Manipur continues to revel on borrowed money, says CAG report

Courtesy: The Imphal Free Press

While the report of the Comptroller and Auditor General of India, CAG, on Manipur government usually is a familiar tale of misappropriation and revenue losses on account of delays in project completion and misappropriation, its report on Manipur for year ended March 31, 2008, which was released today at its Imphal office, contained some welcome whiff of fresh air.

The report noted that "the overall fiscal position of the State in terms of revenue, fiscal and primary deficit improved significantly during 2007-2008."

"While the revenue surplus nearly tripled, both fiscal and primary deficits turned into surplus during the current year." The report added.

The report is however quick to throw in a qualifier: "The improvement in fiscal position of the State should however be considered keeping in view the fact that significant share (exceeding 90%) of revenue receipts of the State is contributed by Central Transfers comprising the State's share in Union pool of taxes and duties and grants-in-aid from the GOI during 2007-08."

It explained that during the current year, "around 98.6% of the incremental revenue receipts were contributed by Central transfers relative to previous year."

The report on Manipur government includes two chapters containing observations of Audit on the Finance Accounts and Appropriation Accounts of the State for the year 207-08 and five chapters with three performance reviews, including the review on Integrated Audit in Irrigation and Flood Control department, 23 paragraphs (excluding general paragraphs) dealing with the results of audit of selected schemes, programmes and the financial transactions of the Government and its commercial and trading activities.

The report noted that the expenditure pattern of the State revealed that although the revenue expenditure as a%age of total expenditure declined from 86% in 2003-04 to 67% in the current year, Non Plan Revenue Expenditure, NPRE continued to take a lion's share of 79% of the total expenditure.

Of this 79%, salaries and wages, pensions, interest payments and subsidies continued to consume a major share of around 77%.

But the sense of growth may be too early. The report also said: "The continued prevalence of fiscal deficit during the period 2003-208 except in the current year... indicates increasing reliance of the State on borrowed funds, resulting in increasing fiscal liabilities of the State over this period, which stood at 79.4% of the Gross State Domestic Product, GSDP in 2007-08 and further increased to 83% after incorporating the contingent 
liabilities in the fold of total liabilities on Consolidated Fund of the State during the year."

It further added that the increasing fiscal liabilities accompanied by a negligible rate of return on Government investments and inadequate interest cost recovery on loans and advances might lead to an unsustainable fiscal situation in medium to long run unless suitable measures are initiated to compress the non-plan revenue expenditure and to mobilize the additional resources both through the tax and non tax sources in the ensuing years."
The CAG report had some harsh words for many of the government programmes.

On the projects under the non-lapsable Central Pool of Resources (Planning Department), the report said "Although projects under critical sectors were accorded priority in funding, adequate priority was not accorded for their completion. Out of the 12 selected projects in review, works of five projects had not been stared even after 20 months from their approval by the GOI."

It also said "there were also cases of lack of transparency and inadequate monitoring and evaluation of the programme, leading to diversion of funds."

On the midday meal scheme, it said "implementation of the Mid-Day-Meal scheme in Manipur was unsatisfactory and failed to achieve the objective of universalization of elementary education and improvement in nutritional status of the children."

It also said "There was no conclusive evidence of improvement in enrolment, attendance and retention of children in the schools. Most of the kitchen sheds constructed was not usable."

The report also took note of fraud, misappropriation and embezzlement and losses of revenue in almost all of the Manipur government departments.



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