Es más, esta buena correlación se mantiene en los diversos tramos del circuito

6.36 The surrender of State plan funds by LSGIs due to the non-implementation of schemes is an area of concern. As per the Report of the Comptroller and Auditor General of India on Local Self Government Institutions for the year ended March 2012, out of Rs 1410.02 crore allotted during 2011-12 under 13 distinct heads, a sum of Rs. 197.27 crore was surrendered.

The major surrender was noticed under Major Head 2217-Urban Development. Out of the total allocation of Rs 210.51 crore under this head, Rs 153.76 crore was surrendered (73 percent) indicating poor utilisation of fund for implementation of State Sponosred Schemes.

Non utilisation of fund was due to delay in approval and slow implementation of projects. In addition to surrender of funds, a large chunk of fund is transferred to Deposit head. Audit scrutiny of funds transferred to Deposit Head and its utilisation for the period 2006-2012 revealed that Rs 1458.30 crore remained unutilized as at the end of March 2012. The accumulation of fund increased every year from 2006-07 due to non/slow implementation of plan schemes by LSGIs (C&AG Report on Local Self Government Institutions, No.2, 2013). The Committee feels that the transfer of funds to Deposit Head of LSGIs actually inflate the plan spending and thus, the information on plan spending is misleading and unreliable. This practice is unhealthy and unwarranted and thus the Committee recommends that urgent steps may be initiated to stop this practice and the unspent amount may be forfeited to the State treasury. 59.63 77.01 62.08 62.47 0 10 20 30 40 50 60 70 80 90 Disctrict Panchayat Block Panchayat Grama panchayat Municipality % TSP Fund Utilisation Chart 6.5

6.37 Among the reasons behind the lagged implementation of schemes, the delayed release of funds to LSGIs is the important factor. Monthly transfer credit of fund from Consolidated Fund to Public Account was devised as a means to ensure availability of fund for incurring expenditure by LSGIs. The State Finance Department was required to transfer fund on the first working day of the month. It was noticed that there was delay in transferring funds ranging from two to 47days in 24 out of 32 transfer of credit made during 2011-12. (CAG Report on Local Self Government Institutions, No.2, 2013).

6.38 There were delays in issuing Letters of Authority by the Controlling Officers. Delay ranging from 2 to 81 days was noticed in 96 out of 128 instalments of LSGI funds released during 2011-12. (AG Report No.2, 2013). The delay in issue of Letter of Authority has resulted in deficiency of fund and consequent delay in implementation of projects.

6.39 Non-release of full amount received by State Government from the Government of India to LSGIs in another issue in this context. As per the AG Report on LSGIs, 2013, the Child Development and Social Welfare Department retained 69 percent of fund reimbursed by GOI to LSGIs towards expenditure on the implementation of Supplementary Nutrition Programme implemented by LSGIs.

6.40 Many items of GOI grants to LSGIs are not released timely. As per the recommendation of the 13th _{FC, GOI grant to LSGIs has to be released in two tranches within three days of}

receipt of funds from GOI or in the first week of the months of July and January of every fiscal year if the grant from GOI was not received till then. It was noticed that there was delay in the release of 13th _{FC grant by State Government to LSGIs. The second instalment} of the Finance Commissin grant was released in March 2012 instead of January 2012. (AG Report No.2, 2013).

6.41. Spending the plan outlay on non priority sectors also amounts to misutilisation of funds. Production activities account for only 13.36% of plan expenditure of LSGIs during 2011-12. Also, the agriculture and allied sectors accounts for only 10.30 percent of total plan utilisation (for details see Sulekha, Eleventh Five Year Plan 2007-12, http://sulekhaweb.lsgkerala.gov.in). The lower share of development expenditure in production activities is a serious concern and corrective steps will have to be taken in future.

6.42 In addition to low priority to productive activities by LSGIs, the diversion of funds to non-development activities is a serious concern. During 2011-12, the Controlling Officers under the direction of the Government, deducted Rs 30.02 crore from Development Expenditure Fund and remitted the same to Kerala Water Authority towards arrears of water charges of LSGIs. (AG Report No.2, 2013). Utilisation of Development Fund for routine non plan expenditures derails the development activities at local level. The Committee strongly recommends that diversion of funds from priority activities to non-priority activities (including non-plan routine expenditures) should be dispensed with.

6.43 The high establishment cost in LSGIs and resultant use of plan funds for the same reduces the fund available for development activities. This situation is very evident in the case of Urban Local Bodies (ULBs). As against ULBs own revenue and General Purpose Fund totalling Rs 589.08 crore during 2011-12, Rs 679.58 crore was spent towards establishment expenses. Out of Rs 333.84 crore towards Development Fund received from the State Government, Rs 90.50 crore (27.10%) was diverted for incurring establishment expenditure, which had adverse implications on development works. (AG Report No.2, 2013).

6.44 Public investment in social sector and rural development through major CSSs are made to LSGIs by agencies such as Kudumbasree, KSUDP, Suchitwa Mission etc. The grants for CSSs enjoin upon sanctioning authorities to GOI the responsibility to ensure proper utilisation of grant money. This is to be achieved through receipt of progress reports, utilisation certificate and internal audit of schemes accounts in LSGIs. Out of Rs 2099 crore released by GOI/State Government, substantial portion of funds amounting to Rs 528.02 crore was lying unspent with Kudumbasree, KSUDP, Suchitwa Mission etc., there by defeating the purpose for which the funds were earmarked and released by GOI/State Government. (AG Report No.2, 2013). The Committee recommends that the sub agents receiving funds for CSS must properly monitored and made accountable.

IV. Summary and Conclusion

6.45 The plan outlay is not spending efficiently in the State, both in Departments and LSGIs. In addition to shortage of actual plan spending from the outlay, a major share of annual spending is bunching towards the last quarter and that too during the month of March. There exists a great disparity in plan utilisation among Departments. Many Departments are not

Departments even could not spend up to 60 percent of sanctioned plan outlay. Out of 37 Departments, only seven Departments received the status of Very Good Department with respect to plan spending. In the case of Centrally Sponsored schemes also, the performance of many Departments are very unsatisfactory. Many Departments could not utilise even 60% of 100% CSS. No accountability is fixed on officers for lapses for poor plan spending. The plan achievement is not evaluated based on physical outcome. The evaluation of the plan schemes based on the methodology of Research Framework Document (RFD) is yet to be implemented. At LSG level also, performance with respect to quality of spending is very poor. Many LSGIs could not even spend up to 50 percent of plan outlay. In addition to underutilization of sanctioned funds, there exists wide variation in spending among LSGIs. In the case of SCP and TSP, only 69% and 66% respectively of sanctioned funds were spent during 2011-12. Within LSGIs, the performances of urban local bodies (ULBs) are deplorably poor in all aspects. Important identified factors, contributing to the poor implementation plan schemes of LSGIs are: the surrender of plan funds, large scale accumulation of funds in Deposit account, diversion of development funds for non-plan recurring expenditures, high establishment cost, low priority to productive sector activities, under utilisation of funds by State level nodal agencies which are functioning for LSGIs, not adhering to timely preparation and submission of monthly progress reports by LSGIs, delay in issuing Letter of Authority by the Controlling Officers, delayed monthly transfer of credit from Consolidated Fund to Public Accounts and non-release of full amount of grants of GOI to LSGIs by the concerned Departments.

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