The Cash Management system introduced by the state finance department has come under attack from the Comptroller and Auditor General (CAG) of India for its failure to rein in rush of expenditure in the last quarter, especially the last month of previous fiscal.
Latest CAG data reveals, under four major heads, 100 per cent expenditure was incurred in the month of March alone in last fiscal, totally out of sync with the system meant for ensuring even distribution of expenditure throughout the year.
As much as Rs 279.69 crore was earmarked in 2011-12 to be sent under four heads- plan to build hostels (Rs 198.37 crore), special Central assistance for special programme for KBK (Kalahandi-Bolangir-Koraput) Plan (Rs 15.13 crore), Rajiv Gandhi Grameen Vidyutikaran Yojana-RGGVY (Rs 30.49 crore) and 13th Finance Commission's grant for incentivising issue of unique identification number cards-UID (Rs 35.70 crore).
The entire expenditure under these four heads was recorded in March 2011, which the CAG pointed out is contrary to Rule 147 of Orissa Budget Manual according to which rush of expenditure in the closing month of the financial year should be avoided. The Cash management system mandates that expenditure in the last month of any fiscal should not exceed 15 per cent and it should be contained at 40 per cent in the last quarter (January-March period).
Besides the above four heads, there were 23 other areas where the expenditure level crossed 50 per cent in the last month.
Among the few schemes wherein more than 50 per cent expenditure was witnessed in March 2011 are special organization for anti-Naxal operations (91.19 per cent), Grant for Special Problem Fund (88.45 per cent), Special Area Basic Grant to local bodies recommended by 13th Finance Commission (92.20 per cent) and Other Plan programmes for Medium Irrigation Plan (90.93 per cent).
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In toto, Rs 1,182.72 crore was set aside for expenditure under these 27 heads of which 80.08 per cent spending was recorded in March alone and 87.15 per cent in the January-March period.
“Maintaining uniform pace of expenditure is a crucial component of sound public financial management as it obviates fiscal imbalance and temporary cash crunches due to revenue expenditure mismatches during a particular month arising out of unanticipated heavy expenditure in that particular month,” the CAG said in its report.
Moreover, the quality of the assets being created out of such expenditure can be maintained if expenditure is incurred in a planned manner, the report pointed out.