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Report of the Comptroller and Auditor General of India on
Report of the
Comptroller and Auditor General of India
on
State Finances
for the year ended March 2014
Government of Karnataka
Report of the
Comptroller and Auditor General of India
on
State Finances
for the year ended March 2014
Government of Karnataka
Table of Contents
Paragraph
number
Preface
Executive summary
Page
number
ix
xi
CHAPTER - I
FINANCES OF THE STATE GOVERNMENT
Introduction
Summary of fiscal transactions in 2013-14
Review of fiscal situation
Major fiscal variable
Budget Estimates and actuals 2013-14
1.1
1.1.1
1.1.2
1.1.3
1.1.4
02
02
03
05
06
Gender Budgeting
1.1.5
Major policy initiatives of Budget 2013-14
Resources of the State
Resources of the State as per the Annual Finance Accounts
Funds transferred to State implementing agencies outside the
State Budget
Revenue receipts
State’s own resources
Tax revenue
Non-tax revenue
Grants-in-aid from GOI
1.1.6
1.2
1.2.1
1.2.2
07
08
09
09
11
1.3
1.3.1
1.3.1.1
1.3.1.2
12
13
13
15
1.3.2
18
Central tax transfers
1.3.3
18
Utilisation of XIII FC grants
1.3.4
19
Foregone revenue
1.3.5
20
Capital Receipts
1.4
21
Public Account Receipts
1.5
22
Application of resources
Growth and composition of expenditure
Revenue expenditure
Committed expenditure
Financial assistance to local bodies and others
1.6
1.6.1
1.6.2
1.6.3
22
23
24
25
1.6.4
30
Quality of expenditure
Adequacy of public expenditure
1.7
1.7.1
31
31
iii
Table of Contents
Paragraph
number
Page
number
Efficiency of expenditure
1.7.2
32
Financial Analysis of Government expenditure and
investments
Incomplete projects
Investment and returns
Investment in PPP Projects
Departmental undertakings
Loans and advances by the State Government
Cash balances and investment of cash balances
1.8
34
1.8.1
1.8.2
1.8.3
1.8.4
1.8.5
1.8.6
Assets and Liabilities
1.9
Growth and composition of assets and liabilities
1.9.1
Off-budget borrowings
1.9.2
Fiscal liabilities
1.9.3
Transactions under Reserve Fund
1.9.4
Consolidated Sinking Fund (CSF)
1.9.4.1
Forest Development Fund
1.9.4.2
Karnataka Silk Worm Cocoon and Silk Yarn Development 1.9.4.3
and Price Stabilisation Fund
Contingent Liabilities
1.9.5
Debt Management
1.10
Debt profile
1.10.1
Debt sustainability
1.10.2
Debt stability
1.10.3
Sufficiency of incremental non-debt receipts
1.10.4
Net availability of borrowed funds
1.10.5
Fiscal imbalances
1.11
Trends in deficits
1.11.1
Composition of fiscal deficit and its financing pattern
1.11.2
Quality of deficit/surplus
1.11.3
Follow up
1.12
Conclusion and recommendations
1.13
35
35
38
38
39
40
42
42
44
46
47
48
49
49
50
58
58
58
59
59
60
60
61
64
65
65
66
CHAPTER - II
FINANCIAL MANAGEMENT AND BUDGETARY CONTROL
Introduction
Summary of Appropriation Accounts
Scrutiny of Budget Estimates and Supplementary
Estimates for the year 2013-14
Injudicious/imprudent changes to the Budget documents
iv
2.1
2.2
71
71
2.3
74
2.3.1
74
Table of Contents
Paragraph
number
Misclassification between capital and revenue account
Misclassification between voted and charged
Errors in budgeting
Errors in classification
Accounting of inadmissible transactions under the object head
prescribed for Compensatory Cost
Transactions under Fund accounts
Lack of transparency in provisioning - budget operation
of omnibus object head 059 – other expenses
Financial accountability and Budget management
Appropriation vis-à-vis allocative priorities
Persistent unspent provision
Excess expenditure
Persistent excess expenditure
Excess expenditure over provision
New service/New instrument of service
Unnecessary supplementary provision
Excessive supplementary provision
Inadequate supplementary provision
Injudicious re-appropriation of funds
Defective re-appropriation
Unspent provision not surrendered
Substantial surrenders
Contingency Fund
Outcome of review of selected grants
Introduction
Budget and expenditure
Lapse of budget grant due to non-furnishing of information
Page
number
2.3.2
2.3.3
2.3.4
2.3.5
2.3.6
74
75
76
76
77
2.4
2.5
77
77
2.6
2.6.1
2.6.2
2.6.3
2.6.4
2.6.5
2.6.6
2.6.7
2.6.8
2.6.9
2.6.10
2.6.11
2.6.12
2.6.13
2.7
2.8
2.8.1
2.8.2
2.8.3
78
78
82
82
82
83
83
85
85
85
86
86
86
87
87
88
88
88
90
Lapse/surrender of savings
2.8.4
90
Persistent savings
2.8.5
90
Re-appropriation of funds
2.8.6
91
Rush of expenditure
2.8.7
91
Introduction
2.9.1
92
Budget and expenditure
Non submission/delay in submission of budget proposal
Payment of electricity charges out of capital head
Surrender of savings
Persistent non-utilisation of provision
2.9.2
2.9.3
2.9.3.1
2.9.4
2.9.5
92
93
93
93
94
v
Table of Contents
Paragraph
number
Unnecessary re-appropriation ` 40 crore
Rush of Expenditure
Outcome of Inspection of Treasuries
Excess payment of family pension
Drawal of funds without proper assessment resulted in
rush of expenditure during the month of March
Conclusion
Recommendations
Page
number
2.9.6
2.9.7
2.10
2.10.1
94
94
95
95
2.11
95
2.12
2.13
96
97
3.1
3.2
101
102
3.3
102
3.4
3.5
3.6
3.7
3.8
3.8.1
3.8.2
3.8.3
3.9
3.10
102
103
103
104
105
105
106
107
107
108
3.11
108
Irregular retention of receipts
3.11.1
108
Transparency in Accounts
3.11.2
109
Important factors affecting accuracy of accounts
Conclusion
3.11.3
109
3.12
112
Recommendations
3.13
113
CHAPTER - III
FINANCIAL REPORTING
Non-submission of Utilisation Certificates
Non-receipt of information pertaining to institutions
substantially financed by the Government
Status of submission of accounts of Autonomous Bodies
and placement of Audit reports before the State
Legislature
Departmental commercial undertakings
Misappropriations, losses, etc.
Non-receipt of stores and stock accounts
Abstract Contingent bills
Personal Deposit accounts
Funds kept in PD accounts
Reconciliation of Personal Deposit (PD) Accounts
Irregular blocking of funds
Reconciliation of receipts and expenditure
Bookings under Minor Head 800 – ‘Other Receipts’ and
‘Other Expenditure’
Comments on Accounts
vi
Table of Contents
Appendix
number
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
1.9
1.10
1.11
2.1
2.2
2.3
2.4
2.5
2.6
2.7
2.8
2.9
2.10
2.11
2.12
2.13
2.14
2.15 (a)
2.15 (b)
2.15 (c)
Subject
State Profile
Structure of Government Accounts
Abstract of Receipts and Disbursements
Time Series Data on State Government Finances
Details of user charges collected
Implicit Subsidies
Financial position of Departmentally managed
Commercial / Quasi Commercial Undertakings
Detailed Loan accounts maintained by PAG(A&E)
Office
Summarised financial position of the Government of
Karnataka as on 31 March 2014
Details of Dormant Reserve Fund under Major Heads
8115 and 8229
Debt sustainability – Indicators and trends
Errors in Budgeting
Non-transparency
in
estimation/accounting
of
expenditure relating to Object Head 059 – ‘Other
Expenses’
Major heads of account under which provision of more
than ` 25 crore and above remained unspent
Major heads of account under which excess expenditure
was above ` 25 crore
Cases of New Service/New Instrument of Service
Unnecessary Supplementary Provision
Excessive Supplementary Provision
Inadequate Supplementary Provision
Injudicious re-appropriation of funds
Defective re-appropriation orders
Statement of various grants/appropriations in which
unspent provision occurred but no part of which was
surrendered
Surrender of unspent provision
Cases of surrender of funds in excess of ` five crore on
30 and 31 March 2014
Results of review of substantial surrenders made during
the year
Cases of Re-appropriation
Rush of expenditure (Grant No.22)
Rush of Expenditure (Grant No.6)
vii
Page
number
117
118
119
122
125
126
127
128
129
130
132
133
134
135
138
140
142
143
144
145
148
150
151
153
154
156
156
157
Table of Contents
2.16
2.17
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
Excess payment of Family Pension
Continued excess payment of Family Pension
Major Head and Department-wise details of outstanding
UCs separately for each year
Non-receipt of information pertaining to institutions
substantially financed by the Government
Status of submission of accounts of Autonomous
Bodies and placement of audit reports before the State
Legislature
Position of arrears in finalisation of proforma accounts
by the departmentally managed Commercial and QuasiCommercial Undertakings
Department-wise/duration-wise breakup of the cases of
theft and misappropriation
Department-wise and category-wise details of theft and
misappropriation cases
Department-wise details of non-submission of stores
and stock accounts
Balances remaining (Adverse) under operative/
in-operative in PD accounts
Glossary
Abbreviation
viii
158
159
160
161
162
163
164
165
166
170
171
172
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