Rush of expenditure in last quarter allows indiscipline, waste, corruption

Rush of expenditure in last quarter allows indiscipline, waste, corruption
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Srinagar: Rush-hour expenditure during the last quarter of the fiscal year is being done “deliberately”, insiders say, in a number of government departments to allow for irregularities in allocation and release of funds.
Sources within the state administration told Kashmir Reader that departments of Revenue, Planning, Ladakh Affairs, Power Development, Industries and Commerce, Public Works, Social Welfare, Housing and Urban Development, Education and Tourism, were spending a major share of the allocated budget in the closing quarters so that the expenditure does not have to follow norms.
“When a heavy share of allocated funds is spent in the eleventh hour, hardly anyone in the department follows the rules and regulations. The objective is only to spend the money, anyhow and anywhere,” said an official.
As per official figures, more than Rs 23, 234 crore of the total budget expenditure of Rs 54, 660 crore for the financial year 2015-16 was spent during the last quarter of the financial year.
The lopsided expenditure, ranging from 29 percent to 97 percent of the total budget, in the last quarter violates the Financial Code laid down by the government.
The Ladakh Affairs Department spent 97% of its budget in the last quarter of 2015-16. The Planning Department spent 59% in the same period, the Transport Department spent 64%, the Revenue Department 67%, Social Welfare Department 59%, Tourism 54%, Industries and Commerce 52%, Power Development Department 52%, Public Works Department 49%, Agriculture 46%, and Finance Department 40% of its funds in the last quarter.
The Financial Code of the J&K government says that a rush of expenditure in the closing month of a financial year should be avoided as far as possible. It says that during the last quarter of the fiscal year, the expenditure should be limited to 30% of the budget allocation, and in the month of March the expenditure should be limited to 15%.
Accountant General (Audit) of J&K, Hoveyda Abbas, told Kashmir Reader that chances of mismanagement and wasteful expenditure increase when a huge sum of allocated funds is spent during the last quarter.
“The basic problem lies with the delaying of funds. When the major share of allocated funds are delayed and released at one go, the departments try to spend all the funds before the close of financial year. It leads to wasteful expenditure,” Abbas said.
He said that when a huge sum of money has to be spent in a limited time, it is diverted to unnecessary and less important work.
“Cash flow management becomes a problem when there is unequal distribution of funds in the four quarters. For instance, a department has funds allocated to it in the budget but doesn’t get the cash till late in the financial year. It hampers the work till the cash is made available,” he said.
When funds remain unutilised in the last quarter, Abbas said, departments make an Abstract Contingency Bill – which means they tell the government they will adjust the remaining funds in some other works. “Here irregularity happens, easily, unless there is a Budgeting Control System for management of finances,” Abbas said.
To promote fiscal discipline and to ensure a balanced rate of expenditure, the government recently issued a circular of reform measures to all departments.
The circular said that 50% of the revenue and capital expenditure budget provision for 2017-18 will be released by 10th February, 2017. The Administrative Departments shall ensure that the Budget is communicated to the Heads of Departments/ executing agencies not later than 20th February, 2017.
“In case this is not done, the budgetary provisions will be deemed to have been conveyed to the HoDs/executing agencies for taking further action. The Administrative Departments/ Heads of Departments/ executing agencies shall immediately set in motion the procurement and tendering process which should be completed latest by 15th May, 2017 , which implies that all budgeted works must be allotted and supply orders issued or procurements made by the specified timeline,” it says.
“Beyond 15th May, 2017, any work or supply orders can be issued only after the permission of the Finance Department for which the concerned department will have to submit valid and satisfactory reasons for the delay,” further reads the circular.

 

 

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