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LATEST NEWS UPDATES | All the way to the ground-KP Shashidharan

All the way to the ground-KP Shashidharan

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published Published on Mar 19, 2013   modified Modified on Mar 19, 2013
-The Indian Express

An accountability framework is critical for flagship schemes

In his budget speech, the finance minister gave the assurance that all flagship programmes of the government would be adequately funded. The government pours substantial funds into 70 Centrally sponsored schemes. In 2011-12, an amount of Rs 1,88,573 crore was allocated for the implementation of 13 development programmes, such as the MGNREGA, PMGSY, NRHM and JNNURM, under the auspices of nine ministries. In the Eleventh Plan period, a total of Rs 6,91,976 crore was allocated for the same purpose. There have been numerous reports about the leakage of funds in flagship programmes, their poor implementation and sub-optimal outcomes. The key challenge in the Twelfth Plan period (2012-12), therefore, is to ensure proper accounting and accountability.

Most of these programmes are executed by implementing agencies at the state and district levels. They are largely funded the Central government, with states contributing a defined share. The funds flowing from the Centre to the states and local bodies include plan and non-plan transfers. Non-plan grants are transferred through the treasury route. Plan funds move through treasury or direct transfer to the bank accounts of implementing agencies like the zila parishads, the NGOs, district rural development agencies and gram panchayats. Many of the local bodies use tax and non tax revenues, as well as borrowings and transfers from the state or Central government. As the money flows through multiple channels, with no single window, it is difficult to track how the funds are utilised.

As constitutional entities, urban local bodies and panchayati raj institutions should be delegated more financial powers and have more autonomy. They should have their own annual budgets and plans. But these budgets should clearly delineate the resources available with all the local bodies under their remit.

An effective accounting and accountability framework is essential to achieve the budgeted outcomes. Inadequate information on the transfer of resources to urban and rural local bodies hampers the enforcement of accountability. Proper utilisation of allocated resources can be ensured only by the effective management of public expenditure. The CAG had reported the deficiencies in the system as far back as 1999 in its Union Audit Report. It stated that ministries execute programmes without quantitative and qualitative evaluations of delivery. After the Eleventh Plan period ended, the government finally realised that a proper accountability framework was critical for programme delivery.

Budgeting and accounting classifications have now been changed. The Central Plan Scheme Monitoring System (CPSMS) that is being introduced will serve as an integrated management information and decision support system. The CPSMS will help track the funds at each stage, until the money reaches the ultimate beneficiaries. The system can also incorporate core banking solutions. The new budget and accounting classification and coding are in line with the UN's Classification of Functions of Government. Uniform codification helps make comparisons between performances in different parts of the country.

The 13th Finance Commission has suggested that the technical guidance and supervision of the maintenance of accounts and audit be entrusted to the CAG. The CAG will formulate appropriate accounting and auditing standards, and establish an effective framework for accountability. Most states have opted for legislation to enable this. The accounts of the local bodies and many of the implementing agencies are certified by chartered accountants.

The CAG is to empanel auditors to appoint CAs who certify these accounts, and to issue the necessary guidelines on control over assets, inventory, reconciliation of expenditure, physical verification and other matters. The CAG's auditors may conduct supplementary audits based on random samples of certified accounts and on the reports of the state directors of the local fund audit department. The CAG also submits an annual report on local bodies to the state legislatures. For that, it should have free and complete access to the accounts documents of all the implementing agencies.

Effective coordination across different agencies can help avoid delays and cost over-runs. The biggest challenge is to tackle corruption in the system. Several legislative measures could be taken against this: establishing a Lokpal, introducing a law on public procurement and transparency, creating a framework to ensure accountability. Speedy prosecution and trial in corruption cases would also help.

The certified accounts of the implementing agencies should reflect the findings of social audits at the macro level and be in keeping with the CAG's financial, regularity and performance audit frameworks. The processes of the social audit and the CAG are complementary and reinforce each other. Most of the states have now set up separate directorates for social audit. To make every village a self-governing unit, it is imperative for policymakers to address the ground realities, such as local power structures, caste and gender divides, and economic vulnerabilities of the people. Good governance is possible through capacity building, the revamping of local institutions and deeper partnerships with civil society.

The writer is director-general in the office of the CAG.

The Indian Express, 19 March, 2013, http://www.indianexpress.com/news/all-the-way-to-the-ground/1089935/0


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