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Report No.1 of 2018 Report of the Comptroller and Auditor General of India on Social, Economic, Revenue and General Sectors for the year ended March 2017 GOVERNMENT OF SIKKIM Report No. 1 of 2018 TABLE OF CONTENTS Paragraph Particulars Page Preface iii Executive summary v CHAPTER I : SOCIAL SECTOR 1.1 Introduction 1 1.2 Planning and conduct of audit 2 National Social Assistance Programme 1.3 2 (Social Justice, Empowerment and Welfare Department) Irregular expenditure 1.4 (Labour Department (Sikkim Building and Other Construction Workers’ Welfare 16 Board)) Diversion of Tribal Sub Plan Fund 1.5 17 (Social Justice, Empowerment and Welfare Department) CHAPTER II : ECONOMIC SECTOR 2.1 Introduction 19 2.2 Planning and conduct of audit 19 National Rural Drinking Water Programme 2.3 20 (Rural Management and Development Department) Sikkim Nationalised Transport Division including implementation of the 2.4 Integrated Depot Management System 52 (Transport Department (Sikkim Nationalised Transport Division)) Idling of feed mills and consequent non-production of fish feed 2.5 76 (Animal Husbandry, Livestock, Fisheries and Veterinary Services Department) Irregular expenditure 2.6 77 (Food Security and Agriculture Development Department) Avoidable Payment 2.7 79 (Roads and Bridges Department) Avoidable liability 2.8 81 (Roads and Bridges Department) Excess Payment 2.9 82 (Rural Management and Development Department) Avoidable cost escalation 2.10 84 (Urban Development and Housing Department) Avoidable expenditure 2.11 85 (Urban Development and Housing Department) CHAPTER III: ECONOMIC SECTOR (Public Sector Undertakings) 3.1 Overview of State Public Sector Undertakings 89 Functioning of State Bank of Sikkim 3.2 103 (State Bank of Sikkim) CHAPTER IV: REVENUE SECTOR 4.1 Trend of Revenue Receipts 131 4.2 Analysis of arrears of revenue 133 4.3 Arrears in assessments 134 4.4 Response of the departments/Government towards Audit 134 4.5 Analysis of the mechanism for dealing with issues raised by Audit 136 4.6 Action taken on the recommendations accepted by the departments/Government 138 4.7 Audit Planning 139 4.8 Results of audit 139 4.9 Coverage of this Report 140 Loss of revenue 4.10 140 (Energy and Power Department) i Paragraph Particulars Page Undue favour to consumers 4.11 141 (Energy and Power Department) Loss of revenue 4.12 143 (Water Resources and River Development Department) CHAPTER V: GENERAL SECTOR 5.1 Introduction 145 5.2 Planning and conduct of audit 146 Border Area Development Programme 5.3 (Development Planning, Economic Reforms and North Eastern Council Affairs 147 Department) Sikkim Integrated Financial Management System 5.4 168 (Finance, Revenue and Expenditure Department) CHAPTER VI: FOLLOW UP OF AUDIT OBSERVATIONS 6.1 Follow up action on earlier Audit Reports 181 Response of the departments to the recommendations of the Public Accounts 6.2 181 Committee 6.3 Monitoring 181 6.4 Outstanding Inspection Reports 182 6.5 Departmental Audit Committee Meetings 183 LIST OF APPENDICES Appendix Subject Page 1.2.1 Audit conducted during 2016-17 under Social Sector 185 2.2.1 Audit conducted during 2016-17 under Economic Sector 186 Components of NRDWP, purpose, distribution of allocation and Centre-State 2.3.1 187 sharing pattern Districts, blocks, GPs and habitations sampled/selected for performance Audit on 2.3.2 188 NRDWP PAC’s recommendations, Action taken and present status in respect of 2.3.3 Performance Audit on Accelerated Rural Water Supply Programme in Sikkim 189 featured in Audit Report 2007-08 2.3.4 Delay in completion of schemes 190 2.3.5 Other issues under coverage component 192 2.9.1 Excess payment to contractors on account of excess carriage of haulage 194 Summarised financial position and working results of Government Companies 3.1.1 and Statutory Corporation as per their latest finalised financial 195 statements/accounts as on 30 September 2017 Short assessment of electricity consumption: Bulk Supply (LT) 2014-16 4.10.1 197 (Gangtok) 4.10.2 Short assessment of electricity consumption: Bulk Supply (LT) 2014-16 (Rongli) 198 Short assessment of electricity consumption: Bulk Supply (LT) 2014-16 4.10.3 198 (Pakyong) 4.11.1 M/s Golden Cross Pharmaceuticals Pvt Ltd (Pakyong Division) 199 4.11.2 M/s Golden Cross Pharmaceuticals Pvt Ltd (Rongli Division) 200 4.11.3 M/s Pravesh Enterprises (Rongli Division) 201 5.2.1 Audit conducted during 2016-17 under General Sector 202 5.3.1 List of implementing departments 203 5.3.2 List of notified border villages 204 Glossary of Abbreviations 205 ii PREFACE 1. This Report for the year ended March 2017 has been prepared for submission to the Governor of Sikkim under Article 151 of the Constitution of India. 2. The Report contains significant results of the performance audit and compliance audit of the departments of the Government of Sikkim. It covers the Social, Economic, Revenue and General Sectors including the departments of, Animal Husbandry, Livestock, Fisheries and Veterinary Services; Energy and Power; Food Security and Agriculture Development; Labour; Roads and Bridges; Rural Management and Development; Social Justice, Empowerment and Welfare; Urban Development and Housing; and Water Resources and River Development. It also covers public sector undertaking, viz. State Bank of Sikkim. 3. 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 as 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. 4. The audit has been conducted in conformity with the Auditing Standards issued by the Comptroller and Auditor General of India. iii Executive summary EXECUTIVE SUMMARY This Audit Report consists of six chapters. Chapters I to V deal with Social, Economic, Public Sector Undertakings, General and Revenue Sectors and Chapter VI deals with Follow up of Audit observations. This Report contains 28 audit paragraphs (including 13 general paragraphs and 15 draft paragraphs) and three performance audits. According to the existing arrangements, copies of the draft compliance audit paragraphs and draft performance audits were sent to the Secretary of the Department concerned by the Accountant General (Audit) with a request to furnish replies within six weeks. Replies received have been suitably incorporated. Replies were not received for five paragraphs (1.4, 2.7, 2.8, 2.9 and 2.11). SOCIAL SECTOR The Chapter on Social Sector includes results of audit on ‘National Social Assistance Programme’ and two Compliance Audit Paragraphs. COMPLIANCE AUDIT National Social Assistance Programme (NSAP): The number of beneficiaries who benefited from NSAP rose from 19,517 to 23,565 during 2012-17. However, implementation of NSAP was riddled with inadequacies as the Department did not follow the prescribed procedures enshrined in the programme guidelines regarding awareness generation, selection of beneficiaries and verification of eligibility of beneficiaries. Programme implementation revealed that the Department had not taken up any initiative to reach out to all eligible people for rendering assistance and efforts for assessing of total number of potential beneficiaries. The Department neither took any proactive action for identification of beneficiaries nor carried out any verification of the eligibility of beneficiaries while accepting the list of beneficiaries recommended by the Gram Panchayats. Annual verification of the beneficiaries as required under the guidelines was also not done. Payment of assistance to ineligible beneficiaries was noticed. The monitoring mechanism was inadequate as State level Committee met only twice against the requirement of 10 meetings. Social Audit, one of the important checks of ensuring control mechanism, was not accorded due importance. Hence, Audit could not vouchsafe whether all eligible beneficiaries who belonged to the weakest section of the society had actually been covered and benefited as envisaged under the programme. (Paragraph 1.3) The Sikkim Building and Other Construction Workers’ Welfare Board incurred irregular expenditure of ₹ 3.03 crore out of total expenditure of ₹ 11.21 crore from the cess fund exclusively meant for the benefit of labours and their families/dependents for whom the cess was actually collected. (Paragraph 1.4) v Audit Report for the year ended 31 March 2017 Diversion of ₹ 0.83 crore out of ₹ 1 crore earmarked for construction of Ashram School defeated the objective of creating a permanent structure for the school. (Paragraph 1.5) ECONOMIC SECTOR The Chapter on Economic Sector consists of two Performance Audits on ‘National Rural Drinking Water Programme’ and ‘Sikkim Nationalised Transport Division including implementation of the Integrated Depot Management System’ and seven Compliance Audit Paragraphs. PERFORMANCE AUDIT National Rural Drinking Water Programme Implementation of the National Rural Drinking Water Programme in Sikkim was riddled with deficiencies in planning, programme execution and monitoring. The Five-year comprehensive plan was not prepared which resulted in water supply schemes being taken up without an integrated approach. The Department failed to constitute the Source Finding Committee. As of March 2017, the Department was able to cover only 737 habitations as Fully Covered (40 litre per capita per day, though the target for Fully Covered habitation was 55 litre per capita per day by March 2017) while the remaining 1,347 habitations (65 per cent) had not been covered even after the implementation of revised scheme in 2009. There were instances of short-release of State share and delay in release of funds by State to State Water and Sanitation Mission. Out of 462 projects, 105 projects had not been completed recording delay between three and four years beyond the stipulated date of completion. Programme implementation had been characterised with non-commencement of work, abandonment of work, tapping of water from non-perennial source, lack of co- ordination with other State Government Departments, etc.
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