REPORT OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA (CIVIL AND COMMERCIAL) FOR THE YEAR ENDED 31 MARCH 2011 (REPORT NO. 2) GOVERNMENT OF JAMMU AND KASHMIR TABLE OF CONTENTS Paragraph Page Preface v Overview vii CIVIL CHAPTER-I : PERFORMANCE REVIEWS Education Department Elementary Education Programme 1.1 1 Agriculture Production Department Command Area Development and Water Management Programme 1.2 38 Housing and Urban Development Department Management of Dal Lake 1.3 61 Power Development Department Power Distribution Utilities 1.4 87 CHAPTER-II: AUDIT OF TRANSACTIONS Fraud/Embezzlement/Mis-appropriation/Loss Animal Husbandry Department Loss of Government money 2.1 119 Public Works Department (Roads and Building Department) Payment against fake documents 2.2 120 Health and Medical Education Department Embezzlement of Government money 2.3 121 Excess payment/Wasteful expenditure Public Health Engineering Department Wasteful expenditure due to improper planning/execution of a 2.4 123 project Power Development Department Excess payment due to admission of higher rates of duty/tax 2.5 124 Housing and Urban Development Department Abandonment of road construction project 2.6 126 (i) Unfruitful/Unproductive/Idle expenditure Higher Education Department Deficiencies in the construction of an auditorium resulting in 2.7 127 unfruitful expenditure Public Works Department Unfruitful expenditure on construction of a road 2.8 128 Public Health Engineering Department Injudicious purchase of Hand Pump Jackets 2.9 129 Unfruitful expenditure due to improper planning of a water supply 2.10 130 scheme Public Works Department Unfruitful expenditure due to stoppage of road work 2.11 131 Rural Development Department Non-operationalisation of Production and Training Centres for 2.12 133 Handicrafts Regularity issues and Other Irrigation and Flood Control Department Blockage of funds due to stoppage of water storage schemes 2.13 134 Education Department (Sarva Shiksha Abhiyan) Diversion/blocking of funds meant for up-gradation of the State 2.14 136 Institute of Education Jammu General Follow-up on Audit Reports 2.15 137 Action Taken on recommendations of PAC/COPU 2.16 138 Lack of response to Audit 2.17 138 CHAPTER-III : CHIEF CONTROLLING OFFICER (CCO) BASED AUDIT Public Works (R&B) Department 3 139 (ii) CHAPTER-IV: COMMERCIAL ACTIVITIES Section I: Overview of State Public Sector Undertakings Introduction 4.1 167 Audit Mandate 4.1.4 167 Investment in State PSUs 4.1.7 168 Budgetary outgo, grants/subsidies, guarantees and loans 4.1.10 170 Reconciliation with Finance Accounts 4.1.13 171 Performance of PSUs 4.1.15 171 Arrears in finalization of accounts 4.1.21 173 Winding-up of non-working PSUs 4.1.27 174 Accounts Comments and Internal Audit 4.1.30 175 Status of placement of Separate Audit Reports 4.1.35 178 Disinvestment, privatization and Restructuring of PSUs 4.1.36 178 Section-II Part-A:Performance Review Finance Department Jammu and Kashmir Bank Limited 4.2 179 Part-B: Transaction Audit Observations SOCIAL WELFARE DEPARTMENT Jammu and Kashmir Scheduled Castes, Scheduled Tribes and Backward Classes Development Corporation Limited Un-authorised Diversion 4.3.1 218 PUBLIC WORKS DEPARTMENT Jammu And Kashmir Projects Construction Corporation Limited Undue favour to Contractor 4.3.2 220 Non-recovery of labour cess 4.3.3 222 TOURISM DEPARTMENT Jammu and Kashmir State Cable Car Corporation Limited Wasteful expenditure due to deficient planning 4.3.4 223 CONSUMER AFFAIRS AND PUBLIC DISTRIBUTION Misappropriation due to absence of monitoring 4.3.5 225 mechanism (iii) APPENDICES Page Appendix-1.1 Economic loss to beneficiaries due to delay in completion of 229 projects Appendix-1.2 Statement showing increase in the nutrients at the flow stage 230 in respect of Sewerage Treatment Plants (STPs) Appendix-1.3 Statement showing inadequate parameters 231 Appendix-1.4 Statement showing particulars of distribution network 232 planned and achievements there against Appendix-1.5 Statement showing physical and financial performance under 233 all the components of the APDRP ending March 2006, between 2006-11 and ending March 2011 in respect of the entire State Appendix-1.6 Statement showing targets for number of checking, theft 235 cases, assessed amount and amount realized Appendix 4.1 Statement showing particulars of up to date paid-up capital, 236 loans outstanding and Manpower as on 31 March 2011 in respect of Government companies and statutory corporations Appendix 4.2 Summarised financial results of Government companies and 239 Statutory corporations for the latest year for which accounts were finalised Appendix 4.3 Statement showing grants and subsidy received/receivable, 243 guarantees received, waiver of dues, loans written off and loans converted into equity during the year and guarantee commitment at the end of March 2011 Appendix-4.4 Statement showing investment made by the State Government 246 in PSUs, whose accounts are in arrears Appendix-4.5 Statement showing financial position of the Statutory 247 corporations for the latest three years for which accounts were finalised Appendix-4.6 Statement showing working results of the Statutory 248 corporations for the latest three years for which accounts were finalised (iv) PREFACE 1. This Report has been prepared for submission to the Governor under Article 151 of the Constitution. 2. Chapter-I deals with the findings of performance reviews in the Education, Agriculture Production, Housing and Urban Development and Power Development departments, while Chapter-II deals with the findings of transaction audit in Animal Husbandry, Higher Education, Public Works, Public Health Engineering, Irrigation and Flood Control, Power Development Department, Health and Medical Education, Rural Development departments. Chapter-III includes comments on CCO based audit of Public Works (Roads and Buildings) department. 3. The observations arising out of audit of Statutory Corporations, Boards and Government Companies are included in Chapter-IV of this Report. 4. The cases mentioned in this Report are among those which came to notice in the course of test audit of accounts during the year 2010-11 as well as those which had come to notice in earlier years but could not be dealt with in previous Reports; matters relating to the period subsequent to 2010-11 have also been included wherever necessary. 5. Audit observations on matter arising from the examination of Finance Accounts and Appropriation Accounts of the State Government for the year ended 31 March 2011 are included in a separate Report on State Government Finances. 6. The audits have been conducted in conformity with the Auditing Standards issued by the Comptroller and Auditor General of India. (v) OVERVIEW This Report contains Civil and Commercial chapters comprising 19 paragraphs and six performance reviews (including one CCO-based review of Public Works Department). Copies of draft paragraphs and reviews were sent to the concerned Commissioner/Secretary of the Department concerned by the Principal Accountant General with a request to furnish replies within six weeks. However, in respect of 16 draft paragraphs and five performance reviews included in the Report, no replies were received from the Commissioners/Secretaries concerned. A synopsis of the important findings contained in the Report is presented in the overview. 1. PERFORMANCE REVIEWS EDUCATION DEPARTMENT ELEMENTARY EDUCATION PROGRAMME Education is one of the most important indicators of social progress of a Nation. Both the State and GOI have been spending enormous funds on increasing enrolment, retention and providing quality education at the elementary level. To achieve this, the Government of India (GOI) introduced the Right of Children to Free and Compulsory Education (RTE) Act 2009 from 1st April 2010. The RTE Act had not been extended to J&K State as the 42nd constitutional amendment had not been adopted by the State. The education system in the State is governed by the Jammu and Kashmir School Education Act 2002 which contains provisions similar to the RTE Act. To achieve the goal of education for all, the GOI introduced two flagship programmes viz. Sarva Shiksha Abhiyan (SSA) and Mid-day Meal (MDM) scheme to support the State in creating, developing and strengthening the Elementary School System and increasing enrolment, retention and creation of necessary infrastructure for the school going children. Audit observed poor utilization of funds under the programmes resulting in huge unspent balances at the close of the financial years at all the levels. The department had failed to provide basic amenities and facilities to students. Some of the highlights of audit findings are summarised below. The Department had not prepared any perspective plan. Annual plans prepared were not based on inputs from school/Zonal level or Household Surveys. NGO’s were not involved at any level. At the State level 3256 habitations (12 per cent) were without any schooling facility. Though Teacher Pupil ratio in test-checked schools was 1:12 and within the prescribed norm of 1:40, 718 schools out of 7016 schools in test-checked districts were run by single teachers. Out of 5232 works relating to construction of schools, additional class rooms cluster resource centres, etc., taken up during 2002-11, only 65 per cent had been (vii) Audit Report for the year ended 31 March 2011 completed. Work on 560 school buildings had not been started. 485 works had been abandoned mid-way and work on 34 school buildings in test-checked districts had been taken up on disputed sites. There was a lack of basic amenities and facilities such as toilets, drinking water, play grounds, etc., in many schools. Delay of more than three to five months in issue of text books to students was observed. Introduction of Mid-day-meals programme did not have the desired impact due to inadequate infrastructure, deficient survey for preparation of Annual plans and less lifting of food grains from Food Corporation of India.