Compliance Financial Performance
Mizoram

Report of 2009 - Compliance, Financial and Performance Audit on State Finance of Government of Mizoram

Date on which Report Tabled:
Date of sending the report to Government:
Government Type:
State
Sector Finance

Overview

In November 2006, Government of Mizoram responded to the recommendations of the Twelfth Finance Commission (TFC) by legislating its "Fiscal Responsibility and Budget Management (FRBM) Act" to ensure prudence in fiscal management and fiscal stability by progressive reduction of revenue deficit and fiscal deficit. The State Government formulated roadmap and reform agenda through its own Fiscal Correction Path (FCP) in the medium term with long-term goals of securing growth stability for its economy. The State Government's commitment to carry forward those reforms is largely reflected in certain policy initiatives announced in the subsequent budget. The benefits of FRBM legislation have been realized to a great extent in terms of reduction of deficit indicators but, the State Government still needs fiscal correction in areas like the introduction of new pension scheme, setting up of guarantee redemption fund, putting a check on increasing revenue expenditure and a host of other institutional and sectoral reforms measures. This will go a long way in building up the much needed "fiscal space"1 for improving the quality of public expenditure and to promote fiscal stability.

The State Government has considerably improved the institutional mechanism on fiscal transparency as evident from the year-to-year presentation of the performance of the State during the FRBM Act regime in terms of key fiscal target fixed for selected variables laid down in the Act. Those outcome indicators tend to serve the limited purpose of measuring the performance against the targets. They do not, however, give the "big picture" of the status of financial management including debt position and cash management etc. for the benefit of the State Legislature and other stakeholders.

The Comptroller and Auditor General's (CAG's) Civil Audit Reports are an effort to fill this gap. CAG's reports have been commenting upon the Government's finances for over two years since FRBM legislation and two reports2 have been published prior to this report. These comments then formed a part of the civil audit report but it was seen that the audit findings on the State finances remained camouflaged in the large body of audit findings on compliance and performance audits. The obvious fallout of this well intentioned but all inclusive reporting was that the financial management portion of these findings did not receive proper attention. In recognition of the need to bring State finances to center-stage once again, stand alone report on State Government finances is considered an appropriate audit response to this challenge. Accordingly, from the report year 2009 onwards, CAG has decided to bring out a separate volume titled "Report on State Finances".

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