STATE FINANCES AUDIT REPORT OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA FOR THE YEAR ENDED 31 MARCH 2019 GOVERNMENT OF ASSAM (Report No. 1 of 2020) Table of Contents Paragraph No. Page No. Preface -- v Executive Summary -- vii Chapter 1: Overview Profile of the State 1.1 1 Basis and Approach to State Finances Audit Report 1.2 1 Report Structure 1.3 2 Structure of Government Accounts 1.4 3 Budgetary Processes 1.5 4 Gross State Domestic Product of Assam 1.6 5 Trends in Key Fiscal Parameters 1.7 7 What are Deficit and Surplus? 1.7.1 8 Trend of Deficit/Surplus 1.7.2 8 Components of Fiscal Deficit and its Financing Pattern 1.7.3 9 Actual Revenue and Fiscal Deficit 1.7.4 10 Fiscal Correction Path 1.8 10 AFRBM Targets on Key Fiscal Parameters and 1.8.1 11 Achievements thereon Medium Term Fiscal Plan 1.8.2 12 Chapter 2: Finances of the State Introduction 2.1 13 Major Changes in Key Fiscal Aggregates during 2018-19 2.2 13 vis-à-vis 2017-18 Sources and Application of Funds 2.3 13 Resources of the State 2.4 14 Revenue Receipts 2.5 15 Trends and Growth of Revenue Receipts 2.5.1 15 State’s Own Resources 2.5.2 17 Own Tax Revenue 2.5.2.1 17 State Goods and Services Tax (SGST) 2.5.2.2 18 Non-Tax Revenue 2.5.2.3 19 Central Tax Transfers 2.5.2.4 20 Grants-in-Aid from Government of India 2.5.2.5 20 Fourteenth Finance Commission Grants 2.5.2.6 21 Funds Transferred to Implementing Agencies Outside the 2.5.2.7 21 State Budget Capital Receipts 2.6 22 Application of Resources 2.7 23 Revenue Expenditure 2.7.1 25 Major Changes in Revenue Expenditure 2.7.1.1 26 Object Head-wise Expenditure 2.7.2 27 Committed Expenditure 2.7.3 27 Salaries and Wages 2.7.3.1 28 Interest Payments 2.7.3.2 29 Pensions 2.7.3.3 29 Table of Contents Table of Contents Paragraph No. Page No. Subsidies 2.7.4 31 Capital Expenditure 2.7.5 31 Misclassification of Revenue Expenditure under Capital 2.7.5.1 33 Section Quality of Expenditure 2.8 34 Investments and Returns 2.9 35 Investment in Public Sector Entities 2.9.1 35 Cash Balances 2.9.2 36 Investment of Cash Balances 2.9.3 36 Investment in Incomplete Projects 2.9.4 39 Contingency Fund 2.10 40 Public Account 2.11 40 Net Balances in Public Account 2.11.1 40 Reserve Funds 2.11.2 42 Consolidated Sinking Fund 2.11.2.1 42 State Disaster Response Fund 2.11.2.2 43 Guarantee Redemption Fund 2.11.2.3 43 General and Other Reserve Funds 2.11.2.4 44 Inactive Reserve Funds 2.11.2.5 44 Loans and Advances by State Government 2.12 44 Debt Management and Sustainability 2.13 45 Trend of Debt 2.13.1 45 Debt Sustainability 2.13.2 46 Maturity Profile of Public Debt 2.13.2.1 47 Liabilities on Account of Ujwal Discom Assurance Yojana 2.13.3 48 (UDAY) Status of Guarantees – Contingent Liabilities 2.14 49 Conclusion 2.15 49 Recommendations 2.16 50 Chapter 3: Budgetary Management Introduction 3.1 51 Budget Preparation Process 3.2 51 Financial Accountability and Budget Review 3.3 52 Gender Budget 3.3.1 52 Child Budget 3.3.2 53 Audit of Appropriations 3.4 54 Summary of Appropriation Accounts 3.4.1 54 Impact of Non-surrender of Savings 3.5 54 Sub-optimal Utilisation of Budgeted Funds 3.6 55 Missing/ Incomplete Explanation for Variation from Budget 3.7 56 Budgetary Deviations at Primary Unit of Appropriation 3.8 57 Large and Persistent Savings in Grants/Appropriations 3.9 57 Expenditure Without Budget Provision 3.10 59 Excess Expenditure Requiring Regularisation 3.11 60 Page | ii State Finances Audit Report for the year ended 31 March 2019 – Government of Assam Table of Contents Table of Contents Paragraph No. Page No. Unnecessary Supplementary Provision 3.12 62 Excessive/ Unnecessary Re-appropriation of funds 3.13 62 Rush of Expenditure 3.14 64 Review of Selected Grants 3.15 65 Grant No. 37-Food Storage and Warehousing 3.15.1 65 Budget and Expenditure 3.15.1.1 66 Surrender of Savings 3.15.1.2 66 Unnecessary Supplementary Grant 3.15.1.3 66 Persistent Savings under Sub-Head 3.15.1.4 67 Savings of Entire Budget Provision 3.15.1.5 67 Non-Materialisation of Budget Commitment 3.15.1.6 68 Grant No. 78 – Welfare of Plain Tribes and Backward 3.15.2 68 Classes (Bodoland Territorial Council) Release and Accounting of Funds 3.15.2.1 68 BTC Budgetary Process 3.15.2.2 69 Maintenance of Accounts 3.15.2.3 69 Outstanding Balances under Personal Ledger Account 3.15.2.4 69 Budget vs. Expenditure 3.15.2.5 70 Discussion of Audit Report by PAC 3.16 71 Conclusion 3.17 71 Recommendations 3.18 72 Chapter 4: Quality of Accounts & Financial Reporting Practices Introduction 4.1 73 Opaqueness in Accounts - Operation of Omnibus Minor 4.2 73 Head 800 Delay in Submission of Utilisation Certificates 4.3 75 Pending DCC Bills 4.4 77 Timeliness and Quality of Accounts 4.5 78 Suspense and Remittance Balances 4.6 79 Personal Deposit (PD) Accounts 4.7 80 Accounting of Transactions Relating to Central Road Fund 4.8 81 Non-transfer of Labour Cess to Labour Welfare Board 4.9 81 Compliance with Indian Government Accounting Standards 4.10 82 Reconciliation of Accounts by Controlling Officers 4.11 83 Reconciliation of Cash Balances 4.12 84 Non-entrustment of Audit of Autonomous Councils, 4.13 84 Development Councils and Development Authorities Non-submission of Accounts by PSUs, Autonomous Councils 4.14 85 (Sixth Schedule Areas), Government Bodies and Authorities Follow-up on Audit Reports 4.15 85 Suo-motu Action Taken Notes 4.15.1 85 Discussion of SFAR by the PAC 4.15.2 86 Conclusion 4.16 86 Recommendations 4.17 86 State Finances Audit Report for the year ended 31 March 2019 – Government of Assam Page | iii Table of Contents Table of Contents Appendix No. Page No. Appendices State Profile Appendix 1.1 89 Time Series Data on State Government Finances Appendix 1.2 90 Heads with Variation beyond PAC Specified Limits and Appendix 3.1 93 Status of Explanation Statement Showing Grants (at Segment level) with Savings of Appendix 3.2 95 ``` 50 crore and above Expenditure in Excess of ``` 50 lakh Without Provision at Appendix 3.3 97 Sub-Head Level Excess Expenditure of Previous Years Requiring Appendix 3.4 101 Regularisation Unnecessary Supplementary Budget Provision Appendix 3.5 102 Unnecessary Re-appropriation of Funds at Sub-Head Level Appendix 3.6 105 Department-wise List of Outstanding Utilisation Certificates Appendix 4.1 108 for the Grants Provided up to the Year 2017-18 Outstanding DCC Bills against the Drawl of AC Bills up to Appendix 4.2 109 the Year 2018-19 Statement Showing Details of Pendency in Finalisation of Appendix 4.3 110 Accounts by Various Bodies and Authorities Statement Showing the Details of Pendency in Finalisation of Appendix 4.4 113 Accounts by the State Public Sector Undertakings Glossary of Abbreviations - 115 Page | iv State Finances Audit Report for the year ended 31 March 2019 – Government of Assam Preface 1. This Report has been prepared for submission to the Governor of Assam under Article 151 of the Constitution. 2. Chapter I of this Report contains the basis and approach to State Finances Audit Report, structure of the Report, structure of Government Accounts, budgetary processes, trends in key fiscal parameters like revenue surplus/ deficit, fiscal surplus/ deficit, etc. and fiscal correction path. 3. Chapters II & III of the Report contain audit findings on matters arising from an examination of the Finance Accounts and Appropriation Accounts respectively, of the State Government for the year ended 31 March 2019. Information has been obtained from Government of Assam, wherever necessary. 4. Chapter IV on ‘Quality of Accounts & Financial Reporting Practices’ provides an overview and status of the State Government’s compliance with various financial rules, procedures and directives during the current year. 5. The Reports containing the findings of Performance Audit and Compliance Audit in various Government departments, observations arising out of audit of Statutory Corporations, Boards and Government Companies and observations on Revenue Receipts are presented separately. Executive Summary 1 The Report Based on the audited accounts of the Government of Assam for the year ending 31 March 2019, this Report provides an analytical review of the finances of the State Government. The Report is structured in four Chapters. Chapter 1 -Overview : This Chapter describes the basis and approach to the Report and the underlying data, provides an overview of structure of government accounts, budgetary processes, macro-fiscal analysis of key indices and State’s fiscal position including the deficits/ surplus. Chapter 2-Finances of the State : This chapter provides a broad perspective of the finances of the State, analyses the critical changes in major fiscal aggregates relative to the previous year, overall trends during the last five years, debt profile of the State and key Public Account transactions, based on the Finance Accounts of the State. Chapter 3-Budgetary Management: This chapter is based on the Appropriation Accounts of the State and reviews the appropriations and allocative priorities of the State Government and reports on deviations from Constitutional provisions relating to budgetary management.