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Jharkhand

Report No. 2 of 2018, State Finances, Government of Jharkhand for the year ended 31 march 2017

Date on which Report Tabled:

Fri 20 Jul, 2018

Date of sending the report to Government

Government Type

State

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Sector Finance

Overview

This Report on the finances of the Government of Jharkhand (GoJ) intends to assess the financial performance of the State during 2016-17, the financial performance against thetargets envisaged by the Jharkhand Fiscal Responsibility and Budget Management Act, 2007, the Fourteenth Finance Commission (14^th FC) Report and the Budget Estimates of 2016-17and to provide the State Legislature with inputs based on audit analysis of financial data.

Fiscal Situation of the State

The State has not achieved revenue surplus, fiscal deficit and ratio of outstanding debt to GSDP targets of the budget estimates 2016-17 and Fiscal Responsibility and Budget Management Act.

The primary deficit of the Government of Jharkhand increased from ` 1,015 crore (2012-13) to
` 6,020 crore during 2016-17 indicating that non-debt receipts were not sufficient to meet the primary expenditure of the State.

Resources mobilization

Revenue receipts (` 47,054 crore) increased by ` 6,416 crore (15.8 per cent) over the previous year (` 40,638 crore) which was lower than the budget estimates (` 55,746 crore).

Revenue expenditure (` 45,089 crore) increased by ` 8,536 crore (23 per cent) over 2015-16, which was lower than the budget estimates (` 48,762 crore).

Capital expenditure (` 10,861 crore) increased by ` 2,702 crore (33 per cent) over 2015-16, which was lower than the budget estimates (` 10,992 crore).

LabourCess

As per the Finance Accounts, ` 312.90 crore was collected as cess from contractors executing government projects between 2008-09 and 2016-17. The cess collected has not been transferred to the Labour Welfare Board (February 2018) inflating the Revenue Surplus and understating the Fiscal Deficit of the State during the relevant years. Non-transfer of cess to Labour Welfare Board not only defeated the very purpose of the cess collection but also represents a Government liability to this extent.

Adequacy of Public Expenditure

The ratio of development expenditure and economic service expenditure to aggregate expenditure was more than average for the General Category States (GCS). However, education sector expenditure and health sector expenditure were less than that of GCS.

Incomplete projects

Blocking of funds on incomplete works impinge negatively on the quality of expenditure. The Public Works Departments had 280 numbers of incompleteprojects which was to be completed by the month of March 2017. The expenditure on those projects was ` 4,777.52 crore as on 31 March 2017.

Sinking Fund

Following the recommendations of the 12^th Finance Commission, the State created a Sinking Fund in 2016-17 for amortisation of all loans including loans from banks, liabilities on account of National Small Savings Funds etc.

State Disaster Response Fund (SDRF)

The SDRF had a closing balance of ` 1,259.21 crore at March 2017. As per Para 19 and 20 of SDRF guidelines 2010, the balances under funds should be invested by the State Executive Committee. The Government did not act as per guidelines. AlsoGoJ had not paid any interest to SDRF since creation of the fund which works out to ` 403.63 crore as per calculation at the applicable rates of interest during the period 2010-17.

Status of Guarantees- Contingent Liabilities

As per the recommendation of the 12^thFinance Commission, the GoJ was required to constitute a Guarantee Redemption Fund with minimum annual contribution of 0.50 per cent of outstanding guarantees at the beginning of the year. However, the State Government has not created the Guarantee Redemption Fund.

Savings

Savings of ` 9,979.81 crore (74 per cent) occurred in 23 cases relating to 19 grants. In these cases, savings exceeded ` 100 crore and was 20 per cent or more of the grant.

In 12 cases (11 departments), there were persistent savings of 10 per cent or more of the total grants, during the last five years

Advances from Contingency Fund

Advances amounting` 382.07 crore on 52 occasions were withdrawn from Contingency Fund during 2016-17 out of which, on 22 occasions, a totalamount of ` 348.52 crore was withdrawn to meet expenditure which were neither unforeseen nor of emergent nature.

Excess over provisions requiring regularisation

Excess expenditure of ` 2,749.87 crore over provisions occurred during 2001-02 to 2016-17 requires regularisation under Article 205 of the Constitution of India.

Rush of Expenditure

An expenditure of ` 6,966.05 crore (69.82 per cent) was incurred in the last quarter of the year 2016-17 against the total expenditure of ` 9,977.08 crore in 29 heads. Of this, ` 3,970.49 crore (39.80 per cent) of total expenditure was incurred in the month of March 2017 avoiding the provisions of Jharkhand budget manual.

Outstanding Utilisation Certificates against the grants

Utilisation certificates (UCs) of `29,449.52 crore against the Grants-in-aid bills drawn upto 2015-16 by different departments were outstanding as on 31 March 2017 which was indicative of failure of the departmental officers to comply with the rules and procedures to ensure timely utilization of the grants for the intended purpose.

Delay in submission of Accounts of PSUs

The accounts of 19 working PSUs (54 accounts) and 03 non-working PSUs/ Corporations (15 accounts) are in arrear ranging from one to eight years. Despite this, the State Government had extended Budgetary support of ` 2,658.06 crore in 11 working PSUs {Equity: ` 76.25 crore, Loans: ` 1,271.80 crore, Capital Grants: ` 1,310.01crore} during the period. The State Government also extended budgetary support of `15.53 crore to one non-working Company during the period.

Outstanding Detailed Contingent bills

At the end of March 2017, Detailed Contingent bills amounting to ` 5,651crore was outstanding against 9,503 number of Abstract Contingent bills advanced during 2001-2017.

Personal Deposit Accounts /Personal Ledger Accounts

During 2016-17, ` 8,406.87 crore were added in the opening balance of ` 5,217.97 crore and ` 4,136.44 crore spent during the year leaving a balance of ` 9,488.40 crore at the end of 2016-17 in 155 Personal Ledger Accounts.

Booking under minor head ‘800’

GoJ departments routinely operated minor head 800 which is to be operated only in rare cases. During 2016-17, ` 1,335.62 crore under receipts and ` 1,139.59 crore under expenditure was booked under minor heads 800 resulting in opaqueness of transactions.

Apportionment of balances as on reorganisation of the State

Balances amounting to ` 7,443.90 crore under Public Accounts heads along with balance under Capital Section ` 11,935.23 crore and Loans and Advances ` 6,583.36 crore remained to be apportioned between the successor States Bihar and Jharkhand, almost two decades after the reorganisation of the erstwhile State of Bihar with effect from November 2000.

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Report No.2 of 2018 - State Finances Government of Jharkhand
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