Report of the Comptroller and Auditor General of India on Social, General, Economic and Revenue Sectors For the year ended 31 March 2017 Government of Mizoram (Report No. 2 of 2018) www.cag.gov.in TABLE OF CONTENTS Paragraph Particulars Page Preface vii Executive Summary ix Chapter-I : Social Sector 1.1 Introduction 1 1.2 Planning and conduct of Audit 1 Performance Audit Public Health Engineering Department 1.3 “National Rural Drinking Water Programme (NRDWP)” 2 Compliance Audit Paragraphs Mizoram Youth Commission 1.4 Doubtful payment to consultants 29 Disaster Management & Rehabilitation Department 1.5 Undue favour to the vendor 31 Follow up of Audit Observations 1.6 Non-submission of suo moto Action Taken Notes 32 Response to audit observations and compliance thereof by 1.7 32 the Executive 1.8 Audit Committee Meetings 33 Chapter-II : General Sector 2.1 Introduction 35 2.2 Planning and conduct of Audit 35 Follow up of Audit Observations 2.3 Non-submission of suo moto Action Taken Notes 36 Response to audit observations and compliance thereof by 2.4 36 the Executive 2.5 Audit Committee Meetings 37 Chapter-III : Economic Sector (Other than State Public Sector Undertakings) 3.1 Introduction 39 3.2 Planning and conduct of Audit 39 i Audit Report for the year ended 31 March 2017 Paragraph Particulars Page Compliance Audit Paragraphs Rural Development Department 3.3 Border Area Development Programme (BADP) 40 Irrigation and Water Resources Department 3.4 Accelerated Irrigation Benefits Programme 59 Horticulture Department 3.5 Avoidable expenditure 71 Follow up action on Audit Observations 3.6 Non-submission of suo moto Action Taken Notes 73 Response to audit observations and compliance thereof by 3.7 73 the Executive 3.8 Audit Committee Meetings 74 Chapter-IV : Economic Sector (State Public Sector Undertakings) 4.1 Introduction 75 4.2 Accountability framework 75 4.3 Statutory Audit 76 4.4 Role of Government and Legislature 76 4.5 Stake of Government of Mizoram 76 4.6 Investment in State PSUs 77 4.8 Special supports and returns during the year 78 4.9 Reconciliation with Finance Accounts 79 4.10 Arrears in finalisation of accounts 80 4.12 Performance of SPSUs 81 4.15 Accounts Comments 82 4.16 Follow up action on Audit Reports 82 4.17 Discussion of Audit Reports by CoPU 83 Compliance to Reports of Committee on Public 4.18 83 Undertakings (CoPU) Chapter-V : Revenue Sector 5.1 Trend of revenue receipts 85 5.2 Analysis of arrears of revenue 86 5.3 Arrears in assessments 86 ii Table of Contents Paragraph Particulars Page 5.4 Evasion of tax detected by the Department 87 5.5 Pendency of Refund Cases 87 5.6 Response of the Government/Departments towards audit 88 5.6.1 Departmental Audit Committee Meetings 89 5.6.2 Response of the departments to the draft audit paragraphs 89 5.6.3 Follow up on the Audit Reports – summarised position 89 Analysis of the mechanism for dealing with the issues 5.7 90 raised by Audit 5.7.1 Position of Inspection Reports 90 5.7.2 Recovery of accepted cases 90 5.8 Audit Planning 91 5.9 Results of audit 91 5.10 Coverage of this Report 91 Compliance Audit Paragraphs Excise and Narcotics Department 5.11 Misappropriation of Government Funds 92 Taxation Department 5.12 Non-levy of penalty 94 5.13 Evasion of tax 95 Geology & Mineral Resources Department Short levy of penalty for illegal transportation of minor 5.14 96 minerals 5.15 Non-levy of penal rate of annual license fee 97 5.16 Short levy of royalty 98 iii Audit Report for the year ended 31 March 2017 LIST OF APPENDICES Appendix Subject Page Statement showing funds under Central Schemes transferred 1.1.1 directly to State Implementing Agencies under Social 101 Sector during 2016-17 Statement showing selection of districts, blocks and 1.3.1 102 villages Statement showing component-wise release and 1.3.2 103 expenditure Statement showing delay in release of funds received from 1.3.3 104 GoI Statement showing inclusion of repair works under 1.3.4 105 Coverage and Sustainability component during 2012-17 Statement showing the details of expenditure incurred for 1.3.5 110 Operation and Maintenance in the Urban WSS Statement showing the details of procurement of furniture, 1.3.6 stationery, hiring of vehicles, etc. from operation and 112 maintenance fund Statement showing the details of funds under ‘Sustainability’ 1.3.7 component diverted for execution of piped water supply 113 schemes Statement showing the details of award of works without 1.3.8 114 call of tender Statement showing the details of community water 1.3.9 118 purification plants Statement showing the details of Work Contract Tax 1.3.10 119 included in the cost of works Statement showing the details of estimates for construction 1.3.11 of seven RCC Reservoirs using the Department’s 122 mathematical model Statement showing the details of placement of trained 1.4.1 123 youths by the consultants Statement showing funds under Central Schemes 2.1.1 transferred directly to State Implementing Agencies under 124 General Sector during 2016-17 Statement showing funds under Central Schemes transferred directly to State Implementing Agencies under 3.1.1 125 Economic Sector (Other than Public Sector Undertakings) during 2016-17 iv Table of Contents Appendix Subject Page 3.3.1 Statement showing sample selection 127 Statement showing list of inadmissible works taken up 3.3.2 128 under BADP 3.3.3 Statement showing the delay in release of fund 131 Statement showing expenditure incurred on hiring of 3.3.4 excavator (JCB)/ pick up truck/ vibratory roller but were 132 found to be of LMVs and two wheelers Statement showing deductible amount of contractor’s profit 3.3.5 from the estimate under Lungsen and Champhai block 137 during 2014-15 and 2016-17 Statement showing works shown as completed but yet to 3.3.6 138 start Statement of works shown as complete but found 3.3.7 139 incomplete 3.4.1 Statement showing projects sample 140 Statement showing delay in release of funds by the State 3.4.2 141 Government Statement showing excess expenditure on hire charges of 3.4.3 142 excavator 3.4.4 Statement showing cases of subletting of works 143 3.4.5 Statement showing delay in completion of projects 144 Statement showing investments made by State Government 4.1.1 145 in SPSUs whose accounts are in arrears Summarised financial position and working results of Government companies and Statutory Corporations as per 4.1.2 146 latest finalised accounts and information furnished by the Companies Statement showing amount of salary drawn from treasury 5.11.1 147 and actual disbursement Statement showing non-levy of penalty from dealers failing 5.12.1 151 to submit Chartered Accountant’s Audited Statement v Table of Contents PREFACE This Report for the year ended March 2017 has been prepared for submission to the President under Article 151 of the Constitution of India. The Report contains significant results of the compliance audit of financial transactions of the Departments of the Government of Mizoram and their autonomous bodies under the Social, General, Economic and Revenue Sectors. Reports in relation to accounts of a Government Company or Corporation are submitted to the Government by the Comptroller and Auditor General of India under Section 19-A of the Comptroller and Auditor General’s (Duties, Powers and Conditions of Service) Act, 1971. The instances mentioned in this Report are those which came to notice in the course of test audit for the period 2016-17 as well those which came to notice in earlier years but could not be reported in the previous Audit Reports. Instances relating to the period subsequent to 2016-17 have also been included, wherever necessary. The audit has been conducted in conformity with the Auditing Standards issued by the Comptroller and Auditor General of India. vii vii Audit Report for the year ended 31 March 2017 viii Executive Summary EXECUTIVE SUMMARY c Audit Report for the year ended 31 March 2017 d EXECUTIVE SUMMARY This Audit Report has been prepared in five Chapters. Chapters I to V deal with Social, General, Economic (Other than State Public Sector Undertakings), Economic (State Public Sector Undertakings) and Revenue Sectors. This Report contains one performance audit and eleven compliance audit paragraphs. According to the existing arrangements, copies of the draft compliance audit and draft performance audit report were sent to the concerned Principal Secretaries/ Secretaries to the State Government by the Accountant General with a request to furnish replies within six weeks. The performance audit was discussed with the concerned Administrative Head of the department and other departmental officials. Replies of the Government/ Department wherever received have been incorporated in the report. CHAPTER-I : SOCIAL SECTOR PERFORMANCE AUDIT National Rural Drinking Water Programme National Rural Drinking Water Programme (NRDWP) was launched in April 2009 by the Government of India (GoI) to ensure delivery of safe and adequate drinking water to the rural population of the country. Ministry of Drinking Water and Sanitation (MDWS) implements the programme through state governments. A performance audit on NRDWP in the State revealed the following significant findings: • Decentralised need-based and participatory plan through a bottom-up approach was not followed as water security plans at Village and District levels were not prepared. • The State Government released Central share of ` 59.56 crore to the implementing agency after delays ranging between one to 12 months during 2014-17.