CAG points out major flaws in JK’s financial management and budgetary control

SRINAGAR: The Comptroller and Auditor General (CAG) has said that Jammu and Kashmir government is making budgeting errors which include shortfall in utilization of funds and excess expenditure without available provisions.
“In 42 cases anticipated savings were either not surrendered or surrendered at the end of the year in the month of March leaving no scope for utilization of these funds for other development purposes,” the CAG has said in its report which was recently tabled in the Assembly by Finance Minister for Finance, Abdul Rahim Rather.
As the Appropriation Accounts have not been discussed by the Public Accounts Committee (AC) since 1980-81, the CAG said, excess expenditure aggregating to Rs 90,198.17 crore for the years 1980-2012 is yet to be regularized by the legislature.
Against a total amount of Rs 2667.61 crore drawn on AC bills by various Drawing and Disbursing Officers (DDOs) during 1995-2013, corresponding AC bills were not submitted (by June 2013) to the Accountant General, it said.
Follow up on previous reports on state finances: The CAG also lambasted the state Finance Department for no Action Taken Report as it was not sent by the department to the Public Accounts Committee (PAC) on the audit observation and recommendation contained in any of the previous reports on state finances. “None of these reports have yet been discussed by the (PAC).”
The report also said the state’s efforts at promoting industrialization through substantial tax revenues being foregone by both union and state government have demonstrably failed to enhance the level of industrialization.
There are two potential drags on the state’s economy as the government looks forward to diversification in the state’s economy through increased industrialization and modern agriculture as a prescription for sustained and inclusive, job creating economic growth.
“First is the steady increase in the unrecovered expenditure on procurement and supply of electricity and second is the steady expansion in the number and per capita expenditure on personnel (both regular and para employees),” the CAG said.
It said the expansion in public employment (through ongoing regularization of irregular appointments and expansion of administrative and service delivery infrastructure) and the difficulties in management of electricity supply both act as disincentive to diversification of the economy.
The power receipts accounted for nearly 74 per cent of non-tax revenue and covered only 36 per cent revenue expenditure on Power Development Department in 2012-13, the CAG pointed out.
“Addressing power sector reforms should continue to be a priority area for the state government. These need the government’s attention,” it said.
On outcome budget: The auditor said there is no system of outcome or performance budgeting or reporting by the departments to the state legislature as the “departments do not prepare annual reports of their activities and achievements.”
Financial reporting: The CAG said that there were delays in furnishing utilization certificates against the loans and grants from various grantee institutions.
“Abnormal delays of 1-18 years were noted in submission of annual accounts by some of the departmental commercial undertakings and autonomous bodies,” the report added.