Epitome of CAG's Reports on the Government of Uttar Pradesh for the year ended 31 March 2007

Transcription

1 GOVERNMENT OF UTTAR PRADESH Epitome of CAG's Reports on the Government of Uttar Pradesh for the year ended 31 March 2007 Principal Accountant General (Civil Audit) Uttar Pradesh, Allahabad Please visit our website for full text of the Audit Reports

2 GOVERNMENT OF UTTAR PRADESH EPITOME OF CAG'S REPORTS ON THE GOVERNMENT OF UTTAR PRADESH FOR THE YEAR ENDED 31 MARCH 2007 Principal Accountant General (Civil Audit) Uttar Pradesh, Allahabad Please visit our website for full text of the Audit Reports

3 Contents Sl.No. Description Page Preface 1 Report (Civil): Highlights 3 2. Finances of the State Government 6 3. Allocative Priorities and Appropriation 7 4. Working of Lucknow Development Authority 8 5. Rural Health Sector in Uttar Pradesh 9 6. Computerisation of Land Records in Uttar Pradesh I.T. Audit of Computerisation of State Treasuries Management of Ardh Kumbh Mela Regional Diagnostic Centres Kanya Vidyadhan Yojana Internal Controls in Jail Administration and Reforms Department Major Audit Paragraphs National Programme of Nutritional Support to Primary Education 15 (Stand Alone Report)

4 Report (Commercial) : Overview of Government Companies and Corporations Procurement and distribution of raw materials by Uttar Pradesh 18 Small Industries Corporation Limited 3. Efficiency in billing and collection of revenue in Paschimanchal 18 and Madhyanchal Vidyut Vitran Nigam Limited 4. Procurement, performance, maintenance and repair of transformers 19 in Power Sector Companies 5. Information Technology Support System for revenue billing in 19 Allahabad and Varanasi towns of Purvanchal Vidyut Vitaran Nigam Limited 6. Construction and Design Services wing of Uttar Pradesh 20 Jal Nigam 7. Paragraphs 20 Report (Revenue Receipts) : Introduction Trend of revenue receipts Allotment/ Unauthorised occupation of Government land Levy and collection of irrigation receipts Paragraphs 24

5 Preface This epitome presents, at a glance, the contents of the Audit Reports (Civil, Revenue Receipts & Commercial) of the Comptroller and Auditor General of India relating to the Government of Uttar Pradesh for the year ended 31 March These Reports contain major findings of audit of financial transactions of the Government of Uttar Pradesh, Government Companies and Statutory Corporations of Uttar Pradesh. The Report on National Programme of Nutritional Support to Primary Education is presented separately. Other audit observations which are not contained in these Audit Reports are reported to and persued with the Controlling Officers and Heads of Offices. In accordance with Article 151 of the Constitution, the Comptroller and Auditor General of India forwards his Audit Reports on the accounts as well as on the points noticed during audit of financial transactions of the State Government to the Governor, who causes them to be laid on the table of the Vidhan Sabha. The Reports of the Comptroller and Auditor General of India on the transactions of the State Government presented to the Vidhan Sabha stand referred to the Public Accounts Committee (PAC) in respect of the Audit Reports on Civil and Revenue Receipts and the Committee of Public Undertakings (COPU) in respect of the Audit Report (Commercial). The Government departments are required to submit suo-moto Action Taken Notes on all Audit Paragraphs and Reviews to the Committee, duly vetted by Audit. The Committees select some of the paragraphs/reviews for detailed examination after which a report containing their observations and recommendations is presented to the Vidhan Sabha. The draft of the paragraphs/reviews included in the Audit Reports are always forwarded to the Secretary of the concerned department for his comments so that the views of the Government are incorporated in the Audit Reports before their presentation to the Vidhan Sabha. The Finance Department has prescribed that the draft paragraphs should be dealt with as expeditiously as possible and the comments of the concerned Department intimated to Audit within a period not exceeding six weeks. All the draft paragraphs/reviews were discussed with the heads of administrative departments and assurance obtained in regard to corrective measures for arresting potential risks. This epitome contains a summarised version of the more important issues included in the Audit Reports. While it has been our endeavour to keep the contents of this document as close to the original Reports as possible, the original Reports ought to be referred to for authentic facts and figures. The names and telephones numbers of the Officers who could be contacted for any clarification in respect of different Audit Reports are on the inner page of the backside cover of this publication.

6 Reports (Civil) for the year ended 31 March 2007 Audit Reports (Civil) The main Report contains five Chapters. The first two contain observations on Finance Accounts and Appropriation Accounts of the State Government for the year The other three contain audit observations in the form of nine Performance Audit/ Long Paragraph and 37 paragraphs on selected schemes, programmes, internal control and financial transactions of the Government. The stand alone Report brings out the performance of Nutritional Support to Primary Education. Highlights The State s revenue receipts during grew by per cent over the previous year as against per cent growth of revenue expenditure resulting in revenue surplus of Rs 4,901 crore. Fiscal deficit also decreased by Rs. 463 crore over the previous year mainly due to increase in revenue receipts. The return on the total investment of Rs 18, crore at the end of in Government companies, statutory corporations, etc. continued to be negligible and was less than one per cent during the year against the average interest rate of 6.74 per cent on the borrowings of the Government. Outstanding liabilities of the State increased from Rs 92,982 crore in to Rs 1,62,156 in and their ratio to GSDP was 52 per cent during the current year. The net saving of Rs 11,775 crore against the total provision of Rs 95,064 crore was the result of overall savings of Rs 14,580 crore in 156 cases of grants and appropriations, partly offset by excess expenditure of Rs 2,805 crore in 44 cases of grants and appropriations. Deficient implementation of the Master Plan by Lucknow Development Authority, Lucknow resulted in un-planned development of the city including growth of un-authorised colonies/ constructions. Lack of proper management of properties caused irregular allotment and delay in their disposal for many years. The objectives to improve the health indicators under family welfare programme could not be achieved mainly due to lack of basic facilities such as operation theatres, labour rooms, emergency services, etc. at the health centres. IT Audit of computerization of land records revealed that objective to provide reliable land record to land holders suffered mainly due to shortfalls in training to officials, non-installation of updated Antivirus software in computer system and non incorporation of provision of manuals in the software. Internal auditors were not effectively trained to meet the challenges of new IT scenario. The objective of computerization of Treasuries to exercise better budgetary control suffered mainly due to nonassessment of users requirement at the beginning. The data relating to pensioners was not validated. Budget control up to the object head level was ineffective. The objective to provide water fit for bathing to pilgrims at the Sangam area in Ardh Kumbh Mela at Allahabad suffered due to excessive water pollution. Solid waste management and disaster management plans were inadequate. The implementation of Kanya Vidya Dhan Yojna (Scheme) to promote education among girl students was deficient due to lack of monitoring at the district level. Inadequate scrutiny of applications and income certificates of guardians led to payment of incentive to ineligible beneficiaries. An evaluation of the Internal Controls of the Jail department revealed deficiencies in financial management and budgetary controls, non-adoption of Model Prison Manual, delay in installation of video conferencing system resulting in escape of prisoners, ineffective inspections/searches to prevent entry of prohibited items in jails and slow progress of Jail Modernization Scheme. Inadequate human resource management facilitated working of fake warders in jails. Material approved for use in strengthening of the Aliganj Sarai Aghat road at Etah was substituted by a costlier material on the recommendation of the local MLA. This amounted to a corrupt practice and resulted in an excess expenditure of Rs. 92 lakh. Strengthening of Mustafabad Eka road at Firozabad by 75 mm thick BM against the requirement of 50 mm resulted in excess expenditure of Rs lakh with the possibility of fraudulent payment. Execution of water recharging projects in the heavy rainfall zone of the Tarai district of Gorakhpur at a cost of Rs 1.63 crore rendered the expenditure infructuous. The projects executed were also not verified by any responsible officer of the Department. Violation of purchase rules facilitated a firm to defraud the Government of Rs lakh in collusion with officers of the district administration at Jalaun. Payment of cement concrete road works at higher rates without verification from PWD facilitated excess payment of Rs lakh to the contractor by the Nagar Palika Parishad Sambhal, Moradabad. The Mid-Day Meal (MDM) scheme suffered as neither the quality of food grains nor improvement in the nutritional status of the children was ensured. Learning and teaching were adversely affected as the children and teachers were involved in cooking of MDM and proper attention towards safety and hygiene was not paid. 3

7 Reports (Civil) for the year ended 31 March 2007 (i) Summary of Finance Accounts Receipts and Disbursements for the year (Rupees in crore) Receipts Disbursements Section-A: Revenue Non Plan Plan Total 45, I. Revenue receipts 60, , I. Revenue expenditure 46, , , , Tax revenue 22, , General services 24, , , Non-tax revenue 6, , Social services 11, , , , Share of union taxes/ duties 23, , Economic services 7, , , , Grants from Government of India 7, , Grants-in-aid and contributions Section-B: Capital 2, , II. Misc. capital receipts , II. Capital outlay , , III. Recoveries of loans and advances III. Loans and advances disbursed ,257.46* IV. Public debt receipts 11, ,252.34** IV Repayment of public debt 5, , V. Contingency fund V. Contingency fund , VI. Public account receipts 63, , VI. Public account disbursements 52, , Opening cash balance 8, , Closing cash balance 15, , ,13, Total 1,44, ,13, Total 1,44, * Excluding ways and means advances and overdraft ** Includes net transaction of Rs crore under WMA (ii) Summary of Appropriation Accounts for the year (Rupees in crore) Nature of expenditure Original grants/ appropriation Supplementary grants/ appropriation Total Actual expenditure Saving (-) Excess(+) Voted I. Revenue 42, , , , (-) 2, II. Capital 18, , , , (-) III. Loans & advances (-) 0.85 Total voted 62, , , , (-) 2, Charged IV. Revenue 13, , , (-) V. Capital (-) 3.44 VI. Public debt 14, , , (-) 8, Total charged 28, , , (-) 9, Grand Total 90, , , , (-) 11,

8 Reports (Civil) for the year ended 31 March 2007 Time Series Data on the Finances of Uttar Pradesh (Rupees in crore) Part A. Receipts I. Revenue Receipts (i) Tax Revenue 10330(40) 12767(46) 13601(43) 15693(42) 18858(42) (38) Sales Tax/Trade Tax 6163(59) 7124(56) 7684(56) 8888(57) 11285(60) (58) State Excise 1961(19) 2555(20) 2472(18) 2686(17) 3089(16) 3551 (15) Taxes on vehicles 503(5) 619(5) 677(5) 776(5) 965(5) 1018 (4) Stamps and Registration fees 1429(14) 2079(16) 2296(17) 2682(17) 2997(16) 4514 (20) Land Revenue 73(1) 64(1) 118(1) 102(1) 109(1) 188 (1) Other Taxes 201(2) 326(2) 354(3) 559(3) 413(2) 448 (2) (ii) Non- Tax Revenue 1787(7) 1913(7) 2282(7) 2720(7) 2930(6) 6533 (11) (iii) State's share in union taxes 10189(40) 10832(39) 13273(42) 15055(40) 18203(40) (38) (iv) Grants in aid from GOI 3292(13) 2309(8) 2482(8) 4149(11) 5358(12) 7851 (13) 2. Miscellaneous Capital Receipts Total Revenue and Non Debt Capital Receipts (1+2) Recoveries of Loans and Advances Public Debt Receipts Internal Debt (Excluding Ways and Means Advances and Overdrafts) 7936(70) 9282(75) 19029(86) 14597(84) 13931(98) (97) Net Transactions under Ways and Means Advances and Overdraft 690(6) (0) Loans and Advances from Government of India 2757(24) 3108(25) 3081(14) 2841(16) 326(2) 379 (3) 6. Total Receipts in the Consolidated Fund (3+4+5) Contingency Fund Receipts Public Account Receipts Total Receipts of the State (6+7+8) Part B. Expenditure 10. Revenue Expenditure 31793(89) 32939(88) 50221(83) 44610(88) 46617(83) (79) Plan 3561(11) 3575(11) 3276(7) 5098(11) 6445(14) 9699 (17) Non Plan 28232(89) 29364(89) 46945(93) 39512(89) 40172(86) (83) General Services (incl. Interest payments) 16178(51) 15583(47) 19540(39) 22761(51) 20919(45) (44) Economic Services 5350(17) 5883(18) 18970(38) 6976(16) 7756(17) 9409 (17) Social Services 9337(29) 10308(31) 10354(21) 13090(29) 15610(33) (35) Grants-in-aid and contributions 928(3) 1165(4) 1357(3) 1783(4) 2332(5) 2742(5) 11. Capital Expenditure 3556(10) 3794(10) 9320(15) 5653(11) 8711(16) (20) Plan 2671(75) 3361(89) 3437(37) 4618(82) 8172(94) (95) Non Plan 885(25) 433(11) 5883(63) 1035(18) 539(6) 672 (5) General Services 128(4) 330(9) 224(2) 255(4) 313(4) 654 (5) Economic Services 3217(90) 3176(84) 8767(94) 4902(87) 7239(83) (80) Social Services 211(6) 288(7) 329(4) 496(9) 1159(13) 2180 (15) 12. Disbursement of Loans and Advances 526(1) 804(2) 1242(2) 629(1) 684(1) 888 (1) 13. Total ( ) Repayments of Public Debt Internal Debt (excluding Ways and Means Advances and Overdrafts) 1509(51) 1811(29) 2300(26) 2903(32) 4045(7) 3738 (63) Net Transactions Under Ways and Mean. Advances and Overdraft (12) (0) ---- Loans and Advances from Government of India 1433(49) 3638(59) 6688(74) 6254(68) 1182(23) 2174 (37) 15. Appropriation to Contingency Fund Total Disbursement out of Consolidated Fund ( ) Contingency Fund disbursements Public Account Disbursements Total Disbursement by the State ( ) Part C. Deficits 20. Revenue Deficit (-)/ Surplus (+) (1-10) (-) 6195 (-) 5118 (-) (-) 6993 (-) 1268 (+) Fiscal Deficit (3+4-13) Primary Deficit (-)/ Surplus (+) (21-23) (-) 1691 (-) 2437 (-) 6523 (-) 1124 (-) 980 (+) 862 Part D. Other data 23. Interest Payments (included in Revenue expenditure) Arrears of Revenue (percentage Tax & Non- Tax Rev. Receipt) 6589(54) 5891(40) (40) 7922(43) 8772(40) 14935(51) 25. Financial Assistance to local bodies etc Ways and Means Advances and Overdrafts (days) Nil 27. Interest on Way and Means &Advance / Overdraft Nil 28. Gross State Domestic Product (GSDP) Outstanding Debt (year end) Outstanding Guarantees (year end) Maximum Amount Guaranteed (year end) Number of incomplete projects Capital blocked in incomplete projects Revenue Buoyancy of Own Taxes (-) (-) Includes Trade Tax and Entertainment Tax only. Figures of other were not available. 2 Figure of GSDP for is quick 3 Figure of GSDP for is advance. 5

9 Reports (Civil) for the year ended 31 March 2007 I. Finances of the State Government Revenue Receipts Revenue Expenditure Increase in arrears of revenue Liabilities of State Government Incomplete Projects Return on investments Committed expenditure Revenue surplus and primary surplus Revenue receipts of the State increased from Rs 25,598 crore in to Rs 60,600 crore in The increase of per cent in revenue receipts over the previous year was primarily driven by 22 per cent growth in Tax Revenue, 123 per cent in non-tax revenue and 28 per cent in State s share in Union Taxes. Revenue expenditure (Rs 55,699 crore) went up by per cent over the previous year due to increase (16.16 per cent) in expenditure under General Services, increase of per cent in Social Services, per cent in Economic Services and per cent in Grants-in-aid during Arrears of revenue increased by 127 per cent from Rs 6,589 crore in to Rs 14,935 crore in and constituted 51 per cent of tax and non-tax revenue. Overall fiscal liabilities of the State increased from Rs 92,982 crore in to Rs 1,62,156 crore in and as a percentage of GSDP, increased from per cent to per cent in The expenditure of Rs 5, crore remained unproductive on 58 incomplete projects as of March The return on investment of Rs 18, crore in Statuary Corporations, Joint Stock Companies Cooperatives etc, was negligible and much below to one per cent during as against the average interest rate of 6.74 per cent on the borrowed funds. Interest payments and expenditure on pensions accounted for 28 per cent of the revenue expenditure. Revenue deficit Rs 1,268 crore in turned into a revenue surplus of Rs 4,901 crore in Primary deficit Rs 980 crore in also turned into a surplus of Rs 862 crore in 6

10 Reports (Civil) for the year ended 31 March mainly due to increase in interest payment by Rs 1,379 crore. However, Fiscal deficit decreased marginally by Rs 463 crore during the current year mainly due to increase in capital expenditure. II. Allocative Priorities and Appropriation Saving and excess The overall saving of Rs 11, crore was the net result of saving of Rs 14, crore in 156 cases of grants and appropriations offset by excess of Rs 2, crore in 44 cases of grants and appropriations. The net saving of Rs 11, crore was more than two and half times of the Supplementary Provision of Rs 4, crore. Non-regularization of excess expenditure The excess expenditure of Rs 33, crore for the period to required regularization by the State Legislature. Un- necessary supplementary grants Supplementary provisions amounting to Rs crore in 68 cases during the year proved unnecessary as the expenditure in these cases fell short of even the original grant and the savings had to be either surrendered or re-appropriated. Inadequate supplementary grants In 26 cases, there was excess expenditure of Rs 2, crore as the supplementary grants of Rs 1, crore proved inadequate. This indicated failure of the departments to assess the requirements of additional funds and also the inadequacy of the system of monitoring the trend of expenditure. Anticipated savings not surrendered In 50 cases, savings above Rupees one crore in each case aggregating Rs 2, crore were not surrendered. Rush of expenditure in March The expenditure in March 2007 under 20 heads of account was 43 per cent to 100 per cent of the total expenditure. 7

11 Reports (Civil) for the year ended 31 March 2007 III. Performance Audit 1. Working of Lucknow Development Authority The Performance audit of working of Lucknow Development Authority revealed deficiencies in implementation of master plans/schemes, delay in preparation of Master Plan and poor financial management. Thus, the objective of planned development of the city suffered adversely. Major audit findings Non-certification of annual accounts Advances to the officials Avoidable expenditure Irregular occupation of land Unfruitful expenditure Lack of monitoring over unauthorised constructions Annual accounts of the LDA were neither certified by the Statutory Auditor nor submitted to the Government. At the end of March 2006, discrepancy of Rs crore between the books of LDA and various banks had not been reconciled. Advances aggregating Rs crore given to the officials of LDA and Government departments/ agencies remained unadjusted for the last one to 20 years. Non-transfer of 10 completed housing schemes by the LDA to Nagar Nigam resulted in unnecessary expenditure of Rs crore on their maintenance during the period Out of 13,940 hectare of land developed, 2,377 hectare was inhabited/ occupied irregularly by private persons (1,690 hectare) and Government/semi-Government departments including LDA (687 hectare). Gomti Nagar Extension Scheme earmarked as a green belt was developed as a housing scheme without obtaining No Objection Certificate from the Environment Department. Consequently, the works of development, etc, were stopped mid way and Rs crore incurred thereon proved unfruitful. Two hundred forty one un-authorized colonies sprung up in the Lucknow city indicating lack of enforcement efforts of the LDA. Besides, effective measures were not taken for stopping unauthorised constructions which increased from 779 (March 2003) to 3,238 (March 2007). 8

12 Reports (Civil) for the year ended 31 March 2007 Irregular allotment of properties Out of 20,095 properties allotted by LDA during , 7,533 (37 per cent) were allotted without lottery, bid or auction. 1,296 properties costing Rs crore were lying unsold. Out of 56 allotment records produced to audit, 11 allotments were made before registration and 11 more without the applicants applying on the prescribed form. 2. Rural Health Sector in Uttar Pradesh The Rural Health care delivery system comprises Community Health Centres (CHCs), Primary Health Centres (PHCs) and Sub Centres (SCs) in rural area to provide curative and specialised health facilities to rural population. A performance audit of the activities relating to Rural Health Sector revealed deficiencies in delivery of health care services to the rural people. Major audit findings Preparation of inflated budget estimates Non-achievement of health indicator targets Inadequacy of coverage of Japanese Encephalitis prone districts Lack of infrastructure for implementation of TB control programme Budget estimates were prepared without any proposals from Chief Medical Officers (CMOs) leading to inflated estimation and surrender of Rs crore, of which Rs crore (88 per cent) related to provision for vacant posts during Health indicator targets under Family Welfare programme were not achieved mainly due to poor anti-natal care, lower institutional births or births through untrained personnel and non-supply of iron folic acid tablets. Medicines costing Rs crore were distributed without testing their quality. Japanese Encephalitis prone districts were not adequately covered by vaccination, fogging and spraying operations due to short availability of vaccines and insecticides. Revised National T.B. Control programme was implemented in the State without ensuring availability of T.B. clinic buildings in 18 districts and District Tuberculosis Officers in 14 districts. There was seven to 30 per cent shortfall in sputum positive detection rate due to non-establishment of Microscopic Centres in 17 per cent CHCs. 9

13 Reports (Civil) for the year ended 31 March 2007 Shortage of health centers Shortage of medical and paramedical staff Extra expenditure There was shortfall of 22 per cent, 17 per cent and 72 per cent vis-a-vis GOI norms in the number of SCs, PHCs and CHCs in the State. Ninety CHCs, 762 PHCs and 3,205 SCs in the test checked districts lacked necessary facilities and 58 CHCs and 79 PHCs remained underutilised during There was shortage of 19 per cent in medical staff and 23 per cent in para medical staff in seven test checked districts. Besides, 39 doctors were absent unauthorizedly for the last one to ten years. Anti Rabies Vaccine and Electrical Sterilisers were purchased at higher rates which resulted in extra expenditure of Rs crore. 3. Computerization of land records in Uttar Pradesh The scheme of computerization of land records (CLR) in Uttar Pradesh was initiated in with a view to overcome inherent problems in the manual system of maintenance and updation of land records. The scheme was not complete even after lapse of 18 years. Major audit findings Weak access controls Inadequacy of on-site training to officials Non-reliability of computerized database Delay in updating of mutation orders Non-integration of data for planning and developmental purposes Access controls were weak and Business Continuity Plan and Disaster Recovery management was not in place. On-site training to officials was incomplete in 39 districts. The information stored in the database was full of errors and important details were missing in the computerized database, thereby, compromising reliability of Record of Rights to land holders. Mutation orders were being updated with delays and not within prescribed time limit. Due to inconsistencies in database design and structure of table in different tehsils, it was difficult to integrate data for generation of Management Information System (MIS) reports. 10

14 Reports (Civil) for the year ended 31 March I.T. Audit of Computerisation of State Treasuries The Treasury Computerisation System in Uttar Pradesh was implemented in with a view to overcome the weakness of the manual system and to exercise better budgetary control. An Information Technology audit of treasuries revealed deficiencies in implementation of the programme. Major audit findings Frequent changes in software version Non-documentation of change request statements Absence of documented password policy Non-validation of reappropriation orders Non-validation of pensioners data Non-sufficiency of budget control system Study of the Users Requirement was not undertaken which led to frequent changes in software versions. There was no record of approval of the System Requirement Specification document. Change request statements were not documented and records of testing and acceptance of the amendments carried out were not maintained. Physical and logical access controls were inadequate in absence of documented password policy and user logs were not maintained. Re-appropriation orders were not validated leading to incorrect re-appropriation in test checked treasuries. The system of payment of pension through the computerized system was not effective as data relating to pensioners was not validated. Budget control up to object head level was ineffective as expenditure in excess of budget provision and Drawing and Disbursing Officers allotment was incurred through correction of expenditure option. 5. Management of Ardh Kumbh Mela Ardh Kumbh Mela was organized in Allahabad in January/ February The Mela administration was responsible for arrangement for smooth conduct of Mela including providing water fit for bathing to pilgrims in Sangam area. The water in the sangam area had high bio oxygen demand and coli-form levels and was not fit for bathing. Solid waste management and disaster management plans were inadequate. Inflated estimation of pilgrims 11

15 Reports (Civil) for the year ended 31 March 2007 for Ardh Kumbh Mela resulted in avoidable expenditure on superfluous arrangements like tube-wells, etc, besides locking of funds on surplus pontoons and material. 6. Regional Diagnostic Centres The objective of establishing Regional Diagnostic Centers to provide diagnostic facilities to the people was impaired substantially mainly due to purchase of equipment not recommended, non-installation of equipment for a long time and non-functioning of the equipment even after their installation due to various reasons. A dedicated plan of action supported by adequate funds was also not prepared to cover the maintenance and repair of the equipment. 7. Kanya Vidya Dhan Yojna Kanya Vidya Dhan Yojna launched (September 2004) by the Government to promote education among girl students suffered due to inadequate monitoring of its implementation at the district level. Inadequate scrutiny of applications and income certificates of guardians led to payment of incentive to ineligible beneficiaries. Expenditure in excess of norms on organising functions to distribute incentive was also noticed. 8. Internal Control System in Jail Administration and Reforms Department A review of internal control on selected areas of the Jail Administration and Reforms Department showed that the controls in the department were not effective. Major audit findings Slackness of budgetary controls Non-adoption of Model Prison Manual Ineffective inspection/ search of Jails Inflated budget estimates, belated surrender of surplus funds and creation of liabilities revealed slackness of budgetary controls. Model Prison Manual has not yet been adopted by the State. Surveillance of prisoners inside the prisons was not effective due to non-functional CCTVs. Delay in establishing video conference links with courts led to escape of 210 prisoners from the police custody during escort of prisoners to the courts. Inspections/ searches carried out by jail authorities were not effective as during joint inspections carried out by District Administration, prohibited items such as mobiles, gutka, transistor, etc. were recovered from the prisoners. 12

16 Reports (Civil) for the year ended 31 March 2007 Problem of overcrowding in Jails unresolved Non-preparation of annual administrative reports Lack of monitoring at the apex level Due to non- completion of seven new Jails and additional barracks under Jail Modernisation Scheme ( ), the problem of overcrowding to the extent of 56 to 100 per cent in Jails remained unresolved during Annual administrative reports of Jails required to be prepared by the Senior Superintendent/ Superintendent of Jails and the Director General were not prepared during Inspection of jail by DG was inadequate. Quarterly meeting of Jail Security Review Board under the chairmanship of the Chief Secretary for reviewing Jail functioning was not held after July No vigilance arrangement was set up in the Department. IV- Major Audit Paragraphs Misappropriation/ losses Excess expenditure by adopting corrupt practices Suspected fraud Infructuous expenditure Fraudulent drawal Material approved for use in strengthening of the Aliganj Sarai Aghat road at Etah was substituted by a costlier material on the recommendation of the local MLA. This amounted to a corrupt practice and resulted in an excess expenditure of Rs 92 lakh. Strengthening of Mustafabad Eka road at Firozabad by 75 mm thick BM against the requirement of 50 mm resulted in excess expenditure of Rs lakh with the possibility of fraudulent payment. Execution of water recharging projects in the heavy rainfall zone of the Tarai district of Gorakhpur at a cost of Rs 1.63 crore rendered the expenditure infructuous. The projects executed were also not verified by any responsible officer of the Department. Violation of purchase rules facilitated a firm to defraud the Government of Rs lakh in collusion with officers of the district administration at Jalaun. 13

17 Reports (Civil) for the year ended 31 March 2007 Excess payment Payments for cement concrete road works at higher rates without verification from PWD facilitated excess payment of Rs lakh to the contractor by the Nagar Palika Parishad Sambhal, Moradabad. Excess payment; wasteful/ infructuous expenditure Avoidable expenditure Utilization of costlier grit in bituminous works on Lumbini Dudhhi Road overlooking its availability at a shorter distance and payment thereof without verifying the collection of the material from a farther quarry paved the way for draining out Rs 1.02 crore extra from the Government exchequer at Basti. Double drawal of salary System failures at all the levels of responsibility led to double drawal of pay and allowances for Rs 1.11 lakh of a transferred driver in Secondary Education Department. Violation of contractual obligations/ undue favour to contractors/ avoidable expenditure Unproductive expenditure An expenditure of Rs 4.20 crore on site development without completing the land acquisition proceedings by Mathura Vrindaban Developement Authority resulted in the abandonment of the work, besides avoidable interest payment of Rs 1.98 crore and locking up of Rs 1.78 crore. Idle investment/ idle establishment/ blocking of funds; delays in commissioning equipment; diversion/ mis-utilisation of funds Unfruitful expenditure on purchase of refrigerators Unfruitful expenditure on a canal Procurement of refrigerators by Animal Husbandry Department for maintaining cool chain of vaccines without assessing their requirement and ensuring the availability of infrastructure rendered the expenditure of Rs 1.15 crore unfruitful. Construction of Ajjupura distributary without acquiring land for the entire stretch of the distributary resulted in unfruitful expenditure of Rs 2.30 crore as the distributary could not be made operational due to gaps in alignment. 14

18 Reports (Civil) for the year ended 31 March 2007 Non-completion of a housing project Allotment of a disputed piece of land for a housing project in a low lying area at Lucknow resulted in stoppage of work after incurring an expenditure of Rs 4.47 crore on part-construction of 1,440 houses, besides execution of extra items at a cost of Rs 1.23 crore. Unfruitful expenditure on a project Regularity issues and others Expenditure of Rs crore on a project related to prevention and control of water pollution of river Gomati at Lucknow was rendered unproductive due to lack of monitoring of the work. Inadmissible expenditure Arrangements for transportation of local applicants, hiring of buses at rates higher than prescribed and execution of civil works not covered under the Un employment Allowances Scheme resulted in inadmissible expenditure of Rs 3.74 crore. V- National Programme of Nutritional Support to Primary Education (Stand Alone Report) The National Programme of Nutritional Support to Primary Education commonly known as Mid-Day Meal (MDM) scheme was started in August 1995 with the aim of universalisation of primary education by improving enrolment, attendance and retention and raising the nutritional level of children, inculcation of hygiene and sanitation practices, breaking caste prejudice by sharing common meals and fostering gender equity. The scheme also aimed at providing nutritional support to children of primary stage in drought-affected areas during the summer vacation. The scheme was ineffective as it was not properly monitored. Major audit findings Base line survey was not conducted Quality of food grains was not ensured Base line survey during to determine the enrolment of children as directed by the GOI was not conducted. The quality of food grains for MDM was not ensured as brokens in excess of permissible limit, foreign matter and damaged/ discoloured grains were noticed in 224 (76 per cent) of the 320 schools and Non-Government Organisations (NGOs) inspected. 15

19 Reports (Civil) for the year ended 31 March 2007 Poor transportation management Excess reimbursement Undue benefit to Fair price shopkeepers Inadequate nutritional support to children Kitchen sheds were not provided Unsatisfactory performance by NGOs Ineffective monitoring by Task forces Food grains valuing Rs crore remained with the transporting agencies ( ) and fair price shops ( ) which indicated poor management of their transportation. Loss of food grains ( ) valuing Rs lakh during storage and transportation was reported in five of the 16 test checked districts though such losses were not permissible. Deficient scrutiny of transportation claims of the transporting agencies for the period resulted in excess reimbursement of Rs crore up to December 2007 to them. Fair price shopkeepers retained 3.58 crore empty gunny bags during the period resulting in undue benefit of Rs crore to them. Non-supply of the required quantity of MDM with the prescribed quantity of nutrients and dishes as per the menu resulted in inadequate nutritional support to children during Kitchen sheds were not provided in 36,489 schools (out of 96,457) as of March Out of 253 kitchen sheds of test checked schools, 169 were non-functional. Sufficient kitchen devices and arrangement for potable water in 61 schools out of 320 test checked schools were not available. NGOs did not submit their accounts and annual reports along with audited statement for the period to the Government. NGOs were engaged without ascertaining their capability and infrastructure which resulted in their unsatisfactory performance and unauthorised occupation of space/ classrooms of school buildings. Task forces constituted for adequate and effective monitoring of the scheme at the school level visited only 65 to 69 per cent of the targeted schools during October 2006 to March

20 Report (Commercial) for the year ended 31 March 2007 Audit Report (Commercial) I. Overview of Government Companies and Corporations The State had 95 Public Sector Undertakings (PSUs) comprising 88 Government Companies and seven Statutory corporations as on 31 March 2007, as against 87 Government Companies and seven Statutory corporations as on 31 March All the seven Statutory corporations were working corporations. In addition, there were four deemed Government Companies (one working and three non-working) as on 31 March 2007 under Section 619-B of the Companies Act, The total investment in working PSUs increased from Rs 27, crore as on 31 March 2006 to Rs 28, crore as on 31 March The total investment in non-working PSUs increased from Rs crore to Rs crore during the same period. The budgetary support in the form of capital, loans and grants/subsidies disbursed to the working PSUs decreased from Rs 1, crore in to Rs crore in The State Government guaranteed loans aggregating Rs 4, crore to nine working Companies during The guarantees of Rs 7, crore were outstanding against 10 working Companies and two Statutory corporations as on 31 March Only five working Government Companies finalised its account for the year The accounts of 43 working Government Companies and seven working Statutory corporations were in arrears for periods ranging from one to 15 years as on 30 September Ten Companies out of 40 non-working Companies were under liquidation. Accounts of remaining 30 non-working Government Companies were in arrears for periods ranging from one to 25 years as on 30 September According to latest finalised accounts, 21 working PSUs (18 Government Companies and three Statutory corporations) earned an aggregate profit of Rs crore. Against this, 22 working PSUs (21 Government Companies and one Statutory corporations) incurred an aggregate loss of Rs 1, crore as per their latest accounts. Of the 21 loss incurring Government companies, 12 Companies had accumulated losses aggregating Rs 6, crore, which exceeded their aggregate paidup capital of Rs 5, crore. 17

21 Report (Commercial) for the year ended 31 March 2007 This Report features five performance reviews and paragraphs relating to Government companies and Statutory corporations. Some of the major findings are as follows: II. Performance Reviews 1. Procurement and distribution of raw materials by Uttar Pradesh Small Industries Corporation Limited The Company did not evolve any system for assessing the demands of raw materials by SSI units. The Company passed on discount of Rs 3.18 crore to the MOU holders instead of SSI units in Agra and Ghaziabad area offices. The Company, during the year to , supplied 25,599 MT of iron and steel to six closed/partly functioning units engaged in trading activities and irregularly availed SSI rebate of Rs 1.41 crore. The Company also supplied 69, MT coal valuing Rs crore and small arms crushed brass scrap valuing Rs 45 lakh to non-ssi units. The Company loaded five per cent incidental charges while fixing the selling price of coal received under state quota. This resulted in extension of undue benefit of Rs lakh to the coordinator. The Company irregularly loaded handling and transportation charges in fixation of sale price of coal received under coal sponsorship scheme. Due to wrong fixation of selling price of scrap, the Company sustained loss of margin amounting to Rs lakh in sale of burnt copper wire and steel scrap allotted by Irrigation Department and Rs lakh in sale of brass scrap allocated by Ministry of Defence during the period to Efficiency in billing and collection of revenue in Paschimanchal and Madhyanchal Vidyut Vitran Nigam Limited (PVVNL and MVVNL) PVVNL and MVVNL could not recover the cost of energy, as a result, the loss of the Companies accumulated to Rs 3, crore in PVVNL and Rs 1, crore in MVVNL during the last four years ending March Both the Companies failed to realise revenue arrears from the consumers which accumulated to Rs 2, crore and Rs 1, crore at the end of March 2007 in case of PVVNL and MVVNL respectively. Both the companies failed to ensure accuracy of meters of consumer, as a result consumers were under-billed by Rs 1.30 crore. Failure of MVVNL to apply of correct tariff and nonissue of bills, resulted in non-realisation of revenue aggregating Rs 5.60 crore. 18

22 Report (Commercial) for the year ended 31 March 2007 Failure in management of capacitor banks at the consumers end resulted in loss of revenue aggregating Rs 4.82 crore in both the Companies. Undue favour was extended to e-suvidha by allowing retention of revenue of Rs 6.84 crore collected from consumers and its delayed transfer to the accounts of the divisions. 3. Procurement, performance, maintenance and repair of transformers in Power Sector Companies Performance of power sector Companies with regard to procurement, maintenance and repair of transformers was found to be deficient due to non-standardisation of procedures, non-fixation of norms and absence of control. Mismatch of sub-power transformation capacity, distribution transformation capacity and connected load resulted in overloading of transformers. Non-exercising option to increase/decrease 50 per cent of tendered quantity and purchase of transformers at higher rates resulted in extra expenditure of Rs 9.62 crore. The damage rate of distribution transformers ranged between and per cent. Due to this, the Companies had to bear a heavy financial burden of Rs crore on repair of distribution transformers that failed in excess of the norms during the period of five year ending 31 March The Companies had incurred extra expenditure of Rs 8.98 crore on repair of 12,001 transformers from outside agencies. 4. Information Technology Support System for revenue billing in Allahabad and Varanasi towns of Purvanchal Vidyut Vitaran Nigam Limited PuVVNL outsourced the billing and collection activity (through cheques) in Allahabad and Varanasi towns during to KLG Systel Limited (Agency) in November 2004 at a contract value of Rs 7.36 crore. Before outsourcing the activity, the Company did not ensure participation of staff in trial runs and monitoring the output to ensure error free generation of bills. Geographical Information System (GIS) mapping, meant for giving minutest details of the network and the connected consumers in a digital form was not available for monitoring despite incurring an expenditure of Rs lakh. Non-updating of the master databank resulted in non-inclusion of 64 per cent cases of Varanasi town. Further, cases of duplicate service connection numbers, duplicate meter 19

23 Report (Commercial) for the year ended 31 March 2007 numbers and duplicate consumers and consumers of higher tariff finding place in the lower tariff etc. that could not be corrected in the master databank. In case of defective meters of domestic light and fan consumers, electricity charges were not charged for fixed units as done in other category of consumers resulting in short assessment of Rs 7.06 crore. 5. Construction and Design Services wing of Uttar Pradesh Jal Nigam (C&DS) Six works costing Rs crore were obtained from clients through sub-contractors and the same were awarded to them on back-to-back basis. Despite having sufficient technically qualified staff, C&DS paid Rs 6.96 crore to private architects. C&DS executed 531 works without centage and 90 works at lower centage resulting in loss of income of Rs crore. There was an excess expenditure of Rs crore over the fund received from clients which was not claimed from the clients. In execution of seven works there was excess consumption of material for Rs 1.97 crore over the norms/ specification and sanctioned estimates. Non-deduction of trade tax and royalty at prescribed rates resulted in undue benefit of Rs 2.39 crore to the sub-contractors. III. Paragraphs Uttar Pradesh Small Industries Corporation Limited did not levy centage charges amounting to Rs lakh on deposit works executed under Vidhayak Nidhi. Uttar Pradesh State Industrial Development Corporation Limited incurred extra expenditure of Rs 1.39 crore on laying of treated effluent disposal pipe in Tronica City, Ghaziabad. Uttar Pradesh State Agro Industrial Corporation Limited incurred extra expenditure of Rs lakh on re-tendering for supply of Galvanised Iron (G.I.) pipes during currency period of existing firm contract. 20

24 Report (Commercial) for the year ended 31 March 2007 Pradeshiya Industrial and Investment Corporation of Uttar Pradesh suffered loss of Rs lakh due to sanction of equity assistance in contravention of the guidelines of the scheme. Purvanchal Vidyut Vitran Nigam Limited short levied the penalty against theft of electricity resulted in under assessment of revenue of Rs lakh. Dakshinanchal Vidyut Vitran Nigam Limited suffered loss of revenue aggregating Rs 1.53 crore due to incorrect application of tariff. Uttar Pradesh State Road Transport Corporation suffered loss of ownership and possession of land transferred to Transport Department, Aligarh without obtaining sale consideration amounting to Rs 3.92 crore. Failure of the Corporation to reassess its demand of electricity resulted in extra payment of Rs lakh to the Electricity Company. Uttar Pradesh Financial Corporation suffered loss of interest income aggregating Rs lakh due to advance payment of interest free installments to IDBI. Uttar Pradesh Bhumi Sudhar Nigam did not adopt a formal system development approach and the IT applications were developed in ad-hoc manner without documentation, testing and user participation. 21

25 Report (Revenue Receipts) for the year ended 31 March 2007 Audit Report (Revenue Receipts) I. Introduction This report shows the position of revenue receipts, cost of collection and arrears of revenue etc. of the State Government for the year Besides, it contains important audit findings on the working of various departments. Two reviews also featured in this report are mentioned hereunder: 1. Review on Allotment/unauthorised occupation of Para 4.2 Government land 2. Review on Levy and collection of irrigation receipts Para 5.2 II. Trend of revenue receipts The position of various receipts of the Government during to are as under: (Rupees in crore) Sl. No. Particulars I. Revenue raised by the State Government Tax revenue 18, Non-tax revenue 2, Total 21, II. Receipts from the Government of India State s share of divisible Union taxes 18, Grants-in-aid 5, Total 23, III. Total receipts of the State (I + II) 45, IV. Per cent of I to III For details, please see statement No. 11- detailed accounts of revenue by minor heads in the Finance Accounts of the Government of Uttar Pradesh for the year Figures under the major heads 0020 corporation tax, 0021 other taxes on income and expenditure, 0028 taxes on income other than corporation tax, 0032 taxes on wealth, Customs, 0038 Union excise duties, 0044 Service tax and Other taxes and duties on commodities and Services - share of net proceeds assigned to states booked in the Finance Accounts under A-Tax revenue have been excluded from revenue raised by the State and included in State s share of divisible Union taxes in this statement. 22

26 Report (Revenue Receipts) for the year ended 31 March 2007 III. System Appraisals Major audit findings Allotment / Unauthorized occupation of Government land Lack of a system/procedure for disposal of the estate land through sale/auction resulted in loss of revenue by way of cost of land amounting to Rs crore. (Para ) Due to lack of a database on the status of lease granted, the Government was deprived of revenue of Rs crore and stamp duty of Rs crore. (Para ) Lack of a time bound plan for disposal of nazul land resulted in non-disposal by way of sale. Lack of maintenance of a database on the status of lease granted of nazul land resulted in non-reversion after termination of the lease period. The loss of revenue was Rs. 2, crore. (Para ) Lack of a specified time frame for regularisation of unauthorised occupations of nazul/estate land deprived the Government of revenue of Rs. 1, crore. (Para 4.2.7) Non-payment of cost of ceiling land utilised by the developmental authority and other organisations deprived the Government of revenue of Rs crore. (Para ) Under-valuation of land resulted in short levy of stamp duty of Rs crore and cost of land amounting to Rs crore. (Para ) 23

27 Report (Revenue Receipts) for the year ended 31 March 2007 Levy and collection of irrigation receipts Lack of monitoring of irrigation potential created resulted in non-achieving the target of irrigation and consequential loss of revenue amounting to Rs crore during the years to (Para 5.2.7) Lack of a system of monitoring the receipts vis-a-vis the water available for irrigation resulted in loss of revenue amounting to Rs crore. (Para 5.2.8) Lack of a prescribed system for measuring the quantity of water supplied for commercial use resulted in short levy of water charges amounting to Rs crore. (Para 5.2.9) Non-levy of centage charges of deposit works resulted in loss of revenue amounting to Rs crore. (Para ) IV. Paragraphs Some of the important audit findings included in the paragraphs are as under: In Trade Tax Department concealment of turnover/false declarations/irregular exemption on stock transfer by 37 dealers resulted in evasion of tax of Rs crore. (Para 2.2) Forty three dealers were liable to pay penalty amounting to Rs crore for purchase made against declaration in form C other than those covered by their certificate of registration. (Para 2.3) 24

28 Report (Revenue Receipts) for the year ended 31 March 2007 In State Excise Department low yield of alcohol from molasses as compared to norms resulted in loss of revenue of Rs crore. (Para 3.2) In Transport Department plying of 332 stage carriages in seven RTOs on their prescribed routes without getting their permits renewed resulted in non/short realisation of additional tax amounting to Rs crore. (Para 3.4) Application of incorrect rates of additional tax resulted in short levy of tax of Rs 2.17 crore. (Para 3.5) In Weights and Measures Department due to non-registration/renewal of registration of users, the Government was deprived of revenue amounting to Rs lakh. (Para 4.6.1) 25

29 Your suggestions are very valuable for us. Please mail/ your suggestions on the following address. To, The Principal Accountant General (Civil Audit) Uttar Pradesh, Satya Nishtha Bhawan, 15 A, Dayanand Marg, Allahabad agauuttarpradesh1@cag.gov.in Madam, Subject : Epitome of Audit Reports

30 List of Officers to be contacted for further information or copies of Audit Reports Report Civil Name & Designation of the Officers Mrs Rita Mitra, Principal Accountant General (Civil Audit), Uttar Pradesh, Satya Nishtha Bhawan 15-A, Dayanand Marg, Allahabad Telephone/Fax No./ (Off.): (0532) (Res.): (0532) (Telex): Fax.: (0532) Commercial and Revenue Receipts Shri Birendra Kumar, Accountant General (Commercial and Receipt Audit), Uttar Pradesh, Kendriya Bhawan, th 6 Floor, Sector-H, Aliganj, Lucknow and Satya Nishtha Bhawan 15 A, Dayanand Marg, Allahabad (UP). (Off.) : (0522) (Res.) : (0522) Fax. : (0522) brauc&rallahabad@cag.gov.in (Off.) : (0532) agauuttarpradesh2@cag.gov.in

31 Satya Nishtha Bhawan Office of the Principal Accountant General (Civil Audit) Uttar Pradesh, Allahabad February 2008 Published by Mrs. Rita Mitra, Principal Accountant General (Civil Audit), Uttar Pradesh, Allahabad for Indian Audit and Accounts Department and Printed at Army Printing Press, 33 Nehru Road, Sadar Cantt., Lucknow Tel.: ,