PAC grills Centre, States on ‘fraud markers’ flagged by CAG in SC scholarship schemes

The Public Accounts Committee examined gaps in pre-matric and post-matric scholarships for Scheduled Caste students. It questioned both the Union government and State governments about delayed payments, missing scholarships, weak eligibility checks, suspected fraud, and incorrect transfers. These problems matter because the schemes are intended to support SC students, while public funds finance them.

The committee questioned the Union Social Justice and Empowerment Ministry about why it had not submitted action-taken reports on every issue raised by the Comptroller and Auditor General. It also asked why fraud markers remained despite Direct-Benefit Transfers and the Aadhaar Payment Bridge System. Examples included shared caste certificates, seemingly common bank accounts, and unmatched Aadhaar and bank details.

The PAC also expected six Chief Secretaries to explain their States’ responses. None appeared. The committee gave the Union Ministry one month to submit detailed reports, while privilege notices against the absent Chief Secretaries may follow.

In this audit, “fraud markers” means patterns or irregularities that can signal improper scholarship administration. They do not automatically prove that every payment was fraudulent. They show that beneficiary identities, eligibility records, or payment details may not have been checked effectively.

The CAG found several concrete examples. In Uttar Pradesh, the same caste certificates were used by multiple beneficiaries. In Odisha, students received scholarships through seemingly common bank accounts. In Haryana, more than ₹13 crore went to beneficiaries whose Aadhaar details did not match their bank details. The committee raised these examples during its PAC hearing.

These findings were significant because the Union government had said Direct-Benefit Transfers, used with the Aadhaar Payment Bridge System, would help remove dummy beneficiaries. Yet the audit still identified such markers. The hearing therefore focused on why safeguards had not prevented every irregular record or payment, and who should correct the gaps.

The scholarship problems were widespread across 14 States. The CAG found that 40.75 lakh beneficiaries received payments late, with delays ranging from one month to 90 months. More than 3.5 lakh beneficiaries did not receive their scholarships at all. These figures show that the issue involved both delivery failures and payment administration.

The audit also recorded over 5,700 scholarships disbursed without proper income-eligibility checks. More than 6,000 non-SC beneficiaries received scholarships intended for SC students. It further identified cases involving double payments, short payments, and excess payments. Together, these findings covered delays, missing support, incorrect recipients, and incorrect amounts.

The PAC examined why these problems continued despite digital payment safeguards. It also noted a sharp reduction in beneficiary numbers after the move to Direct-Benefit Transfers. For 2025-26, post-matric beneficiaries reached only 36.07 lakh against a target of 76.55 lakh, adding to concerns about implementation.

The Chief Secretaries of Uttar Pradesh, Karnataka, Punjab, Odisha, Bihar, and Madhya Pradesh were expected to brief the PAC. Their States had to explain the gaps identified in the CAG’s 2025 report on SC scholarship administration. The appearances were meant to provide direct answers about corrective action and implementation.

None of the six States deputed the respective officials for the October 15 hearing, according to sources cited in the report. Their absence meant the committee could not receive the planned explanations from the senior officials responsible for State administration. The PAC also questioned the Union Ministry because State governments had not shared their action-taken reports.

The possible consequence is a privilege notice against the six Chief Secretaries. The article says the PAC is likely to move such notices. Separately, the Union Social Justice and Empowerment Ministry assured the committee that it would submit detailed reports on the audit findings within one month.

The PAC required the Union Social Justice and Empowerment Ministry to submit a detailed action-taken report on each issue raised in the CAG audit. The report must explain what has been done about delays, missing payments, eligibility failures, wrongful beneficiaries, payment errors, and fraud markers. This requirement is meant to create a documented response to every audit finding.

The Ministry had told the committee that implementation rests with State and Union Territory administrations. It said it could not file the reports because the States had not shared their own responses. The PAC pressed the Ministry on this explanation during the hearing and asked why the reports had not already been submitted.

The Ministry then assured the committee that the reports would be provided within one month. The deadline creates a near-term accountability step, but the article does not state what action will follow if the reports are incomplete or late. The six absent Chief Secretaries may separately face privilege notices.

Direct-Benefit Transfers and the Aadhaar Payment Bridge System were presented as safeguards against dummy beneficiaries. They were expected to send scholarships through a more controlled payment process. The PAC questioned why fraud markers and payment errors remained if these systems were meant to weed out ineligible or duplicate records.

The CAG’s examples show the unresolved problem. Uttar Pradesh had the same caste certificates used by multiple beneficiaries. Odisha had students receiving scholarships in seemingly common bank accounts. Haryana paid over ₹13 crore where Aadhaar and bank details did not match. The audit also found double, short, and excess payments, showing that digital transfer did not eliminate every irregularity.

The article does not identify a single technical cause for these failures. It reports that implementation rested with State and Union Territory administrations and that checks remained inadequate in some cases. The PAC also noted that beneficiary numbers fell sharply after the shift, with post-matric coverage below its 2025-26 target.

Centrally sponsored schemes combine Union funding with implementation by State and Union Territory administrations. For these SC scholarship schemes, the Union government shares the financial burden with the States and Union Territories. The arrangement gives both levels of government a role in ensuring that eligible students receive correct and timely payments.

The normal funding ratio is 60:40, with the Union paying 60% and States and Union Territories paying 40%. For northeastern States, the ratio is 90:10. Between 2017 and 2024, ₹52,878 crore was spent on the two schemes, including about ₹30,234.5 crore from the Union government’s share.

The Ministry told the PAC that implementation rests with State governments, which is why it had not received action-taken reports from them. This division does not remove Union responsibility for oversight, however. The PAC required the Union Ministry to compile detailed reports, while States must explain and address their administrative gaps.