CAG paints grim picture of Himachal’s finance management

By: ML Verma

Shimla (Apr 9): The Comptroller and Auditor General’s (CAG) report  tabled in Himachal Pradesh Assembly on the last day of Budget session on Friday painted a  grim  picture of state government’s finance management, highlighting fiscal imbalances in the Budget for the year ending 31st March, 2010.

Principal Accountant General (Audit) of Himachal Pradesh Rita Mitra addressed media persons at Gorton Castle complex last evening and elucidated the findings of CAG. She said that it was the second time when report on state’s financial health was being brought out in separate volume. The findings mark out ‘lack of governance control over managing capital expenditure’ and ‘leakages in tax realizations,’ and parking of funds due to non-compliance by the executing agencies.

Mitra said that the CAG report found that the state government has incurred an expenditure of Rs 4,788 Cr on salaries and wages during 2009-10, which was Rs 1,977 crore (70 per cent) more than the budget projection (Rs 2,811 Cr) for the year. The salary component was 61 PC of the revenue expenditure, which was much higher than the norm of 35 pc out by the 13th Finance Commission.

The government had invested Rs 2,663 crore in statutory corporation, rural bank, joint stock companies and cooperative institutions till 2009-10. While the government raised high cost borrowing with interest rates varying from 8.59 to 9.40% from the market during 2005-10, the returns on these investments was barely 1.65 per cent, the auditor pointed out.

Central government transfers of Rs 923.48 Cr during the year though increased the state resources from Rs 19,754 Cr to Rs 20,677 crore, the government was not monitoring the receipt-transfer of these funds, which made it difficult to verify by audit for establishing accountability of their usage, said Mitra. Excess expenditure of Rs 887.80 Cr during the year that needed to be regularized showed poor budgetary preparation as well as deficiencies in financial management.

Whereas the 13th Finance Commission has recommended a debt stock target of 25% of Gross State Domestic Product (GSDP) to be achieved by 2014-15, the state had a debt stock of 56 % of GSDP by end of the year.

On financial reporting, the auditor commented that as many as 26,057 utilization certificates (60pc) going back to works awarded till 9 years ago involving an amount of Rs 829.48 crore were yet to be furnished. 21,708 number of audit observations amounting to Rs 9621.79 crore contained in 7,881 inspections reports were outstanding as on March 31, 2010, resulting in erosion of accountability.

Out of 50 outstanding cases of misappropriation, loss, deflection, etc, involving Rs 76.92 lakh during the last more than 25 yrs, departmental proceeding and criminal investigation were not initiated in 23 cases involving Rs 49.20 lakh (64pc), indicating lack of initiative on the part of the government to fix accountability.

“Departmental enquires in fraud and misappropriations case should be expedited to bring the defaulters to book. Internal control in all the organizations should be strengthened to prevent such case,”  CAG report recommends in its last note.

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