In its latest report, the Comptroller and Auditor General (CAG) also pulled up the Ministry for excess expenditure under certain heads without budgetary provisions for them.
"The persistent trend of large savings is indicative of over-estimation of requirement of funds or poor planning for procurement and projects, poor contract management, lack of an internal control system and failure to take effective remedial measures to avoid persistent savings," it said.
It also observed that between 2007-10, the Defence Services surrendered Rs 5,638 crore under five grants, which included savings of Rs 5,309.49 crore.
Noting that savings are required to be surrendered as soon as they are foreseen without waiting for the year to end and they should not be used for future use, the CAG said, "Besides, Rs 5,638 crore was surrendered on the last day of the financial year which was contrary to the rules."
Pointing towards a particular grant to the Army, the report said, "There was an overall excess of Rs 2,464 crore but despite that excess expenditure, the Ministry surrendered an amount of Rs 838 crore on March 2010, which reflects deficient budgetary control mechanism in the Ministry."
The report also observed that the Ministry had "failed" to give any justification to how authorities had allowed excess expenditure without budget provision.
"Ministry failed to arrest the trend of persistent excesses beyond budget provisions... this shows poor exchequer control," it added.