Absence of a coherent mechanism in the Finance Ministry is causing underutilisation of allocated funds and it's "high time" accountability was fixed, a report by the Standing Committee on Finance tabled in Parliament said today.
The Committee said there was persistent underutilisation of allocated funds in respect of certain demands in the Finance Ministry's Revenue Department during the past three years.
It said Rs 366.17-8,096.39 crore was surrendered in the last three years against one demand compared with Rs 238.80-644.86 crore and Rs 95.81-146.57 crore for two other demands.
"The committee was not convinced with the routine reply of the Ministry that the large amount was surrendered as no decision could be taken about providing CST compensation to states beyond 2011-12 and also due to non-finalisation or non-clearance of some proposals to purchase properties or equipment or vessels," said the panel headed by Veerappa Moily.
"The committee, therefore, recommended that the Ministry should devise a coherent mechanism for realistic budgetary formulation, followed by proper utilisation of allocated funds through effective management and close monitoring," it said.
The committee added that it's time a mechanism for fixing accountability was developed at appropriate levels.
It said although some measures have been taken by government to augment tax collections, tax buoyancy has not been commensurate with growth in income and wealth.
It suggested that the government formulate a holistic policy to increase tax-GDP ratio in the economy and a strict view be taken on tax evasion.
The committee also recommended expansion of the existing tax base of the country.
It said stringent penal action should be taken against wilful defaulters and tax evaders.
The panel made a case for Parliament scrutiny for tax refunds with serious implications on revenue.
"The committee would, therefore, reiterate that in the interest of transparency and accountability, the government should especially provide for interest liability of tax refunds in the central Budget.
