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CAG suggests way out for managing direct devolutions to J&K institutions

For implementation of schemes, the states are supposed to create autonomous societies that are directly linked with the central funding.

, ET Bureau|
Updated: Apr 24, 2013, 05.14 PM IST

SRINAGAR: Comptroller and Auditor General has suggested a separate mechanism that would take care of the central fund devolutions skipping state treasury system in J&K. Quantum of these funds is on the increase. Against Rs 1797.81 crore that various central organizations transferred directly to different state apparatuses in 2010-11, Rs 2875.41 crore was transferred in 2011-12.

For implementation of various schemes, the states are supposed to create autonomous societies that are directly linked with the central funding systems. Programmes like PMGSY, MGNREGA, IAY and even Sarva Shiksha Abhiyan (SSA), NRHM are being implemented by specific state agencies which are registered as societies.

Every penny that is transferred to them skip's state's annual finance accounts as well as the state treasury systems. While the central government is usually aware of the fund flow, state's usually take a long time to know exactly what happens where. CAG seems to be facing the same crisis.

"As these funds are not routed through the state budget, state treasury system, Annual Finance Accounts do not capture the flow of these funds and to the extent, State's receipts and expenditure as well as other fiscal variables / parameters derived from the Finance Accounts do not represent a complete picture of the fund flow of central government resources into the state," CAG observed in its report on J&K.

The CAG, however, is not seeking any fundamental shift in the process. "This systemic weakness can be addressed if there is an information exchange agreement with the implementation agencies," the CAG proposed.

A consistent revenue surplus state, J&K's income constitutes 72.76% of central devolutions including grants and tax shares in 2011-12. Given its narrow income base, J&K has own deficit at 63% in the same year.

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