Drowned in Mis-Governance

Arjimand reviews findings of the Comptroller and Auditor General of India (CAG) regarding the quality of governance in the State, but does not mention determined efforts by politicians and state officials to keep the CAG Annual Reports from being discussed in the State Assembly. Few of the CAG findings are discussed following Arjimand's analysis

(Mr. Arjimand Hussain Talib, 34, was born in Srinagar. He is a columnist/writer and a development professional who matriculated from Tyndale Biscoe Memorial School in 1991. He subsequently graduated with a Bachelor's degree in Engineering from Bangalore University and has a diploma in journalism as well. He is an alumni of the International Academy for Leadership, Gummerbach, Germany and has worked with UNESCO, Oxfam and ActionAid International in some seven countries in Asia and Africa. Arjimand writes regular weekly columns for the Greater Kashmir and The Kashmir Times since 2000 on diverse issues of political economy, development, environment and social change and has over 450 published articles to his credit.)

Drowned in Debt

The CAG report presented in the State Legislative Assembly is a severe tell off to the government of the State. The consequences of ad hoc budgeting, almost entirely driven by political expediency, have gruelingly started staring into our face. It needs bare common sense to point out the rot that has set in from long time now. An excessive, and blind, reliance on loans under different schemes, borrowings from center and different financial institutions, and incessant piling up of debts have pushed this state into a crisis that are too deep to fathom. This was known to all even before the budget for this fiscal was presented. It makes our economy tragic, and those who handle it criminal, that rather than making an attempt to check the rot, it has only been deepened. Does it need any super fine calculations that when we, on the one hand every time borrow, and on the other hand create no wealth, we are destined to find ourselves neck deep into debt. And this is what has happened.

In the ultimate analysis economy is about making calculations, and digits have a habit of being brute. Digits don’t do a politics that hides more and reveals less. If our politicians stealthily and slyly wreak havoc to our economy, digits are only there to expose them; head to toe. The report submitted by the Comptroller and Auditor General of India indicating the pathetic state of the economic health of our state on account of its debt load is a harsh reminder of what the governments in the state from time to time having been doing to us. "The overall fiscal liabilities of J&K State have increased from Rs 23,287 crore in 2008-09 to Rs 28,735 crore in 2009-10," the report makes it plainly clear. It means that the State's fiscal liabilities have increased by 18.31 per cent in 2009-10. According to the report the total liabilities come to about Rs 15.449 – comprising internal debt, loans and advances from the central government. Given these figures the Fiscal Liability – Gross State Domestic Product ratio has reached 75.03 percentile at the end of the last fiscal, meaning March 31, 2010. The same was 69.78 percentile in 2008-09. To make it understandable to a layman, one way is to compare this ratio to the proposed ration in the recommendations of the 13th Finance Commission. It says that the ratio should come under 25 percent in the next five years. This huge gap between the two is indicative of how worse the situation is.

The point that now needs to be asked with all seriousness, mixed with popular resentment, is that what made us come to this pass. Without getting into who did it and for what ugly purposes, it can be in a nutshell explained in terms of lack of democracy in the State. To come into power, public support has never been considered as crucial in this State. It has always been a nexus between the political parties of this State and a slew of know and unknown powers, to contain the popular urge about one particular political question that has determined the power structure of our State. Consequent to this we have witnessed the growth of a bureaucracy that is a mix of incompetence and servility. With the result the element of responsibility has been completely absent from our politics and bureaucracy. To give a feel good factor every time, and getting money from different sources to keep things afloat our governments have accrued problem over problem for us as people. People become rich only if they know how to explore and exploit the resources that nature has left with them. Also by developing skill and knowledge capital. These are the principled sources for the creation of wealth. Stuffing these sources and allowing the loans to compensate – it makes a hideous economy.

CAG Indicts Govt for Financial Indiscipline

State fails to surrender huge sum in budgetary savings

Tribune News Service & PTI

The Comptroller and Auditor General (CAG) of India has pointed out in its report that the state government has violated the budget manual and failed to surrender the budgetary grants and appropriations in the financial year 2009-10. And the non-surrender of the funds deprived the government of the opportunity to transfer these to other needy sectors, the report revealed.

In its report for the year ended March 31, 2009, which was tabled in the state Legislative Assembly recently, the CAG said that the state government has failed to surrender Rs 2,671 crore of budgetary grants and appropriations.

“At the close of the year 2008-09, there were 28 grants and five appropriations (state budget) in which saving occurred, but no part of that had been surrendered by the government departments concerned,” the report said.

The saving in these cases included Rs 2,292.35 crore in 44 cases (involving 28 grants and two appropriations) where saving involved were Rs 1 crore and above, it said.

As per the state budget manual, the departments were required to surrender grants/appropriations or saved portion, thereof, to the Finance Department as and when the savings were anticipated, it said.

Giving further breakup, the CAG report said the Education Departments failed to surrender Rs 437.55 crore as saving amount, the Planning and Development Department Rs 381.54 crore, Consumer Affairs public Distribution Department (CAPD) Rs 310.88 crore, Power Development Department Rs 247.95 crore, Finance Department Rs 242.91 crore and Home Department failed to surrender Rs 148.91 crore during 2009-10.

Indicting the government for financial indiscipline, the report said contrary to the financial code of the state, in respect of 11 major heads, expenditure exceeding Rs 10 crore and also more than 50 per cent of the expenditure of the year was incurred during the last month of the financial year 2009-10. According to the Jammu and Kashmir Financial Code, the rush of expenditure in the closing month of the financial year should be avoided and strictly monitored, it said. The report further said the coding pattern as advised by the Principal Accountant General had not been adopted by the state Finance Department and even the demand of grants of some departments did not have a code number to identify them.

These deficiencies made the entire budgeting process erroneous, making reconciliation of the department figures with those adopted by the Principal Accountant General difficult, it said. The report added that the matter was reported to the state government from time to time, but there was no response.

CAG Points out 'Poor Governance,' Non-Compliance of Rules in J&K

'Good governance' and 'work culture' are the two words, off and on, used or to say propagated by the State Government but going by the latest report of Comptroller and Auditor General (CAG) of India, the reality is somewhat different, as CAG has indicted the State administration for its non-compliance with various financial rules, procedures and directives during 2009-10.

Pointing towards the 'poor governance' in J&K, the CAG has stated that the several state government departments have failed to furnish mandatory Utilisation Certificates (UCs) to the Accountant General (AG) within the stipulated time period of 18 months. According to the CAG findings in Table 3.1 on Page 43, Utilization Certificates for a whopping Rs 1815.29 crore in respect of 2362 items were outstanding till the end of March 2010.

The range of delay in producing UCs varies from one to five years. There were 504 items amounting to Rs 354.52 crore for which no UC was received by AG for at least an year while non- production of UCs for huge funds of Rs 1071.76 crore against 1129 items is still pending for the last three years or so and reflecting the 'irresponsible' approach of the state government is the fact that there were 729 items amounting to Rs 388.99 crore whose UCs are being awaited for about the last five years.

As per the Financial Rules, "the grants provided for specific purposes, UCs should be obtained by the departmental officers from the grantees and after verification, these should be forwarded to the Accountant General within 18 months from the date of their sanction unless specified otherwise."

Evidently, there has been laxity on part of the departments and the officers concerned who have failed to comply with the guidelines laid down by the Accountant General. Moreover with the slackness displayed by the officers, the State Government has to receive a bit of 'stick' from the CAG.

It is not only the non-compliance of UCs, the State Government has also got flak from the CAG as far as non-submission or delay in submission of accounts is concerned.

As many as seven Autonomous bodies covered under section 19(3) and 20(1) of the Duties and Powers Act had not furnished the annual accounts amounting to Rs 535.56 crore (Table 3.2, Page 43, 44) as per the CAG report. For the period 2008-09, the Sher-e-Kashmir University of Agriculture Sciences and Technology (SKUAST)- Jammu failed to produce the details of grants to the tune of Rs 54.42 crore released under four accounts for at least four years while SKUAST-Srinagar could not provide status of its two accounts under which it was granted Rs 80.58 crore as aid for almost four years.

The other autonomous bodies which fell short of the yardstick include Jammu & Kashmir Khadi Village Industries Board, Srinagar, Ladakh Autonomous Hill Development Council, Kargil, Jammu & Kashmir Legal Services Authority, Srinagar and Provident Fund Organisation, Srinagar.

By not preparing and submitting their accounts despite receiving hefty sum in grants clearly reflect these organisations' non-seriousness.

Astonishingly these bodies did not even bother to convey the reasons of non-submissions of the details of the accounts. The CAG report further highlighted that 245 accounts of 29 other bodies were awaited in audit. These organisation have to go through annual audit under Sections 14 and 15 of the CAG's (Duties, Powers and conditions of Service) Act,1971 which says, " The Government/Heads of the Department are required to furnish to Audit every year detailed information about the financial assistance given to various institutions, the purpose of assistance granted and the total expenditure of the institutions." (Early Times)

CAG picks holes in financial management of J&K Expenditure in excess of approval, more than Rs 1 cr each in 15 cases

Giving a lie to the claims of J&K government vis-à-vis “financial management and budgetary control, the audit of the appropriations by the Comptroller and Auditor General of India on State Finances for the year ended March 31, 2010 reveals that the expenditure aggregating Rs 11,875.82 Cr exceeded the approved provisions by Rs 4062.03 Cr in 15 cases.

In these 15 grants/appropriations worth Rs 7813.79 Cr, the excess expenditure was more than Rs one Cr each or more than 20 percent of the total provision. Among them, for Power Development Department, the total grant/appropriation was Rs 2435.66 Cr while the expenditure was Rs 2795.20 Cr thus incurring an excess expenditure of 359.54 Cr (15 percent). Similarly for Consumer Affairs and Public Distribution (CAPD) department, the grant was Rs 3.97 Cr yet the expenditure was Rs 5.52 Cr with an excess expenditure of Rs 1.55 Cr (39 percent). For Social Welfare department, Labour, Stationery and Printing department and Higher Education department, the grants/appropriations were Rs 278.71 Cr, 36.03 Cr and 275.96 Cr while the expenditure was Rs 281.66 Cr, Rs 83.72 Cr and Rs 450.26 Cr thus incurring excess expenditure of Rs 2.95 Cr (1 percent), Rs 47.69 Cr (132 percent) and Rs 174.30 Cr (63 percent) respectively.

Of these five demands, total revenue voted was Rs 3030.33 Cr while the expenditure was Rs 3616.36 Cr with an excess expenditure of Rs 586.03 Cr.

In case of Finance department, the total grant/appropriation (revenue charged ) was Rs 1950.44 Cr while the department expended an excess amount of Rs 187.80 Cr (10 percent) with the total expenditure of Rs 2138.24 Cr.

Under the head of Capital Voted, the departments of General Administration, Industries and Commerce, Public Works, Social Welfare, Public Health Engineering, Hospitality, Protocol and Toshakhana and Transport incurred an expenditure of Rs 36.90 Cr, Rs 114.29 Cr, Rs 1465.23 Cr, Rs 199.59 Cr, Rs 171.77 Cr, Rs 505.00 Cr, 0.47 Cr and Rs 54.07 Cr against the total grant/appropriation of Rs 29.15 Cr, Rs 111.29 Cr, Rs 1216.92 Cr, Rs 182.67 Cr, Rs 113.82 Cr, Rs 345.31 Cr, Zero and Rs 25.40 Cr which amounted to an excess expenditure of Rs 7.75 Cr (27 percent), Rs 3.00 Cr (3 percent), Rs 248.31 Cr (20 percent), Rs 16.92 Cr (9 percent), Rs 57.95 Cr (51 percent), Rs 159.69 Cr (46 percent), Rs 0.47 Cr (100 percent) and Rs 28.67 Cr (113 percent) respectively. In these grants, the total grants were Rs 2024.56 Cr while the expenditure was Rs 2547.32 Cr which amounted to an excess expenditure of Rs 522.76 Cr.

Under capital charged head, in case of Finance department, the total grants were Rs 808.46 Cr while the expenditure was Rs 3573.90 Cr thus incurring an excess expenditure of Rs 2765.44 Cr (342 percent). Of these, excess expenditure by more than 20 percent has been observed consistently for the last five years in respect of one grant and one appropriation i.e., Labour, Stationery and Printing and Finance departments.

Closing month rush

According to Jammu and Kashmir Financial Code, rush of expenditure in the closing month of the financial year should be avoided. Contrary to this, in respect of 15 major heads viz., GAD, Planning and Development, Education, Finance, Industries and Commerce, Agriculture, Revenue, Public Works, Social Welfare, Housing and Urban Development, Tourism, Stationery and Printing and Transport departments, expenditure exceeding Rs 10 Cr and also more than 50 percent of the total expenditure for the year was incurred either during the last quarter (Rs 149991.66 lakhs) or during the last month (Rs 125236.37 lakhs) of the financial year 2009-2010. The percentage of expenditure in the last quarter ranged between 63 and 99 percent and during the last month it ranged between 51 and 94 percent of the total expenditure, reveals the CAG report on State Finances for the Year ended March 31, 2010.

Similarly, as per the State Budget Manual, the spending departments are required to surrender the grants/appropriations or portion thereof to the Finance Department as and when the savings are anticipated. At the close of the year 2009-10, there were, however, 28 grants and five appropriations in which savings occurred but no part of which had been surrendered by the concerned departments. The savings in these cases was of the order of Rs 2672.03 Cr which includes Rs 2671.73 Cr in 44 cases (involving 28 grants and two appropriations) where savings involved were Rs 1 Cr and above. Non surrender of these funds deprived the government of the opportunity to transfer these funds to other needy sectors, CAG report pointed out. (Kashmir Times)