Report No 3 of 2017
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Report of the Comptroller and Auditor General of India on State Finances for the year ended March 2016 Government of Telangana Report No.3 of the year 2017 Table of Contents Reference to Paragraph Page Preface v Executive Summary vii Profile of Telangana 1 Chapter – 1 Finances of the State Government Introduction 1.1 1 Summary of Current Year’s Fiscal Transactions 1.2 1 Budget Estimates and Actuals 1.3 3 Fiscal Reform Path 1.4 3 Resources of the State 1.5 4 Revenue Receipts 1.6 5 Capital Receipts 1.7 8 Public Account Receipts 1.8 9 Application of Resources 1.9 10 Quality of Expenditure 1.10 15 Financial analysis of Government expenditure and investments 1.11 18 Assets and Liabilities 1.12 21 Debt Sustainability 1.13 24 Fiscal Imbalances 1.14 25 Apportionment of balances between Andhra Pradesh and Telangana 1.15 27 Conclusion 1.16 27 Introduction 2.1 29 Chapter – 2 Financial Management and Budgetary Control Budget Preparation Process 2.2 29 Financial Accountability and Budget Management 2.3 29 Summary of Appropriation Accounts 2.4 29 Advances from Contingency Fund 2.5 35 Major Policy Initiatives 2.6 35 Review of Selected Grants 2.7 39 Errors in Budgeting Process 2.8 46 Conclusion 2.9 48 Reference to Paragraph Page Introduction 3.1 49 Chapter – 3 Financial Reporting Utilisation Certificates 3.2 49 Delay in Submission of accounts/Audit Reports of Autonomous 3.3 50 bodies Un-reconciled expenditure and receipts 3.4 51 Personal Deposit Accounts 3.5 51 Pendency of Detailed Contingent bills 3.6 55 Misappropriations, losses, defalcations etc. 3.7 56 Operation of Omnibus Minor Head -800 3.8 57 Debt, Deposit and Remittance Heads 3.9 57 Outstanding balances under Suspense Account (Major Head 8658) 3.10 60 Functioning of Treasuries 3.11 62 Conclusion 3.12 64 Page | ii Appendices Sl. Name of the Appendix Reference to No. Paragraph Page 1.1 Profile of Telangana 67 1.2 Structure of Government Accounts and layout of Finance 1.1 68 Accounts 1.3 Abstract of Receipts and Disbursements in 2015-16 1.2 69 1.4 Actuals vis-à-vis Budget Estimates 2015-16 1.3 71 1.5 Fiscal Responsibility and Budget Management (FRBM) 1.4 72 Act, 2005 1.6 Time Series Data on State Government Finances 1.6 72 1.7 List of Incomplete Irrigation Projects 1.11.2 75 1.8 Summarised Financial Position of the Government of Telangana 1.12.1 75 as on 31 March 2016 &1.12.2 1.9 Summarised position of Apportionment of balances between 1.12.4 & 77 Andhra Pradesh and Telangana as on 31 March 2016 1.15 2.1 Excess over provision of previous year requiring regularisation 2.4.3 78 2.2 Statement of Grants/Appropriations where saving was more than 2.4.4 78 ` 100 crore each and more than 20 per cent of the total provision 2.3 Cases where Supplementary Grant proved unnecessary by 2.4.5 79 rupees one crore or more in each case 2.3 (a) Cases where Supplementary Grant proved excessive by rupees 2.4.5 81 one crore or more in each case 2.3.(b) Cases where Supplementary Grant proved insufficient by rupees 2.4.5 82 one crore or more in each case 2.4 Re-appropriation of funds (savings/excess more than ` 10 crore 2.4.6 82 in each case) 2.5 Substantial surrenders made during the year 2.4.8 84 2.6 Surrenders in excess of saving/excess (Rupees two crore more in 2.4.10 86 each case) 2.7 Statement of Grants/Appropriations in which saving occurred 2.4.11 86 but no part of which was surrendered 2.8 Details of saving of rupees five crore and above not surrendered 2.4.11 87 2.9 Cases of surrender of funds in excess of ` 10 crore on 2.4.11 88 31 March 2016 2.10 Scheme wise allocations under SCSP and TSP 2.6.12 88 2.11 Cases of Excessive & Insufficient Supplementary Grant 2.7.1.3 97 (Panchayat Raj Grant) 2.12 Cases of Unnecessary supplementary Grant (Panchayat Raj 2.7.1.3 98 Grant) 2.13 Re-appropriation of funds (Panchayat Raj Grant) 2.7.1.4 99 Page | iii Sl. Name of the Appendix Reference to No. Paragraph Page 2.14 Cases of surrender of entire provision (Panchayat Raj Grant) 2.7.1.5 99 2.15 Expenditure incurred without Budget provision (Panchayat Raj 2.7.1.6 100 Grant) 2.16 Cases of Unnecessary Supplementary Grant (Major & Medium 2.7.2.3 100 Irrigation Grant) 2.17 Cases of Excessive Supplementary Grant (Major & Medium 2.7.2.3 101 Irrigation Grant) 2.18 Re-appropriation of funds (Major & Medium Irrigation Grant) 2.7.2.4 101 2.19 Cases of surrender of entire provision (Major & Medium 2.7.2.5 102 Irrigation Grant) 2.20 Rush of Expenditure (Major & Medium Irrigation Grant) 2.7.2.7 103 2.21 Subsidies provided under 310-Grants-in-Aid 2.8.1.2 103 2.22 Opening of New Subheads 2.8.1.6 105 3.1 Statement showing submission of accounts and status of audit of 3.3 108 Autonomous Bodies 3.2 Statement of Bodies and Authorities whose accounts have not 3.3 109 been received 3.2(a) Bodies and Authorities whose accounts have not been received 3.3 110 for more than 10 years 3.3 Un-reconciled expenditure (` 500 crore and above cases only) 3.4 111 3.4 Statement showing Department-wise details of pending DC bills 3.6 113 at the end of 2015-16 3.5 Statement of expenditure major head wise under Minor Head 3.8.1 114 800 for the year 2015-16 3.5(a) Statement of receipts major head wise under Minor Head 800 3.8.2 114 for the year 2015-16 3.6 Statement showing Interest Obligation on Zilla Parishad 3.9.3.4 115 Provident Fund 3.7 Excess payment of Pension/Family Pension etc. 3.11.2 115 3.8 Details of Non-inclusion of transactions in Main Accounts 3.11.4 115 4.1 Glossary of terms 116 4.2 Acronyms and abbreviations 118 Page | iv Preface This Report pertaining to the State of Telangana for the year ended March 2016 has been prepared for submission to the Governor of Telangana under Article 151 of the Constitution of India. Chapters 1 and 2 of this Report contain Audit observations on matters arising from examination of Finance Accounts and Appropriation Accounts respectively, of the State Government for the year ended 31 March 2016. Information has been obtained from the Government of Telangana wherever necessary. Chapter 3 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. The Report(s) containing the findings of Performance audit and Compliance audit in various Departments and observations arising out of audit of Local Bodies, Statutory Corporations, Boards and Government Companies and the Report containing observations on Revenue Receipts are presented separately. Page | v Executive Summary 1 The Report This report provides an analysis of the finances of the State Government, based on the audited accounts of the Government of Telangana for the year ended March 2016.The Report is structured in three Chapters. Chapter 1 is based on the Finance Accounts and makes an assessment of the Government’s fiscal position as on 31 March 2016. It presents and analyses the State Government’s resources and their application, developmental expenditure, borrowing pattern, sustainability of debt etc. It also assesses the adequacy of the State’s fiscal priorities. Chapter 2 is based on audit of the Appropriation Accounts and reviews the allocative priorities of the State Government and the manner in which the allocated resources were managed by the various Departments. Chapter 3 gives an overview of the State Government’s compliance with various reporting requirements and financial rules. The data collated from several sources in support of the findings of Audit are included as appendices at the end of the report. 2 Audit findings 2.1 Analysis of Finances of the State Government The State registered revenue surplus of ` 238 crore during 2015-16. It is overstated due to misclassification of grants-in-aid (` 151 crore) under capital heads and crediting off-budget borrowings (` 3,719 crore) to revenue receipts. Fiscal deficit which stood at 3.23 per cent of GSDP is understated by (` 3,719 crore) due to crediting off budget borrowing to revenue receipts. It would have the effect of increasing the ratio of fiscal deficit to GSDP from 3.23 per cent to 3.87 per cent. Total outstanding liabilities constituted 21.37 per cent of GSDP which was within the ceiling of 21.55 per cent prescribed by the 14th Finance Commission. 52.5 per cent of the revenue receipts of ` 76,134 crore during 2015-16 came from the State’s own tax revenue and 19 per cent came from the revenue receipts from non tax revenue collections, the rest coming from the State’s share of Central taxes (16.2 per cent) as well as a central grants (12.3 per cent). During the year, Government issued orders to remit the unspent balances in PD accounts to revenue receipts in violation of accounting provisions inflating revenue receipts to the extent of ` 4,218 crore. Non-plan revenue expenditure of ` 54,656 crore constituted 72 per cent of the total revenue expenditure (` 75,896 crore) during the year.