Utilisation Certificate
Also called: UC · Topic: Fiscal Federalism: Finance Commission, Devolution and Centre-State Finances · NCERT: Beyond NCERT
Meaning
A Utilisation Certificate (UC) is an official document that proves earlier grant money was spent on the purpose it was approved for. The body that receives the grant gives it to the body that gave the money. The receiver may be a State, a local body or an institution. Under a centrally sponsored scheme (a scheme run by States with shared Centre-State funding), the Centre usually pays in instalments. It releases the next instalment only after the State sends a UC for the earlier money and shows progress on the ground. UCs matter for two reasons. They link central money to proper use. They are also a common reason why scheme funds reach States slowly.
Example
Under the Ministry of Home Affairs' Scheme for Expansion and Modernization of Fire Services in the States, the Centre releases money in parts. A State that is slow to build a fire station or buy equipment cannot send a UC for its earlier instalment. So it waits longer for the next one. This is one reason why much less money may be released than was announced.
Don't confuse with
- Audit (by the CAG): A UC is a statement by the body that spent the money. An audit is a later, independent check by the Comptroller and Auditor General of whether the money was spent properly.
- Sanction of funds: A sanction is the approval of a project or a grant. A UC comes after the money is spent and confirms how it was used.