Increase in accumulated balances in accounts of 3 J&K Deptts due to improper planning: CAG


128 solar power plants at police establishments non-functional


Jammu: There was an increase in accumulated balances in 1,138 bank accounts of three departments in Jammu and Kashmir between 2014 and 2019 due to factors such as improper planning and undisbursed funds for relief or compensation to victims of militancy and natural disasters, the CAG has said.
It is recommended that there is an effective monitoring mechanism in the union territory in this regard and government instructions are strictly implemented, it said in a report tabled in Parliament recently.
The massive increase in balances were in accounts of 131 Drawing and Disbursing Officers (DDOs) of the public works, revenue and rural development departments, the Comptroller and Auditor General (CAG) of India said.
The CAG made the remarks in its Jammu and Kashmir report on the social, general, economic and revenue for the year ended March 31, 2019.
The increase in the accumulated balances was due to undisbursed funds of relief or compensation to the victims of militancy and natural disasters, improper planning and non-completion of schemes, overstatement of expenditure in utilisation certificates, retention of funds, retention of statutory deductions and land compensation outside the government account, the CAG said.
It said that instructions issued by the government from time to time on consolidation and streamlining of utilisation of funds retained in bank accounts of DDOs were not strictly adhered to.
“Only a meager amount of Rs 64.10 crore was transferred from the redundant bank accounts of DDOs during the period December 2016 to February 2017,” the report said.
“The accumulated balance in 1,138 bank accounts of 131 DDOs of three selected government departments (public works, revenue and rural development) increased from Rs 116.41 crore to Rs 399.94 crore during the period from 2014 to 2019,” it said.
The report said the compliance audit on management of bank accounts in government departments was conducted from February 2019 to February 2020 to assess whether rules and procedures relating to financial matters as well as the circulars or instructions issued by the finance department have been complied with by the DDOs.
“Emphasis was given to assess the compliance by the DDOs to the government instructions of December 9, 2016, regarding consolidation of and reduction in number of bank accounts in government departments. Test-check of records was conducted in 131 DDOs selected on a random basis, of three departments in six out of 22 districts of the (erstwhile) state,” it said.
The state of Jammu and Kashmir in 2019 became a union territory after its special status was revoked the Centre. The erstwhile state was bifurcated into union territories of Jammu and Kashmir and Ladakh.
The test check of records, the report said, was conducted in Jammu, Reasi and Rajouri districts of the Jammu Division and Anantnag, Baramulla and Kargil districts in the Kashmir division.
Kargil is now part of union territory Ladakh after bifurcation of the erstwhile state.
“The audit scrutiny of the records (February 2019 to February 2020) of 131 DDOs of three selected departments in six districts revealed accumulation of undisbursed/unutilised balance in 1,138 bank accounts operated at the end of each financial year during the period from 2014-15 to 2018-19,” the CAG said.
“The cumulative balance of 131 DDOs as on 31 March 2015 was Rs 116.41 crore in 1,138 bank accounts, which increased to Rs 399.94 crore at the end of March 2019,” it said.
The report said the audit also noticed that in the three departments, 44 DDOs had opened 182 bank accounts in banks other than the J&K Bank Limited without obtaining prior approval of the finance department.
The CAG also highlighted the non-compliance of instructions including transfer of cash balance of all government accounts which had remained inoperative for more than a year to official account of the finance secretary without closure of the bank accounts.
It recommended the finance department to ensure strict implementation of the government instructions issued for streamlining of retention of funds in bank accounts. There should also be an effective monitoring mechanism so that funds are not withdrawn by DDOs from the treasury in anticipation of immediate disbursement to avoid accumulation of undisbursed balance in the bank accounts, the CAG said.
Meanwhile, as many as 128 solar power plants at police establishments in Jammu and Kashmir remained non-functional since 2014 due to non-settlement of payment of works contract tax, the Comptroller and Auditor General (CAG) of India has said.
The CAG has asked the J&K Home Department to settle works contract tax (WCT) on priority and ensure rectification of defects in the non-functional plants, so that the investment made is utilised.
In its report on the social, general, economic and revenue for the year ended March 31, 2019 which was tabled in Parliament recently, the CAG said that “non-settlement of payment of WCT with the state taxes department rendered 128 solar power plants (SPPs) installed at police establishments non-functional since September 2014 despite incurring an expenditure of Rs 9.70 crore between May 2014 to January 2015 and availability of maintenance free warranty”.
To ensure uninterrupted power supply to police establishments, a proposal of Rs 37.94 crore to provide solar photovoltaic system for 523 locations was submitted by the Jammu and Kashmir Police on August 25, 2011, to the government for approval and onward submission to the Union Ministry of New and Renewal Energy, it said.
After only two days, a reworked proposal with a total financial implication of Rs 43.31 crore was submitted (27 August, 2011) including additional 25 locations (district police offices),” the report said.
“The government of India, under the Central Financial Assistance (CFA) sanctioned (February 2012) Rs 33.54 crore towards installation of 523 SPPs with an aggregate capacity of 1,408.6 KWP at the establishments of the J&K Police at a tentative cost of Rs 37.94 crore, it said.
Meanwhile, in line with a recommendation of state level purchase committee in March 2012, it was decided to float a notice inviting tender (NIT) in April of that year for the project.
The requirement of 523 locations was reworked to include 25 district police offices, four police stations and 10 police posts. The number rose to 562 and was duly projected in the NIT floated on April 25, 2012, the report said.
It said the lowest bidder quoted a price of Rs 36.14 crore, inclusive of taxes, for the project.
The contract for supply, installation, testing, commissioning and maintenance of SPPs of different capacities, aggregating up to 1553.76 KWP, for 562 locations was placed in March 2013 with the firm for Rs 36.14 crore on the grounds that the price quoted by it was well within the approved budget of Rs 37.94 crore, the report said.
As stated in the NIT, the J&K Service Tax and Value Added Tax (VAT) was not to be applicable to this contract and would be paid extra by the police department, if charged by the state taxes department.
The report said the delivery, installation and commissioning of SPPs was to be completed within six months from the date of placement of the supply order.
As per the terms and conditions of the supply order, the supplier was responsible for free warranty of five years for SPPs, 10 years for power output warranty for solar photovoltaic modules and replacement guarantee of 20 years for the modules,” it said.
Under the scheme, the renewable energy ministry was to provide CFA of Rs 243 per watt or 90 per cent of the sanctioned project cost whichever is less,” the report said.
The ministry, therefore, in June 2013 reduced the CFA to Rs 29.43 crore based on the tendered cost of the project, it said.
The first installment of 50 per cent of CFA or Rs 14.71 crore was released in June 2013 by the Centre to Jammu and Kashmir out of which an amount of Rs 14.39 crore towards payment of 187 out of 252 SPPs installed was made between May 2014 and January 2015, according to the report.
The CAG said post the installment of the 252 SPPs, 163 SPPs were found to be non-functional which included 128 SPPs for which payment of Rs 9.70 crore had been made.
The home department directed (August 2015) the supplier to rectify the defects in the installed 163 SPPs. The supplier informed the department in August 2015 that instead of repairing old power conditioning units of these SPPs, new power conditioning units were dispatched to J&K,” it said.
The material was, however, detained by the sales tax department on the grounds of non-deposit of WCT. The home department took up (February 2015 to May 2018) the matter with the government to either release Rs 3.80 crore on account of WCT at a rate of 10.50 per cent or for waiver of such tax, the report said.
The audit scrutiny in July 2017 of records of the director general of police, police feadquarters, Jammu, revealed that the matter relating to WCT, however, has not been resolved even after a lapse of more than five years, and 128 SPPs have remained non-functional for which payment of Rs 9.70 crore was made up to January 2015.
The DGP, police headquarters, Jammu, in its reply in June 2020 said the non-functional SPPs could not be repaired as spare parts were impounded by the commercial taxes department for non-payment of WCT.
The home department stated that all the issues shall be resolved as soon as the government releases WCT amount or waives it, the report said.
Thus, failure of the department to effectively coordinate and settle the issue regarding payment of WCT with the sales tax department led to impounding of spare parts dispatched by the firm which resulted in non-functional SPPs,” it stated.
As a result, the benefits of installation and commissioning of 128 SPPs could not be availed, despite an expenditure of Rs 9.70 crore having been incurred for installation of these 128 SPPs. The matter was reported to the government on May 2020, their reply is awaited (September 2020), the CAG said.