State Finances Audit Report of the Comptroller and Auditor General of India
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State Finances Audit Report of the Comptroller and Auditor General of India for the year ended 31 March 2019 Government of Mizoram TABLE OF CONTENTS Para No. Title Page Preface v Executive Summary vii CHAPTER-I Finances of the State 1.1 Profile of the State 1 1.2 Basis for State Finances Audit Report 1 1.3 Budgetary Processes 2 1.4 Structure of Government Accounts 3 1.5 Gross State Domestic Product 4 1.6 Fiscal Correction Path 6 1.7 Trends in key Fiscal Parameters 7 1.8 Major changes in key fiscal aggregates vis‑à‑vis 2017‑18 9 1.9 Sources and Application of Funds 10 1.10 Summary of Current Year Fiscal Transactions 10 1.11 Budget Estimates and Actuals 12 1.12 Buoyancy Ratios 13 1.13 Major policy initiatives in Budget Speech 14 1.14 Resources of the State 14 1.15 Revenue Receipts 16 1.16 Capital Receipts 22 1.17 Public Account Receipts 23 1.18 Reserve Funds 24 1.19 Application of Resources 26 1.20 Quality of Expenditure 34 1.21 Financial Analysis of Expenditure and Investments 37 1.22 Assets and Liabilities 41 1.23 Debt Management and Sustainability 43 1.24 Conclusion 47 1.25 Recommendations 47 State Finances Audit Report 2018-19 i Page Para No. Title Page CHAPTER-II Budgetary Management 2.1 Introduction 49 2.2 Budget preparation process 49 2.3 Financial Accountability and Budget Review 49 2.4 Sub-optimal utilisation of budgeted funds 51 2.5 Missing/Incomplete Explanation for Variation from Budget 51 2.6 Large and Persistent Savings in Grants/Appropriation 53 2.7 Appropriation vis‑à‑vis Allocative Priorities 54 2.8 Financial Accountability 57 2.9 Excessive/unnecessary Re-appropriation of funds 59 2.10 Review of selected Grant 59 2.11 Conclusion 61 2.12 Recommendations 61 CHAPTER-III Financial Reporting 3.1 Introduction 63 3.2 Opaqueness in Accounts - Operation of Omnibus Minor 63 Head 800 3.3 Delay in submission of Utilisation Certificates 64 3.4 Non-submission of Detailed Countersigned Contingent 66 (DCC) Bills 3.5 Timeliness and Quality of Accounts 67 3.6 Suspense and Remittance Balances 68 3.7 Accounting of transactions relating to Central Road Fund 69 3.8 Reconciliation of Cash Balances 69 3.9 Compliance with Indian Government Accounting Standards 69 3.10 Audit of Accounts 70 3.11 Building and Other Construction Workers’ Welfare Cess 71 3.12 Misappropriation, losses and defalcations 73 3.13 Follow-up action on Audit Reports 74 3.14 Conclusion 74 3.15 Recommendations 75 ii Page State Finances Audit Report 2018-19 Appendix Title Page Number Part‑A: State Profile 77 Part-B: Layout of Finance Accounts 78 Appendix-1.1 Part‑C: Definition of major Three Sectors in Economy for 80 computing Gross State Domestic Product Appendix-1.2 Time Series data on State Government Finances 81 Appendix-1.3 Abstract of Receipts and Disbursements for 2018-19 84 Funds under Central Schemes transferred directly to State Appendix-1.4 87 Implementing Agencies Statement showing the details of amount parked in the savings/current bank accounts by the various Drawing Appendix-1.5 90 and Disbursing Officers of different State Government Departments Appendix-1.6 Assets and Liabilities of the GoM as on 31 March 2019 120 Numbers of Sub-Heads - Grant-wise which required replies Appendix-2.1 121 for variations (Excess/Saving) Appendix-2.2 Details of savings not surrendered (`10 lakh and above) 123 Statement of various Grants/Appropriation where savings Appendix-2.3 were more than `One crore each or more than 20 per cent 124 of the total provision Results of review of substantial surrenders (more than Appendix-2.4 126 50 per cent of total provision) made during 2018-19 Appendix-2.5 Unexplained surrender of more than `10 lakh 131 Appendix-2.6 Unnecessary Supplementary Provision (`10 lakh and above) 134 Excessive/Inadequate/Unnecessary re-appropriation of Appendix-2.7 135 funds (`10 lakh and above) Year-wise break-up of outstanding DCC Bills as on Appendix-3.1 136 31 March 2019 Delay in deposit of collected Cess to Mizoram Building and Appendix-3.2 Other Construction Workers’ Welfare Board by the Cess 137 Collectors Statement showing the details of non-deduction of labour Appendix-3.3 141 cess detected in 2019-20 State Finances Audit Report 2018-19 iii Page PREFACE 1. This Report has been prepared for submission to the Governor of Mizoram under Article 151 of the Constitution. 2. Chapters-I and II of the Report respectively contain Audit observations on matters arising from examination of Finance Accounts and Appropriation Accounts of the State Government for the year ended 31 March 2019. Information has been obtained from the Government of Mizoram wherever necessary. 3. Chapter-III on ‘Financial Reporting’ provides an overview and status of the State Government’s compliance with various financial rules, procedures and directives during the current year. 4. Report containing the findings of performance audit and audit of transactions in various departments and observations arising out of audit of Statutory Corporations, Boards, Government Companies and observations on Revenue Receipts are presented separately. State Finances Audit Report 2018-19 v Page State Finances Audit Report 2018-19 v Page vi Page State Finances Audit Report 2018-19 EXECUTIVE SUMMARY State Finances Audit Report 2018-19 c Page executive summary 1. The Report Based on the audited accounts of the Government of Mizoram for the year ending March 2019, this report provides an analytical review of the finances of the State Government. The report is structured in three Chapters. Chapter 1-Finances of the State This Chapter provides a broad perspective of the finances of the State, analyses the critical changes in major fiscal aggregates relative to the previous year, overall trends during the last five years, debt management of the State and key Public Account transactions, based on the Finance Accounts of the State. Chapter 2-Budgetary Management This chapter is based on the Appropriation Accounts of the State and reviews the appropriations and allocative priorities of the State Government and reports on deviations from Constitutional provisions relating to budgetary management. Chapter 3-Financial Reporting This chapter comments on the quality of accounts rendered by various authorities of the State Government and discusses issues of non-compliance with prescribed financial rules and regulations by various departmental officials of the State Government. The Report has 16 appendices containing additional data collated from several sources in support of the audit observations. 2. Audit findings 2.1 Finances of the State - Fiscal position The State achieved a Revenue Surplus for the fourth consecutive year during 2018-19 (₹1,533.91 crore). Fiscal Deficit of ₹352.92 crore (1.59 per cent) in 2018-19 was well within the limit of three per cent of GSDP recommended by the XIV Finance Commission. Revenue Receipts of the State grew significantly during the five-year period 2014-19 at a CAGR of 13.17 per cent. While the State’s Own Resources constituted only around 10 per cent of the Revenue Receipts during 2014-18, their contribution increased to 13.02 per cent in 2018-19. Revenue Expenditure increased by ₹624.82 crore (9.08 per cent) while Capital Expenditure decreased by ₹127.88 crore (6.41 per cent) during 2018-19 over the previous year. Revenue Expenditure accounted for 79.72 per cent of the State’s Total Expenditure during 2018-19, leaving only 19.85 per cent for creation of assets (balance 0.43 per cent for Loans and Advances). Committed Expenditure increased by 40.51 per cent during the five-year period 2014-19. State Finances Audit Report 2018-19 vii Page executive summary During 2018-19, 262 DDOs of 38 Departments parked an amount of ₹534.20 crore in bank accounts in contravention of the CTR codal provisions and instructions of the Finance Department. Further, 60 DDOs who had parked ₹368.13 crore in bank accounts during 2017-18, continued the accounts during 2018-19 and parked ₹225.52 crore in these accounts. Drawal of money from the Consolidated Fund and parking it in the DDOs’ bank accounts for future utilisation is fraught with the risk of misappropriation and fraud. There is also a possibility of diversion of funds for other unauthorised purposes and the expenditure moving out of the purview of Legislative oversight. State Government needs to investigate this matter and fix responsibility on the concerned DDOs. The outstanding fiscal liabilities had shown an increase from ₹6,550.39 crore in 2014-15 to ₹7,315.54 crore in 2018-19. The ratio of fiscal liabilities to GSDP had decreased from 37.77 per cent in 2017-18 to 32.89 per cent in 2018-19. The maturity profile of outstanding stock of the public debt indicated that 66.71 per cent of the public debt would be payable within the next seven years, which was a matter of concern. (Chapter 1) 2.2 Budgetary Management Budgetary assumptions of the State Government were not realistic during 2018-19 and despite carrying out an elaborate pre-budget exercise to bring about efficiency and transparency in budget formulation and execution, budgetary estimates were off the mark by a considerable margin, and control over the execution and monitoring of budget was inadequate. Supplementary Grants/Appropriation were obtained without adequate justification, and large amounts were expended without budgetary provision. Despite flagging this issue every year over the last several years, the State Government was yet to take corrective measures in this regard.