State Finances Government of Uttar Pradesh
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Report of the Comptroller and Auditor General of India on STATE FINANCES for the year ended 31 March 2017 Government of Uttar Pradesh Report No. 1 of the year 2018 TABLE OF CONTENTS Particulars Reference to Paragraph Page Preface - v Executive Summary - vii CHAPTER 1 FINANCES OF THE GOVERNMENT Gross State Domestic Product 1.1 1 Financial Resources of the State 1.2 6 Application of resources 1.3 12 Government expenditure and investments 1.4 18 Assets and Liabilities 1.5 21 Debt Management 1.6 26 Follow up 1.7 27 CHAPTER 2 FINANCIAL MANAGEMENT AND BUDGETARY CONTROL Summary of Appropriation Accounts 2.1 29 Financial Accountability and Budget Management 2.2 30 CHAPTER 3 FINANCIAL REPORTING AND COMMENTS ON ACCOUNTS Personal Ledger Accounts/ Deposit Accounts 3.1 35 Building and Other Construction Workers Welfare Cess 3.2 36 Transfer of additional stamp duty to Development Authorities 3.3 38 and Housing Development Councils Opaqueness in accounts 3.4 39 Non-maintenance of Cash Books 3.5 40 Delay in finalisation of accounts of PSUs/Corporations 3.6 40 Dividend not declared 3.7 41 Non-reconciliation of Equities/Loans 3.8 42 Reporting of pending cases 3.9 42 Proforma Accounts of Departmental Commercial 3.10 43 Undertakings Non-submission of Utilisation Certificates 3.11 43 i Report on State Finances for the year ended 31 March 2017 Outstanding Detailed Contingent Bills 3.12 44 Non-payment of Interest on Deposits 3.13 44 Apportionment of balances as on reorganisation of the State 3.14 45 Variation in Cash Balance 3.15 45 Non-transfer of amounts to the Central Road Fund 3.16 45 Impact on Revenue surplus and Fiscal deficit 3.17 46 APPENDICES Appendix 1.1 State Profile 49 Structure and form of Government Accounts and Layout of Appendix 1.2 51 Finance Accounts Appendix 1.3 Abstract of receipts and disbursements for the year 2016-17 53 Budget Estimates, Actual Receipts and Expenditure for Appendix 1.4 57 2016-17 Appendix 1.5 Time series data on the State Government Finances 59 (A) Tax Revenue during 2012-17 Appendix 1.6 62 (B) Non-Tax Revenue during 2012-17 Summarised financial position of the Government as on Appendix 1.7 63 31 March 2017 Appendix 1.8 Details of Reserve Funds 65 Excess expenditure despite reduction in provision by Appendix 2.1 68 re-appropriation (A) Excess expenditure relating to previous years requiring regularisation Appendix 2.2 69 (B) Excess of Expenditure requiring regularisation during 2016-17 Savings more than ` 10 crore under each Grant/ Appendix 2.3 71 Appropriation and more than 20 per cent of total provision Savings of ` 100 crore and above under each Grant/ Appendix 2.4 73 Appropriation Appendix 2.5 Grants with Persistent Savings 76 Cases where supplementary provision (` one crore or more Appendix 2.6 77 in each case) proved unnecessary Appendix 2.7 Excess/Unnecessary Re-appropriation of Funds 80 Appendix 2.8 Substantial surrenders made during 2016-17 84 Appendix 2.9 Surrenders in excess of actual savings (` 50 lakh or more) 94 Grants/Appropriations where savings occurred but were Appendix 2.10 95 not surrendered Appendix 2.11 Savings of ` one crore and above not surrendered 97 Appendix 2.12 Rush of Expenditure 100 ii Table of Contents Appendix 3.1 Disbursement of two per cent additional Stamp Duty 102 Appendix 3.2 Non-maintenance of Cash Books 103 Investments in 2016-17 by the State Government in PSUs Appendix 3.3 104 whose accounts were in arrears as on 31 March 2017 Investments in 2016-17 by the State Government in PSUs Appendix 3.4 106 whose accounts were in arrears as on 31 March 2016 Appendix 3.5 Profit earning PSUs 107 Department-wise/duration-wise break-up of the pending Appendix 3.6 cases (where final action was pending at the end of March 109 2017) Department-wise/category-wise details of loss to Appendix 3.7 Government due to theft, misappropriation, loss and 110 defalcation Statement of finalisation of accounts and investments Appendix 3.8 111 in Departmentally managed Commercial Undertakings Appendix 4 GLOSSARY (ADDITIONAL DATA) Basis of Calculation 112 Explanation of Terms 113 Acronyms 115 iii PREFACE This Report has been prepared for submission to the Governor of Uttar Pradesh under Article 151 of the Constitution. This Report on the finances of the Government of Uttar Pradesh (GoUP) intends to assess the financial performance of the State during 2016-17 and to provide the State Legislature with inputs based on audit analysis of financial data. The Report attempts to analyse the financial performance against the targets envisaged by the Uttar Pradesh Fiscal Responsibility and Budget Management (Amendment) Act, 2017, the Fourteenth Finance Commission (FFC) Report and the Budget Estimates of 2016-17. The Report is structured in three Chapters. Chapter-1 is based on the audit of the Finance Accounts and makes an assessment of the Uttar Pradesh Government’s (GoUP) fiscal position as on 31 March 2017. It provides an insight into trends in expenditure on interest payments, salaries and wages, pensions, subsidies and repayment of debt and borrowing patterns. Chapter-2 is based on the audit of Appropriation Accounts and gives grant-wise description of appropriations and the manner in which the allocated resources were managed by the service delivery departments. Chapter-3 is an inventory of the GoUP’s compliance to various reporting requirements and financial rules. The audit has been conducted in conformity with the Auditing Standards issued by the Comptroller and Auditor General of India. v EXECUTIVE SUMMARY Fiscal situation of the State Revenue receipts, revenue expenditure and capital expenditure have increased from 2012-13 to 2016-17 even after accounting for inflation and also as a percentage of GSDP. (Paragraph 1.1.1) State has not achieved revenue surplus and ratio of outstanding debt to GSDP as targeted in budget estimate and FRBM Act. Further, the ratio of fiscal deficit to GSDP is also above the target of budget estimates 2016-17, XIV FC and FRBM Act. (Paragraph 1.1.2) The primary deficit of the Government of Uttar Pradesh increased from ` 2,317 crore (2012-13) to ` 29,052 crore during 2016-17 indicating non-debt receipts were not sufficient to meet the primary expenditure of the State. (Paragraph 1.1.2.2) Resource mobilisation Revenue receipts grew by ` 29,799 crore (13 per cent) over 2015-16 receipts, which was lower than the budget estimates (` 24,680 crore). Revenue expenditure increased by ` 23,856 crore (11 per cent) over 2015-16, which was lower than the budget estimates (` 16,763 crore). Capital expenditure increased by ` 5,366 crore (eight per cent) over 2015-16, which was lower than the budget estimates (` 2,089 crore). Recommendation: The Finance Department should rationalise the budget preparation exercise, so that the persisting gap between the budget estimate and actuals is bridged. (Paragraphs 1.1.1 & 1.1.3) Summary of important audit findings and recommendations: Cost of collection of taxes The cost of collection on sales, trade etc., which constitutes 45 per cent of the States own tax revenue is more than twice the all India average and also higher than that of neighbouring states of Bihar, Jharkhand and Madhya Pradesh. The State has had persistent shortfall of actual receipts of taxes against budget estimates. Recommendation: The Finance Department and the Sales Tax Department should analyse why the cost of collection of taxes on sales, trade etc., is nearly twice as high as the all India average and introduce measures to reduce the cost of collection. (Paragraph 1.2.2.2) vii Report on State Finances for the year ended 31 March 2017 New Pension Scheme (NPS) Details of pension contributions under the New Pension Scheme (NPS) from 2005 to 2008 are not available in the State Accounts, due to which, Audit has been unable to estimate whether the amounts actually due to be deducted from employees since the inception of the scheme have been deducted, fully matched with Government share, and transferred to NSDL. As against the employees’ contribution of ` 2,830 crore from 2008-09 to 2016-17, the actual contribution by the State Government was ` 2,247 crore, resulting in short contribution of ` 583 crore. Against the total contribution of ` 5,660 crore (employees’ share and Government share for the period 2008-09 to 2016-17), only ` 5,001.71 crore was transferred to NSDL, leaving a balance of ` 545.68 crore in the Public Account under MH 8342. Further, employees’ contributions (representing deductions from employees recruited on or after 1 April 2005) which had increased from ` 5.03 crore booked in 2008-09 to ` 636.51 crore in 2015-16, significantly dropped to ` 199.24 crore in 2016-17. This drop can only be attributed to irregular transfer of employees’ contributions elsewhere than the Public Account specified for NPS under MH 8342, and is required to be rectified immediately. Recommendation: The State Government should initiate action immediately to ensure that employees recruited on or after 1 April 2005 are fully covered under the New Pension Scheme from the date of their recruitment. This is to be done by ensuring that employees’ deductions are fully deducted, fully matched by Government contributions, and fully transferred to NSDL in a timely manner. (Paragraph 1.3.4.1) Adequacy of public expenditure The ratio of development expenditure and economic services expenditure to aggregate expenditure was less than the average for the General category States. (Paragraph 1.3.5.1) Financial results of irrigation works The Thirteenth and Fourteenth Finance Commissions had prescribed cost recovery rates of irrigation projects (revenue receipts as compared to revenue expenditure) for assessing the commercial viability of these projects.