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Financial
Tamil Nadu

Report of 2006 - Financial Audit on Urban Local Bodies and Panchayati Raj Institutions, Government of Tamil Nadu

Date on which Report Tabled:
Date of sending the report to Government
Government Type
Local Bodies
Local Body Types
Panchayat Raj Institutions,Urban Local Bodies
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Sector -

Overview

This Audit Report, dealing with the results of audit of accounts of local bodies, is presented in two parts. Part I on Urban Local Bodies and Part II on Panchayat Raj Institutions with six chapters. While two chapters contain the overview of the accounts and finances of the urban local bodies and panchayat raj institutions, the remaining four chapters contain three performance reviews, three mini reviews and 13 audit paragraphs. A synopsis of important audit findings is presented in this overview.There were six municipal corporations, 152 municipalities and 561 town panchayats in Tamil Nadu as on 31 March 2007. The urban population of the State as per the 2001 census was 2.75 crore constituting 44 per cent of the total State population. While the decadal growth rate of the total population during 1991-2001 was 11 per cent, the urban population during the same period grew by 43 per cent.

The Director of Local Fund Audit is the statutory auditor for all the urban local bodies. As of October 2007, audit was not completed for one municipal corporation for 2004-05 and all the 6 municipal corporations for 2005-06 and 2006-07. The audit of 17, 98 and 152 municipalities was not completed for 2004-05, 2005-06 and 2006-07 respectively. The number of town panchayats whose audit was not completed for the last three years were seven, 222 and 561 respectively. As of March 2007, the number of paragraphs relating to municipalities and municipal corporations pending settlement aggregated to 3,11,234.Out of 18 functions listed in the Twelfth Schedule of the Constitution to be devolved on urban local bodies, only 13 functions were transferred to municipalities and municipal corporations and 12 functions to town panchayats. State Government stated that transfer of the remaining functions to these urban local bodies will be decided after perusing the report of the High Power Committee constituted for this purpose.During 2006-07 own revenue of all the urban local bodies amounted to Rs 2781 crore of which tax-revenue constituted to Rs 1598 crore. The own revenue of municipal corporations (except Chennai), municipalities and town panchayats increased during 2004-07.Property Tax is the major source of tax revenue of urban local bodies. The percentage of collection of Property Tax compared to total demand during the last three years in municipalities and municipal corporations (except Chennai) ranged between 50 and 54. In Chennai City Municipal Corporation the percentage was slightly better at 75, 75 and 77 during the last three years. In town panchayats the percentage of collection after increasing from 70 in 2004-05 to 73 in 2005-06, decreased to 69 in 2006-07.In the case of Profession Tax the percentage of collection by five municipal corporations increased from 70 in 2004-05 to 72 in 2005-06 and remained at 72 in 2006-07 also. However the percentage in municipalities declined from 59 in 2004-05 to 54 in 2005-06 and remained as such in 2006-07. In respect of town panchayats, the percentage after increasing from 85 in 2004-05 to 87 in 2005-06, steeply declined to 70 in 2006-07 due to lesser demands than the previous years.

The percentage of collection of non-tax revenue by five municipal corporations decreased during 2004-07. In town panchayats the percentage of collection of non-tax revenue after increasing from 86 in 2004-05 to 87 in 2005-06 decreased to 78 in 2006-07. In municipalities the non-tax revenue increased from 71 in 2004-05 to 72 in 2005-06 and then to 75 in 2006-07.A declining trend was noticed in municipal corporations and municipalities during 2004-05 in respect of proceeds of Entertainment Tax.Test-check revealed that the Twelfth Finance Commission grants were released belatedly to urban local bodies with delays ranging between two and 196 days during 2005-06. Though Government of India stipulated that interest was to be provided for such belated release, State Government had not paid any interest and the amount of interest to be paid for the delayed release of grants to 78 urban local bodies during 2005-06 worked out to Rs 23.07 lakh.Despite directions of the Public Accounts Committee for furnishing prompt replies to their pending recommendations arising from the audit paragraphs in the Reports of the Comptroller and Auditor General of India, 131 recommendations of eight audit reports relating to 1985-86 to 1996-97 (upto which discussions were over) of the Municipal Administration and Water Supply Department were pending final settlement, as of December 2007.

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