is expected to be carried into the CAG’s audit report for the financial year 2024 to 2025.
4. The response being sought: The Principal Accountant General (Audit-1) of Odisha sent the draft report to the then Additional Chief Secretary to the Labour and ESI Department, seeking a response on anomalies indicating corruption in the scheme’s implementation.

Challenges to construction worker welfare boards

1. Collection outruns disbursement: Welfare boards are financed by a cess on construction cost and carry large unspent balances while the workers the cess is collected for remain uncovered. Eg. The cess is levied at 1 per cent of the cost of construction under the Building and Other Construction Workers Welfare Cess Act, 1996.
   The Fix: Tie a board’s annual budget approval to its disbursement ratio in the previous year, so an accumulating balance becomes a reason to release funds rather than a cushion.
2. Registration lapses and is not portable: Cover depends on a work day threshold in the preceding year and on a registration held with one State’s board, so a worker who migrates or misses renewal loses entitlement. Eg. A worker moving to another State must register afresh with that State’s board.
   The Fix: Build a single national worker identity record that a destination State’s board reads directly, so registration follows the worker.
3. Claims are settled on paper certificates alone: A death benefit is released against a locally issued certificate and a nomination record, with no automatic check against any other government database. Eg. The audit records certificates issued in the names of people who were alive.
   The Fix: Validate every death claim against the civil registration database and the ration authentication log before the payment is released.
4. Welfare databases do not talk to each other: A death entered in the welfare register does not close the same person’s entitlement in the food security system, so one event produces two contradictory statuses. Eg. Ration continued to be drawn for years against names the welfare board had already settled as deceased.
   The Fix: Run a scheduled reconciliation between the welfare board’s death register and the food security database, with every mismatch raised as an exception for a named officer to clear.

Back2Basics: National Food Security Act, 2013

1. About: The Act converts subsidised foodgrain supply from a welfare provision into a legal entitlement for identified households.
2. Coverage: It provides for coverage of up to 75 per cent of the rural population and 50 per cent of the urban population.
3. Entitlement: Priority households receive 5 kg of foodgrains per person per month, and Antyodaya Anna Yojana households receive 35 kg per household per month.
4. Portability: Under One Nation One Ration Card, a cardholder may draw the entitlement from any fair price shop through biometric authentication, which is the authentication trail this audit relied on.

Conclusion

The fraud here did not defeat a control. It exploited the absence of one, because no process required the welfare register and the food security database to be read against each other. That makes the finding a design failure rather than a local scam, and the remedy a reconciliation rule rather than a set of recoveries. Two things follow the draft report: the Labour and ESI Department’s response to the Principal Accountant General, and whether the finding survives into the final CAG audit report for 2024 to 2025 with a recovery figure attached to it.

Matching Previous Year Question

“[2024, GS2, 10] “The duty of the Comptroller and Auditor General is not merely to ensure the legality of expenditure but also its propriety.” Comment.”