TABLE OF CONTENTS Reference to Paragraph Page Preface vii Overview ix Chapter I FINANCES OF THE STATE GOVERNMENT Introduction 1.1 1 Trend of finances with reference to the previous year 1.2 3 Summary of receipts and disbursements 1.3 4 Audit methodology 1.4 4 State finances by key indicators 1.5 5 Application of resources 1.6 7 Expenditure by allocative priorities 1.7 12 Assets and liabilities 1.8 16 Management of deficits 1.9 21 Fiscal ratios 1.10 22 Chapter II APPROPRIATION AND CONTROL OVER EXPENDITURE Introduction 2.1 31 Summary of Appropriation Accounts 2.1.1 31 Excesses and savings 2.1.2 32 Chapter – III PERFORMANCE APPRAISALS AUDIT REVIEWS Town and Country Planning Department (Haryana Urban Development Authority) Development of Urban Estates at Faridabad and Gurgaon 3.1 37 Public Works Department (Irrigation Branch) Water Management for Irrigation 3.2 53 Food and Supplies Department Implementation of Acts and Rules relating to Consumer Protection 3.3 68 Chapter –IV TRANSACTION AUDIT OBSERVATIONS AUDIT PARAGRAPHS Fraud/misappropriation/embezzlement/losses/overpayment 4.1 Rural Development Department 4.1.1 85 (District Rural Development Agencies) Misappropriation of wheat under Sampoorna Grameen Rozgar Yojana Audit Report (Civil) for the year ended 31 March 2005 Reference to Paragraph Page Excess payment/wasteful/infructuous expenditure 4.2 Town and Country Planning Department 4.2.1 87 (Haryana Urban Development Authority) Unfruitful expenditure on construction of booths Agriculture Department 4.2.2 88 (Haryana State Agricultural Marketing Board) Inadmissible payment of special pay Public Works Department (Public Health Branch) 4.2.3 89 Unfruitful expenditure on account of unutilised structures of water supply scheme Public Works Department (Public Health Branch) 4.2.4 90 Extra expenditure due to non-availing of Central Excise Duty exemption Transport Department 4.2.5 91 Loss arising out of failure to obtain quarterly passes for payment of toll tax Agriculture Department 4.2.6 92 (Chaudhary Charan Singh Haryana Agricultural University, Hisar) Extra financial burden due to supply of power on lower rates in the University Campus Rural Development Department 4.2.7 94 (Chief Planning and Development officer) Unfruitful expenditure on Old Age Homes Finance Department 4.2.8 95 Overpayment of pensionary benefits Violation of contractual obligations/undue favour to 4.3 contractors/avoidable expenditure Public Works Department (Buildings and Roads Branch) 4.3.1 96 Avoidable Payment due to delay in demarcation of land Public Works Department (Public Health Branch) and 4.3.2 97 Technical Education Department Avoidable expenditure due to non-maintenance of power factor and non- reduction of contract demand Forest Department 4.3.3 99 Delayed payment of land compensation led to avoidable payment of interest Food and supplies Department 4.3.4 100 Excess consumption of gunny bags ii Table of contents Reference to Paragraph Page Idle investments/idle establishment/blocking of funds 4.4 Rural Development Department 4.4.1 101 (District Rural Development Agencies) Advances from former Sarpanches not recovered/adjusted Transport Department 4.4.2 103 Cranes worth Rs.4.03 crore lying idle Public Works Department (Irrigation Branch) 4.4.3 104 Idle investment on construction of staff quarters Transport Department 4.4.4 105 Injudicious decision resulting in blocking of funds and loss of interest Regulatory issues and others 4.5 Agriculture Department 4.5.1 106 (Chaudhary Charan Singh Haryana Agricultural University, Hisar) Loss of interest due to unauthorized use of Provident Fund subscriptions Public Works Department (Public Health Branch) and 4.5.2 108 Family Welfare Department Lack of response to Audit findings and observations resulting in erosion of accountability Finance Department 4.5.3 109 Response of the Departments to Draft Audit Paragraphs and Follow up on Audit Reports Chapter V INTERNAL CONTROL SYSTEM AND INTERNAL AUDIT ARRANGEMENT Police Department 5.1 111 iii Audit Report (Civil) for the year ended 31 March 2005 APPENDICES Appendix Reference to Paragraph Page I. Statement showing definitions of terms used in Chapter I 1.4.1 123 II. Details of utilisation certificates required, received and 1.7.3 125 outstanding III. Details with status of accounts submitted by Autonomous 1.7.4 128 bodies to State Legislature IV. Statement showing names of bodies and authorities, the 1.7.5 129 accounts of which had not been received V. Details and status of grants-in-aid released by State 1.7.6 137 Government VI. Department-wise/year-wise break-up of the cases in 1.7.7 138 which final action was pending at the end of June 2005 VII. Department-wise details in respect of cases relating to 1.7.7 139 theft, misappropriation/loss of Government material and fire/accident at the end of June 2005 VIII. Details of Statutory Corporations and Government 1.8.4 140 Companies with Government investments which are in loss IX. Statement of various grants/appropriations where 2.1.7 141 expenditure fell short by more than Rupees 10 crore in each case and also by more than 10 per cent of the provision X. Statement of various grants/appropriations where 2.1.8 143 expenditure exceeded the original provision by Rupees five crore or more and also by more than 10 per cent of original provision XI. Details of surrender in excess of actual savings in the 2.1.11 146 grants XII. Cases of injudicious re-appropriation of funds resulting in 2.1.12 147 excesses/savings by more than Rupees 50 lakh in each case XIII. Cases where expenditure was incurred without any 2.1.13 157 provision of funds XIV. Statement showing details of incomplete works 3.1.21 158 XV. Statement showing the details of Channels constructed 3.2.20 159 under NABARD schemes but remained either non functional or negligible functional XVI. Statement showing the details of infrastructure either not- 3.2.21 163 utilised or negligible utilised iv Table of contents Appendix Reference to Paragraph Page XVII. Statement showing the details of infrastructure either not- 3.2.21 168 utilised or negligible utilised XVIII. Detailed reasons for overpayment of pensionary benefits 4.2.8 172 XIX. Statement showing the year-wise break–up of outstanding 4.5.2 173 Inspection Reports and Paragraphs XX. Statement showing the year-wise break–up of outstanding 4.5.2 174 Inspection Reports and Paragraphs XXI. Details of serious irregularities pointed out through 4.5.2 175 outstanding Inspection Reports XXII. Statement showing the names of departments where 4.5.3 176 Action Taken Notes were awaited XXIII. List of paragraphs where recovery has been pointed out 4.5.3 177 but no action has been taken by the Administrative Departments v PREFACE 1. This Report has been prepared for submission to the Governor under Article 151 of the Constitution of India. 2. Chapter I and II of this Report respectively contain Audit observations on matters arising from examination of Finance Accounts and Appropriation Accounts of the State Government for the year ended 31 March 2005. 3. Chapter III deals with the findings of performance audit in various departments while Chapter IV deals with the findings of audit of transactions in the various departments including the Public Works and Irrigation Departments, audit of Autonomous Bodies and departmentally run commercial undertakings. Chapter V deals with the comments on internal control mechanism existing in selected departments in the State. 4. The Report containing the observations arising out of audit of Statutory Corporations, Boards and Government Companies and the Report containing such observations on Revenue Receipts are presented separately. 5. The cases mentioned in the Report are among those which came to notice in the course of test-audit of accounts during the year 2004-05 as well as those which had come to notice in earlier years but could not be dealt with in previous Reports; matters relating to the period subsequent to 2004-05 have also been included wherever necessary. CHAPTER I FINANCES OF THE STATE GOVERNMENT Summary Haryana State had a relatively comfortable financial year. The revenue deficit decreased from Rs 274 crore to Rs 258 crore and the fiscal deficit from Rs 2,933 crore Rs 1,206 crore in 2004-05. The decrease in revenue deficit was as a result of increase in the revenue receipts as also on account of misclassification of grants-in-aid to local bodies (Rs 175.96 crore) as capital expenditure instead of revenue expenditure. Substantial growth in revenue receipts during the year was due to collection of more receipts under Sales Tax (Rs 923 crore), Urban Development (Rs 174 crore), Miscellaneous General Services (Rs 132 crore), State Excise (Rs 90 crore), Corporation Tax (Rs 68 crore), Goods and Passengers Tax (Rs 45 crore), Stamps and Registration Fee (Rs 31 crore) and Road Transport (Rs 31 crore). Around 90 per cent of the revenue had come from the State’s own resources. Sales Tax was the major source of the State’s own tax revenue and contributed 64 per cent. Of non-tax revenue, State Lotteries (27 per cent), Road Transport (20 per cent) and Interest receipts (19 per cent) were the principal contributors. Overall expenditure of the State increased from Rs 8,908 crore in 2000-2001 to Rs 12,512 crore in 2004-05. Revenue expenditure constituted 91 per cent of the total expenditure. Capital Expenditure increased during the year, due to less realisation of Rs 247 crore of recoveries under ‘Procurement and Supply of Food Grains’ as compared to the previous year. Salaries (Rs 3,714 crore), interest payments (Rs 2,235 crore), pensions (Rs 902 crore) and subsidies (Rs 1,157 crore) alone consumed 72 per cent of the revenue receipts of the State during the year.