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Financial Management in Assam
1.
2. 1.1 Since the late 1960s Assam has benefitted from
poverty estimates showing 32% of the population of
liberal Central govt. funding for its Plan and non-Plan
Assam below the poverty line. The State’s GSDP has
needs by the Planning Commission’s Gadgil formula as
risen from 3.7% in the VII Plan from 1985-90 to 6.5% in
amended from time to time. This formula was made for
2007-12 in the XI Plan against the national median of
three Special Category States (SCS), viz. Assam, J&K
5-7-9.1% in the same period. The State’s tax revenues
and Punjab - in the late-1960s primarily to develop
too have grown on a year-to-year basis by about 9-11%
them for they had borders each with a neighboring
while the major sources of revenue remain those from
nation. This formula, with several permutations and
commodities (mainly tea & petroleum) and a buoyant
combinations, continues to date, with Assam receiving
services sector (that grew from an annual 4.5% to 8%
90% of Central assistance as non-interest bearing
against the national median of 7.7-9% in the same Plan
grants-in-aid and 10% as loan. Although the quality of
periods) and rising share of income tax from the Govt.
life of Assamese has improved substantially in the post-
of India. Yet the overall contribution of SCS to GDP,
2003-04 years, yet this State remains one of the poorest
including that of Assam, remains at a minuscule of
in India with the Planning Commission’s 2011-12
0.78% to 1.78% in 2011-12.
2
3. 1.2 Although Assam’s GSDP increased by 12.7% in
relatively small budget deficits.
2011-12, that of other Special Category States, like
1.3 Net borrowings are on a declining trend although
Uttarakhand and Sikkim, fared much better with
old interest liability runs relatively high, but not
24.7% and 19.24% respectively. Such tiny share of
worrisome by the standards of many other larger
GDP could not have owed singly to the marginal
States. In fact, Assam’s debt stock at 21.3% of GSDP
decline of 1.88% in absolute terms from the IVth to
among SCS is perhaps the lowest when compared to
XIIth FC by way of Central assistance to Assam since
Sikkim’s 68.9% and Uttarakhand’s 87.5%. Naturally,
GOI grants have also risen by about 50% in absolute
this reflects positively on Assam’s declining debts &
terms in the last decennial. Yet direct transfers for
liabilities from 37.65% to 27.29% of GSDP in the last
flagship Central schemes may be a major factor for
decennial. A vastly improved cash balance has enabled
such decline but improved the quality of life of
the State to steer clear of any advances and/or
Assamese people. Notwithstanding a rise in absolute
overdrafts from the Reserve Bank of India since 2005-
terms in taxation and Central assistance, Assam’s
06. The position would have been certainly better were
gross revenue has constituted about 18-23% of GSDP
it not for a minuscule 1.04% return on the State’s PSU
per annum in the last decennial while gross
investment in 2011-12.
expenditure has ranged between 21-25% thus leaving
3
4. 1.4 Owing mainly to relatively high inflation and
revenue surplus in 2010-11, a trend that continued
rising
employees,
in 2011-12. Such surpluses mainly owe to the
expenditure on revenue account has risen by an
Financial Responsibility & Budget Management
annual average of 18-24% while that on capital by
(FRBM) Act, 2005 that, inter alia, prescribed
only 2-3% in the last decennial. Obviously, the
maxima of 3% of GSDP as revenue deficit.
accretion of benefit-yielding capital expenditure
However, the above statistics do not necessarily
has been thwarted by rising operating costs of
imply that fiscal and administrative governance
government. After several years of revenue
synergize each other as the succeeding paragraphs
deficits, in 2009-10, Assam returned a small
----would bear out.
wages
of
government
4
5. 2.1
While
40%
of
Assam’s
highways
are
from an over 50% shortage of energy. In fact, the
macadamized & 93% roads remain single-laned, and
overall registration of educated job seekers as per
71% fields have markets more than 5km from the
record of Employment Exchanges increased by
nearest field. Moreover, the average operational land
17.25% in 2010. The PDS Outlet: Population Ratio is
holding size is only 1.15 ha that may account for the
adverse at 1:898 and the State has 14 lakh
State having a low
of
unemployed registered in employment exchanges
commercial banks of only 35.6% against 75.1%
with about 75% of all job-seekers being educated.
nationally. The State is yet to reach self-sufficiency
Assam also ranks 26th among all States in literacy
in productivity as well as minimum nutrition.
rates with 79% for males & 67% for females, 70.44%
Industry is mainly small scale, and the State suffers
rural and 88.88% urban literacy.
deposit: credit
ratio
5
6. 2.2. The sex ratio of the State is heavily skewed at
also higher than the national average of 6.50%. In
1000:957 while the State has India’s highest
sum, while incomes have grown and quality of life
maternal mortality ratio of 390. The labor force is
improved in the State, the State still lacks in basic
equally skewed with 53% marginal female workers
infrastructure and development of basic quality of
against 15% male. Birth rate of 23.6 per mille
life parameters such as energy, roads & bridges,
against the national median of national 22.5 per
hospitals and primary health care, communications
mille and infant mortality of 58 per mille are higher
and roads and bridges, etc. Assam also suffers 16%
than the national average of 47 per mille. The State
power shortage aggravated by 26% T&D losses.
also has a relatively high birth rate of 23.2 and death
Notwithstanding
rate of 8.2 per mille. Yet Assam’s below the poverty
assistance over the last several decades, often to the
population at 19.70% (Lakdawala) or 34.40%
exclusion of equally and more needy states, Assam
(Tendulkar) is relatively lower when compared to
remains on the fringe of assuring a minimally
national averages of 27.5% and 37.20% respectively.
acceptable quality of life for its inhabitants.
large
infusions
of
Central
Assam’s net per capita income growth of 11.50% is
6
7. Tax and non-tax revenues rose 4.5 and 4 folds
respectively but were adversely affected by inflation
GSDP ranged from 4.62% to 6.62% from 2007-08 to
2011-12.
ranging from 2-17% per annum during this decennial,
However, the State’s record in collecting taxes on
particularly from 2009-10. While tax revenue rose
commodities and services with a tax efficiency ratio
partly in tandem with GSDP, non-tax revenue fell
ranging from 0.82%-1.33% in the same period is
substantially short of GSDP growth rate primarily
praiseworthy. In the same period percentage of State’s
owing to PSU/AB losses. The State also remained
share of Union taxes declined from 59.42% to 54.86%.
below the national average GDP growth rate except in
While taxes on income & expenditure have risen,
2009-10 with the services sector expanding by 8.76%
grants-in-aid & contributions have declined compared
in 2010-11. The rise in taxes on income and
with revenue receipts. However, in absolute value,
expenditure owes mainly to a corresponding nine-fold
grants-in-aid increased from Rs. 2351.50 crore in
rise in the share of net proceeds of Union taxes and
2002-03 to Rs. 7666.87 crore in 2011-12, i.e. over a
duties assigned to the State from 2002-03 to 2011-12.
three-fold rise in the decennial, showing continuing
Supported by increasing Central grants-in-aid, the
dependence on central grants. Receipts from Govt. of
State’s revenue and expenditure as percentage of
India increased over 2010-11 by Rs. 2248.64 crore to
GSDP have broadly kept pace with each other, except
Rs.
in 2009-10 owing to arrear payments and salary
appropriation of Rs. 39,482.69 crore, i.e. 43% in
increases recommended by
2011-12.
the 6th
State Pay
16950.40
crore
against
gross
budget
Commission. Percentage of State’s own revenue to
7
8. Although the state registered a fiscal surplus
to emerge between GSDP, debt and other liabilities.
from 2005-06 to 2008-09, 6th Pay Commission
With relatively liberal funding from the GOI,
payments forced it back into a deficit in 2009-10.
Assam’s debt stock at 21.30% of GSDP is the lowest
While interest payments remained largely static
among all SCS and barely a fourth of Uttarakhand.
until 2008-09, these rose substantially from 2009-
In fact, the State’s debts and liabilities have declined
10 owing to more payments under internal debt,
by about a third to 27.29% in 2011-12 from 2002-
Small Savings and PF, etc. While total internal debt
03. Regrettably, the return on the State’s investment
and other liabilities show a rising trend, L&A from
on its public sector enterprises has contributed only
GOI shows a declining trend, all without adjusting
0.5-1% per annum in the last decennial, making
for inflation. Declining L&A from Ministries, other
these a major drain on the State’s economy. With its
than Finance, write-off of loans by 12thFinance
improved liquidity the State has also not taken any
Commission plus Assam’s special category eligibility
ways and means advances since 2004-05.
for 90% grants and 10% loan, has caused a balance
8
9. 4.1 Expenditure on revenue account (18-24% of
social services, where the State’s many beneficiaries
GSDP) has risen appreciably faster than on capital
lie, accounted for only 11%. Even within social
account (2-3% of GSDP) that has stagnated with few
services,
new capital assets being added without adjusting for
accounted for relatively small percentages. Although
inflation. Declining borrowings by 90% SCS grants,
the State shows erratic fiscal health up to 2009-10,
write-off of loans by 13th Finance Commission and
large budget surrenders/undrawn balances every
extra budgetary transfers for flagship schemes and
year by key infrastructure and social welfare
reducing pensions with introduction of New Pension
departments shows that the state is unable to apply
Scheme, have helped raise expenditure on social
such funds even when human development indices
services without adjusting for inflation. Although
are among the lowest in India. This also points to
pensions have remained largely static as a percentage
ineffective schematic monitoring and evaluation both
of total revenue expenditure, in absolute terms they
by the State and GOI.
health,
education
and
social
welfare
have risen by approx. 300% in the last decennial,
without adjusting for inflation.
4.2
However,
surprisingly,
economic
services
accounted for 87% of total capital expenditure while
9
10. 4.3 While there are large budget surrenders every
every year. While, on the one hand, the State was
year, large investments are made in short-term
unable to utilize approx. Rs. 86,000 crore of its
investments in Govt. of India Treasury Bills owing
budget allotments in the past decade, it drew
to unutilized cash balances of the State with RBI. If
several thousand crore of Rupees in March. Since
current bank account balances are factored, the
such moneys were not lawfully available after
State is not short of funds even if Central Plan
March 31 every year, its utilization remains
grants were temporarily reduced. In fact, the 2011-
unknown.
12 Annual Plan’s outlay almost equals gross budget
surrenders/undrawn balances in the same year. The
State’s receipts, its own and from GOI, are received
regularly through the year but about a quarter to a
third of the state’s budget is expended in March
alone. As a logical corollary, the State’s accounts
invariably show a large revenue surplus till March
10
11. 4.5 Assam receives substantial grants (90% as grant
such large funds are made available to Assam at the
and 10% as loan, being a Special Category State) from
expense of needier States.
the GOI. However, the State’s Appropriation Accounts
4.6
for 2011-12 show that Assam had an unspent balance
allocations are decided by the Planning Commission,
of Rs. 10,128.67 crore against total appropriation of
partly on the basis of the achievements of the state
Rs. 39,482.69 crore, i.e. 25.65%. Such large unspent
govt. in the preceding year. When the figures of
balances caused a revenue surplus of Rs. 926.85 crore
expenditure depicted in the Appropriation Accounts
and artificially lowered the fiscal deficit to Rs.
show such large unspent balances and heavy drawings
1,646.05 crore, i.e. 1.43% of GSDP (of Rs. 1,15,409.64
in March alone, these subvert Govt. of India’s Plan
crore), less than half the maxima set by the FRBM Act
budget that finds itself short of resources for more
ibid. If transfers to DDOs’ current bank accounts (ref.
deserving states and artificially inflates both revenue
para 12 infra) are not included as expenditure in the
and fiscal deficits of the Centre.
Future
years’
schemes
and
their
budget
Appropriation Accounts, Assam’s fiscal deficit to
GSDP ratio would decline further and substantially,
although this may detract from avowed State policy to
improve the quality of life for its citizens for which
11
12. 4.7 Section 4 (3) (v) of the State’s Fiscal
57%), Urban Development (57-67%) and Roads &
Responsibility and Budget Management (FRBM)
Bridges (35-38%), Power (55-57%) etc. Within such
Act states that the fiscal deficit is required to be
large
restricted to no more than 3% of the estimated
surrenders, e.g. Water Resources (Rs. 1891.45
Gross State Domestic Product within a period of five
crore), Roads & Bridges (Rs. 1292.02 crore) and
financial years beginning on the 1st April, 2005, and
Power (Rs. 916.88 crore) from 2009-10 to 2011-12.
ending on 31st March, 2010. However, the State’s
Cumulative surrenders over 2009-10 and 2010-11 in
Appropriation Accounts for 2011-12 show that
14 major budget heads alone were Rs. 11716.40
Assam showed unspent balance of Rs. 10128.67
crore. In fact, in 2011-12, except for 2-3 budget
crore against a total appropriation of Rs. 39,482.69
heads where there was excess spending, in all other
crore, i.e. 25.65%. From 2009-10 to 2011-12, the
budget heads there were savings and/or unspent
State surrendered/did not draw 23-37% of its gross
balances - a most unusual trend in an era of major
budget allocation approved by the State Assembly.
budgetary cutbacks country and world wide. Such
Key infrastructure and social welfare departments
savings also carry with it the distinct possibility of
have showed abnormally high surrenders in areas
needier States being underfunded while the revenue
such as Social Service (68-90%), Water Resources
deficit of the Centre artificially mounts.
overall
savings
are
large
capital
fund
(57-68%), Social Security, Welfare & Nutrition (27-
12
13. 4.8 Of the total Plan schematic surrenders of Rs.
colleges and rural family welfare sub-centers, water
16,951.84 crore from 2009-10 to 2011-12, Rs.
supply, child services, mid-day meals for school
9163.28 crore were on account of major schemes
children, flow irrigation, grants for backward
with 75% savings in about a dozen, 50-74% in 18
regions and hill areas, both State and Central, Plan
and 20-49% in another 19, affecting diverse budget
and non-Plan.
heads such as, but not limited to, Water Resources,
4.10 In addition, there were large surrenders of
Hill
Urban
revenue allocations, many of which sub serve Plan
Development, Water Supply & Sanitation, Roads &
schematic expenditure such as Rs. 1,117.36 crore in
Buildings, Rural Development, Medical & Public
Medical & Public Health, Rs.1,730.05 crore in Social
Health and others.
Security, Welfare & Nutrition, Rs. 574.16 crore in
4.9 Even externally funded schemes like those of
Welfare of SC/ST/OBC and Rs. 1,602.27 crore in
the North Eastern Council (NEC) showed savings of
Social Service from 2009-10 to 2011-12. These
Rs. 1,426.72 crore from 2009-10 to 2011-12. Some
include unfilled posts of doctors, teachers, repairs
schemes that showed large savings include flood
and maintenance of existent capital projects, etc.
Areas,
Social
Security/Services,
control of Brahmaputra and Barak rivers, medical
13
14. 4.11 Such large surrenders caused an artificial
Although the State’s departments report large
revenue surplus of Rs. 926.85 crore and artificially
surrenders and/or unspent balances every year
lowered the fiscal deficit to Rs. 1,646.05 crore, in
that invariably leads to an accretion in the cash
2011-12, i.e. 1.43% of GSDP (of Rs. 1,15,409.64
balance of the State held by the Reserve Bank of
crore), less than half the maxima set by the FRBM
India, the State invested Rs. 5146-8858 crore per
Act ibid. However, if 80% of capital allocations
annum in short-term Govt. of India Treasury Bills
were expended, there ought to have been a fiscal
and earned interest thereon, ranging from Rs. 231-
deficit of Rs. 8822 crore in 2011. This, in turn,
481 crore per annum from 2007-08 to 2011-12. In
would have raised the fiscal deficit to 7.64% of
fine, the FRBM Act has not only failed to achieve
GSDP. Likewise, if 80% of revenue budget
its desired objective but, paradoxically, has
allocations were expended, there ought to have
become an instrumentality for subversion of
been a revenue deficit of Rs. 4829 crore in 2011-12.
prudent financial practices and accountability.
14
16. Borders 7 states and 2 countries
Area of 78,438 sq. km
Has 48 major and 128 minor rivers
Population of 31.17 million in 2011
27 districts + 4 under Bodoland TC
2.4% of India’s area home to 2.57% of its population
Decadal population growth of 16.93% against national average of 17.64%
GSDP growth in 2011-12 est. at 8.42%
NSDP growth in 2011-12 est. at 8.42%
Primarily agricultural economy with paddy covering 91% of cultivated land and employing 52% of work force
Manufacturing only 7% of GSDP
Source: Economic Survey of Assam, 2011-12
16
17. Source: Economic Survey of Assam, 2011-12
Services sector growth in 2011-12 est. at highest among all
sectors at 9.74%
Est. 10.73% growth in tax income of State
Per capita indebtedness of Rs. 8677 in 2010-11
20000 population covered by a bank branch against
national average of 14000
Rice production up by 14% in 2010-11
7% of land area eroded by major rivers since 1954
Yet to reach self-sufficiency in productivity as well as
minimum nutrition
Tea industry of 332000 ha. major source of economic and
>10 million heads of livestock
social sustenance
Industry mainly small scale
Except natural gas, Coal, Petroleum(Crude) and Limestone
No improvement in power availability
production declined
PDS Outlet : Population Ration = 1:898
Tele-density of 35.18% below national average of 66.17%
14 lakh registered unemployed in employment exchanges
17
18. Growth of population during 1971-2011 is 113.12 % against the national growth rate of 120.77%
14th in size of population in India
15th in density
15th in sex-ratio
0.19 0.09
26th in literacy
0.09
0.04
0.08
3.7
30.92
64.89
Hindu
Muslim
Christian
Sikh
Buddhist
Jains
Other
Not Stated
Source: Economic Survey of Assam 2011-12
18
19. Source: Economic Survey of Assam 2011-12
Literacy rate 79% for males & 67% for females
70.44% rural and 88.88% urban literacy
Child sex ratio M: F = 1000:957
53% marginal female workers against 15% male
Birth rate of 23.6 per mille against national 22.5 per mille
Infant mortality 58 per mille against national average of 47 per mille
Birth rate 23.2 and death rate 8.2 per mille
BPL population 19.70% (Lakdawala) or 34.40% (Tendulkar) against national averages of 27.5% and 37.20% respectively
GSDP growth rate of 7.34% against national average of 8.5%
19
20. Source: Economic Survey of Assam 2011-12
Net per capita income growth of 11.50% against national average of 6.50%
Average operational land holding size is only 1.15 ha
71% fields have markets more than 5 km from nearest field
16% power shortage aggravated by 26% T&D losses
40% macadamized highways & roads of which 93% single-laned
Deposit : Credit ratio of commercial banks 35.6% against 75.1% nationally
Percentage of educated job seekers about 75% of all job-seekers
Overall registration of educated job seekers as per record of Employment Exchanges increased by 17.25% in 2010
Highest maternal mortality ratio of 390
20
24. 10
Figures In Per cent
9
8
Per Cent
7
6
5
4
3
2
1
0
1985-90
1992-97
1997-2002
2002-07
2007-12
Assam
4.5
4.4
3.9
7.3
8
Median
7.7
5.8
6.9
8.5
9
Assam’s growth rate of services is fast catching up with the national median
24
25. Human Services
• Medical & Public
Health
• Education
• Water Supply &
Sanitation
• I-T enabled
services for
remote areas
Infrastructure
• Power
• Alternative
sources of energy
• Roads & Bridges
• Irrigation &
Waterways
• Water Resources
• Communication
Economic
•
•
•
•
Agriculture
Manufacturing
Financial Services
Employment
25
28. Percent
80
60
40
20
0
GCS Tax:
GSDP
GSDP
GCS
SCS Tax:
GSDP
GSDP
SCS
GCS Tax: GSDP
GSDP GCS
SCS Tax: GSDP
GSDP SCS
2014-15
8.97
13.55
6.31
11.77
2013-14
8.89
13.54
6.24
11.76
2010-11
8.66
12.57
6.02
11.33
2012-13
8.81
13.52
6.16
11.74
2011-12
8.74
13.09
6.09
11.55
2009-10
8.58
10.04
5.94
10.25
While in the case of General Category States (GCS), the gap between GSDP growth and tax rate growth has
worsened from approx. 1.5% in 2009-10 to a projected approx. 4.5%, the Special Category states
(SCS), including Assam, project a rise from approx. 4.5% in 2009-10 to approx. 5.50% by 2015.
Obviously, there is reticence to widen the tax net and/or raise existing rates of state taxes.
28
29. Percent
45
40
35
30
25
20
15
10
5
0
VIII FC
IX FC
X FC
XI FC
XII FC
Transfers as %age of Gross Central
Revenues
37.86
40.33
35.79
35.27
38.51
Total Revenue Transfers from Centre
to States as %age of GDP
10.04
12.57
13.09
13.52
13.54
http://fincomindia.nic.in/ShowContentOne.aspx?id=28&Section=1 pp. 375-376 & http://www.tradingeconomics.com/india/gdp
29
30. http://sfcassam.nic.in/13thFC/13thFCMemorandum.pdf p. 6
Year
Revenue Receipts
of Centre
(Rs. In Crore)
Quantum of FCT
(Rs. In Crore)
FCT as %age of
Central Revenue
Receipts
Actual
devolution
%age
-
-
37.80
-
1999-2000
181482
46222
25.46
-
2004-05
305991
88354
28.87
25.77
2005-06
345754
115345
33.36
27.77
2006-07
434387
136486
31.42
25.41
2007-08
525098
155973
29.70
25.93
1990-91
Although Twelfth FC fixed States’ share of Central taxes at 30.50% of net
proceeds, actual devolution has been below this level.
30
31. http://sfcassam.nic.in/13thFC/13thFCMemorandum.pdf p. 11
Although GOI grants have risen by about 50% in the last decennial in absolute terms, Assam’s share has
declined by 1.88% in absolute terms from the IVth to XIIth FC. However, in real terms the decline is
substantially more when inflation is factored. Direct transfers for flagship Central schemes may be a
major factor for such decline.
31
32. 18
16000
16
14000
14
12000
12
10000
10
8000
8
6000
6
4000
4
2000
Rs. In Crore
18000
2
0
2011-12
2010-11
2009-10 2008-09 2007-08 2006-07 2005-06 2004-05 2003-04 2002-03
Tax Revenue
16921.77 13898.46 10326.25 9340.11
8277.71
7382.31
6288.99
5297.65
4232.39
3748.87
Non-Tax Revenue
0
692.97
2866.76
2373.33
2752.94
2271.9
2134.59
1859.27
1459.28
1070.03
945.8
GSDP %age grow over previous year
10.74
18.4
13.57
6.61
14.62
34.63
8.23
8.51
9.76
Tax as %age of GSDP
17.14
15.62
14.86
14.98
14.33
14.57
12.22
10.04
8.16
7
Tax and non-tax revenues rose 4.5 and 4 folds respectively but were adversely affected by inflation
ranging from 2-17% per annum during this decennial, particularly from 2009-10. While tax revenue rose
partly in tandem with GSDP, non-tax revenue fell substantially short of GSDP growth rate primarily
owing to PSU/AB losses. The State also remained below the national average GDP growth rate except in
2009-10 with the services sector expanding by 8.76% in 2010-11.
32
33. 2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
Percentage of Total Receipts
100%
80%
60%
40%
20%
0%
2011-12
2010-11
2009-10
2008-09
2007-08
2006-07
2005-06
2004-05
2003-04
2002-03
Percentage to GSDP
23.79
24.01
22.59
23.32
21.08
21.55
25.57
22.83
19.36
21.78
Grants/Contributions
27.32
29.27
34.22
35.76
32.06
32.38
35.67
35.92
33.31
34.61
Economic Services
8.24
7.92
9.39
9.18
11.08
11.01
11.08
9.72
10.93
9.51
Social Services
0.09
0.12
0.13
0.12
0.2
0.99
0.32
0.21
0.64
0.19
General Services
0.32
0.39
1.77
0.77
0.92
0.24
0.29
0.64
0.44
0.37
Interest/Dividends/Profits
1.78
1.87
2.56
2.5
1.73
1.36
0.43
0.2
0.17
0.13
Commodities/Services
9.46
37.4
32.41
34.23
34.91
37.63
38.03
38.81
39.69
42.36
Property & Capital Tr.
1.2
1.18
1.16
1.25
1.25
1.27
1.35
1.33
1.61
1.66
20.97
21.83
18.36
16.19
17.85
15.12
12.83
13.17
13.21
11.17
Income & Expdn
The rise in taxes on income and expenditure owes mainly to a corresponding nine-fold rise in the share
of net proceeds of Union taxes and duties assigned to the State from 2002-03 to 2011-12
33
35. State’s share of
Central taxes
47%
State's Own Taxes
53%
Decennial Average
Percentage of State’s own revenue to GSDP ranged from 4.62% to 6.62% from 2007-08 to 2011-12.
However, the State’s record in collecting taxes on commodities and services with a tax efficiency ratio
ranging from 0.82%-1.33% in the same period is praiseworthy. In the same period %age of State’s
share of Union taxes declined from 59.42% to 54.86%.
35
36. 15%
1%
34%
Decennial Average
38%
Income & Expd.
Property & Capital
Commodities & Services
10%
Interest/Dividend/Profit
General Services
Economic Services
1%
1%
While taxes on income & expenditure have risen, grants-in-aid & contributions have declined compared
with revenue receipts. However, in absolute value, grants-in-aid increased from Rs. 2351.50 crore in
2002-03 to Rs. 7666.87 crore in 2011-12, i.e. over a three-fold rise in the decennial, showing continuing
dependence on central grants.
36
38. 5000
4000
3000
2000
1000
0
-1000
-2000
Borrowings
Interest Payment
2011-12
2010-11 2009-10 2008-09 2007-08 2006-07 2005-06 2004-05 2003-04 2002-03
1646.05 1990.56 4043.42 -1406.7
2074.5
1912.12
1832.58 1593.33
-790.1
-711.38
-355.7
1512.24
1515.67
1510.12
2057.45 1393.98
1197.43
1403.53
1244.74
1446.1
Although the state registered a fiscal surplus from 2005-06 to 2008-09, 6th Pay Commission
payments forced it back into a deficit in 2009-10. Although interest payments remained largely
static, these rose substantially from 2009-10 owing to more payments under Internal debt, Small
Savings and PF, etc.
38
39. 20000
140000
Progressive Balances
18000
120000
16000
100000
14000
12000
80000
10000
60000
8000
6000
40000
4000
20000
2000
0
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
Internal Debt
4507.97
L&A from GOI
6482.36 6734.45 6904.25 2875.02 2775.31 2708.44 2639.57 2346.38 2238.69 2143.48
Other Liabilities
2768.36 3331.22 4006.96 4070.73 4675.38 5296.29 6403.74 9444.3
0
GSDP (Rs. In Crore)
36547
5023.5
40115
6633.71 11681.8 12402.5 13032.5 15198.1 16674.0 17903.6 17805.1
43529
47113
63428
72700
77506
88023
9550.37 11548.5
104218
115408
While total internal debt and other liabilities show a rising trend, L&A from GOI shows a declining
trend, all without adjusting for inflation. Declining L&A from Ministries, other than Finance, writeoff of loans by 12th Finance Commission plus Assam’s special category eligibility for 90% grants and
10% loan, has caused a balance to emerge between GSDP, debt and other liabilities.
39
41. 45
As percentage of GSDP
40
35
30
25
20
15
10
5
0
2011-12 2010-11 2009-10 2008-09 2007-08 2006-07 2005-06 2004-05 2003-04 2002-03
%age of GSDP
27.29
28.49
32.34
31.28
28.94
31.3
39.54
40.3
37.61
37.65
Debt and Liabilities as a percentage of GSDP is declining that is a positive sign of the state’s fiscal health
and its ability to sustain itself on limited borrowings. However, this decline owes primarily to the XIIth
FC’s 90% grant and 10% loan component of Central assistance
41
42. Effective %age return for FY
1.21
1.17
0.94
1.04
0.93
0.78
0.69
0.70
0.48
The return on investments in PSUs is negligible owing to their below par performance, although state
investment on them has risen approx. four-fold in the last decennial
42
43. No. of days
2011-12
No. of days without advance
2010-11 2009-10 2008-09 2007-08 2006-07 2005-06 2004-05 2003-04 2002-03
365
365
365
365
365
365
365
No. of days with advance
155
11
23
0
0
0
0
0
0
0
81
39
30
No. of days with overdraft
0
0
0
0
0
0
0
129
315
312
The state is living within its means owing, inter alia, to rising Central assistance from 2004-05
and onward in absolute terms
PRINCIPAL ACCOUNTANT GENERAL (A&E), ASSAM
43
44. 35000
30000
NPE on Capital Account
PE on Revenue Account
25000
PE on Capital Account
GSDP (Revenue)
NPE on Revenue Account
GSDP (Capital)
20000
15000
10000
5000
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
0
Expenditure on revenue account (18-24% of GSDP) has risen appreciably faster than on capital account
(2-3% of GSDP) that has stagnated with few new capital assets being added without adjusting for
inflation.
44
48. As per cent of Total Revenue Expenditure
120
Percentage
100
80
60
40
20
0
2011-12
2010-11
2009-10
2008-09
2007-08
2006-07
2.59
1.04
0.07
0.07
17.71
20.26
22.4
23.3
41.03
38.89
39.08
14.99
10.1
10.52
13.68
13.24
12.8
9.14
11.94
1.39
0.72
1.18
0.93
Grants-in-aid & Contributions
2.47
1.56
Economic Services
17.58
20.34
Social Services
43.22
44.26
40.24
Pensions
12.79
10.68
Administrative Services
13.64
11.74
Debt Servicing
8.32
8.85
Organs of State
0.93
Fiscal Services
1.05
2005-06
2004-05
2003-04
2002-03
0.1
0.13
0.15
0.11
22.18
22.14
18.3
15.39
37.84
41.67
39.78
40.75
10.29
9.61
10.39
10.76
10.92
10.57
12.35
8.98
10.4
12.07
13.47
14.76
15.7
14.15
18.25
18.51
1.25
0.79
0.75
1.08
0.96
1.15
0.82
1.14
1.06
1.18
1.14
1.58
1.21
1.43
Declining borrowings by 90% SCS grant, write-off of loans by 13th FC and extra budgetary transfers for
flagship schemes and reducing pensions with introduction of NPS have helped raise expenditure on social
services without adjusting for inflation. Although pensions have remained largely static as a percentage of
total revenue expenditure, in absolute terms they have risen by approx.
300% in the last
decennial, without adjusting for inflation.
48
49. 6000
4000
2000
0
-2000
-4000
2012-13
2011-12
Revenue 5302.23
926.85
Fiscal
3592.23 -1646.0
2010-11 2009-10 2008-09 2007-08 2006-07 2005-06 2004-05 2003-04
53.12
-1990.5
-1347.7
3833.71 2580.77 2210.42 1509.08
-4043.4 1406.79
790.1
711.38
355.7
-291.87
-684.69
-2057.4
-6000
-1393.9
Although the State shows erratic fiscal health up to 2009-10, large budget surrenders/undrawn
balances every year by key infrastructure and social welfare departments shows that the state is
unable to apply such funds even when human development indices are among the lowest in India.
This also points to ineffective schematic monitoring and evaluation both by the State and GOI.
49
50. 60000
Rs. In Crore
50000
40000
30000
20000
10000
0
2009-10
2010-11
2011-12
Net Savings
3006.75
2640.44
2797.08
Capital
6742.89
5635.59
6537.45
Net Savings
9637.77
11313.55
6416.46
Revenue
30870.4
34265.8
32945.24
Central grants have risen in absolute terms by over 50% in the last decade. Utilization certificates are not
submitted to PAG/AG (A&E) in time – gross average annual cash savings are 23-37% although some
departments have up to 90% in certain years. If unspent balances were drawn in toto, Assam may have had
a large budget surplus every year that would have militated against such excessive funding, if these
amounts were not expended. Transfers to current bank accounts compounds excess cash flow, overstates
physical achievements but understates cash balance and interest.
50
51. Fiscal Year
2009-10
2010-11
R u p e e s
Department
i n
2011-12
C r o r e
Rev
Cap
%
Rev
Cap
%
Rev
Cap
%
Roads & Bridges
129.59
438.02
35.23
264.16
378.09
38.40
224.66
475.91
36.86
Water Resources
22.48
828.41
68.34
69.15
438.72
73.40
11.47
624.32
57.06
Social Security,
Welfare & Nutrition
891.69
0.18
57.36
466.34
1.52
37.65
372.02
0.10
26.63
Power
182.01
125.99
56.73
150.91
166.57
55.29
11.47
624.32
57.06
Welfare of SC/ST/OBC
226.32
9.66
38.98
224.02
0
42.58
123.82
0.24
19.64
Water Supply &
Sanitation
20.21
399.22
47.49
83.36
33.19
22.32
18.03
8.82
6.47
Urban Development
174.34
22.03
56.58
193.73
22.83
53.39
165.37
7.57
66.09
Social Service
391.13
0
68.03
704.82
0
90.43
506.32
0
73.51
Medical & Public
Health
380.65
0
21.15
543.96
0
28.91
192.75
0
11.66
Miscellaneous General
Services
2473.48
0
63.64
95.49
0
58.98
647.57
42.34
27.66
Administration of
Justice
54.74
0
39.44
61.76
0
29.87
76.66
0
37.19
Education
156.65
0.10
22.38
108.66
0
10.86
132.14
0.10
12.29
Secretariat & Attached
Offices
437.62
-1.64
24.66
1114.14
4.78
63.98
479.31
1.50
28.23
Rural Development
153.40
0
27.88
242.59
0
40.74
50.80
0
9.21
51
52. 2009-10 to 2011-12
23-37% of State’s gross budget allocation surrendered annually
Social Service (68-90%)
Water Resources (57-68%)
Social Security, Welfare & Nutrition (27-57%)
Urban Development (57-67%)
Roads & Bridges (35-38%)
Power (55-57%) etc.
Within such large overall savings are large capital fund surrenders:
Water Resources (Rs. 1891.45 crore)
Roads & Bridges (Rs. 1292.02 crore)
Power (Rs. 916.88 crore)
Rs. 11716.40 crore of cumulative surrenders in 14 major budget heads
In 2011-12, except for few budget heads, in all others were savings
52
53. Externally funded schemes like those of the North Eastern Council (NEC) savings of
Rs. 1426.72 crore from 2009-10 to 2011-12 with Rs. 861.01 crore in 2011-12 alone:
Flood control of Brahmaputra and Barak rivers
Medical colleges and rural family welfare sub-centers
Water supply & flow irrigation
Child services & Mid-day meals for school children
Grants for backward regions and hill areas
53
54. 2009-10 to 2011-12
Total Plan schematic surrenders of Rs. 16951.84 crore
Rs. 9163.28 crore on account of major schemes
75% savings in about a dozen
50-74% in 18 and
20-49% in another 19
Affecting diverse budget heads such as, but not limited to:
Water Resources, Hill Areas, Social Security/Services, Urban Development, Water Supply & Sanitation,
Roads & Buildings, Rural Development, Medical & Public Health
54
55. 2009-10 to 2011-12
Large surrenders of revenue allocations that sub serve Plan schematic expenditure such as:
Rs. 1117.36 crore in Medical & Public Health
Rs.1730.05 crore in Social Security, Welfare & Nutrition
Rs. 574.16 crore in Welfare of SC/ST/OBC and
Rs. 1602.27 crore in Social Service
Include unfilled posts of doctors, teachers, repairs and maintenance of existent capital projects, etc.
55
57. 10000
9000
8000
Rs. In Crore
7000
6000
5000
4000
3000
2000
1000
0
2007-08
2008-09
2009-10
2010-11
2011-12
GOI Treasury Bills
5146
8858
8175
6747
6021
Interest
231
351
481
407
464
While there are large budget surrenders every year large investments are made in short-term investments
in Govt. of India Treasury Bills. If current bank account balances are factored, the State is not short of
funds even if Central Plan grants were temporarily reduced
57
58. Artificial revenue surplus of Rs. 926.85 crore that
Artificially lowered the fiscal deficit to Rs. 1,646.05 crore, in 2011-12, i.e. 1.43% of GSDP (of Rs.
1,15,409.64 crore), less than half the maxima set by the FRBM Act
If 80% of capital allocations were expended, fiscal deficit = Rs. 8822 crore in 2011 raising fiscal deficit to
7.64% of GSDP
If 80% of revenue budget allocations were expended = revenue deficit of Rs. 4829 crore in 2011-12
2010-11 & 2011-12 Annual Plan Outlays almost equal gross budget
unspent balances
58
59. Grant
Grant
Apprn.
Grant
savings
Unspent
29- Medical & Public health – 2215 & 2217
1147.44
744.17
65% overall unspent
30-Water Supply & Sanitation – 4215
659.39
459.32
66% overall unspent in
ARWSC
31- Urban Dev (T&CP) - 2217
363.16
279.73
77% unspent in JNNURM
38- Welfare of SC/ST/OBC-2225
223.01
190.59
85% unspent overall
39- Social Security, Welfare & Nutrition – 2235,
2236
3205.98
1930.17
60% unspent overall
42 - Social Services – 2070, 2575
1690.42
1561.30
92% unspent overall
49- Irrigation – 4701, 4702
170.69
170.69
100% unspent overall
59 – Sericulture & Weaving – 2851
28.16
27.82
99% unspent
63 – Water Resources - 4711
2061.26
1610.27
78% unspent overall
64 – Roads & Bridges – 3054, 5054
220.00
220.00
100% unspent
71 –Education - 2202
435.57
430.44
99% unspent overall with
MDMS single largest
73 – Urban Dev (GDD) – 2217, 4217
936.35
516.59
55% unspent overall
76 -78 – Hill Areas & BTC – 2202, 3451
694.66
421.53
61% unspent overall
11836.09
8562.62
72% overall unspent
GRAND TOTAL
59
61. Dept
Unspent Balance
(Rs. In Crore)
Dept
Unspent balance
(Rs. In Crore)
Health
221.25
Irrigation
440.20
Town & Country Planning
109.01
Industry & Commerce
131.73
Mines, Minerals & Power
296.15
Social Welfare
219.08
Hill Areas
380.25
Planning & Development
238.81
Agriculture
280.33
Education (Technical)
117.45
Minority Development
678.64
Education (General)
919.17
Finance
567.57
Finance (Taxation)
377.88
Food & Civil Supplies
225.72
Guwahati Development
407.67
Rural Development
200.85
Public Works
1306.23
WPT & BC
190.42
Home
722.34
Water Resources
629.91
Forest
188.60
Secretariat Administration
1293.85
TOTAL
9952.69
61
62. To state the facts frankly is not to despair the future nor
indict the past. The prudent heir takes careful inventory of
his legacies and gives a faithful accounting to those whom
he owes an obligation of trust.
US President John F Kennedy
62
63. The oldest known accounting records date back to 3500 B. C. and relate to commerce in the Mesopotamian
Valley. The duties of a scribe (a Mesopotamian accountant) were to record commercial transactions and to audit
these transactions to ensure compliance with the Code of Hammurabi, the earliest legal code. To be a scribe in
Mesopotamia was to be an honored and respected member of society.
Governmental accounting developed in ancient Rome. The emperors had control of the Roman Treasury but
the records were maintained by quaestors (Roman accountants). To manage their vast commercial enterprises
within the empire the Romans developed the use of an annual budget.
Medieval accounting was agency accounting. The chief task of the accountant was to monitor the taxes due to
the king from his various counties. Tax settlements were made at a table covered with a checkered cloth. In
England this cloth was named the Exchequer.
The father of modern accounting was Luca Pacioli, a Franciscan friar of the Renaissance period. In 1494 he
published a book on mathematics which contained twenty-six chapters outlining a system of bookkeeping used
by Italian merchants. This system was called the "Method of Venice".
Scotland was the birthplace of the modern accounting profession. In 1854 a group of Scottish accountants
petitioned Queen Victoria for a charter to form a society of accountants.
It was granted and they called
themselves Chartered Accountants using the letters, "C A" as a professional designation.
Many of these Chartered Accountants came to the United States in the late 1800s and set up firms in New
York, Philadelphia, and Chicago.
PRINCIPAL ACCOUNTANT GENERAL (A&E), ASSAM
63
64. The dogmas of the quiet past are inadequate to the
stormy present. The occasion is piled high with
difficulty, and we must rise with the occasion. As
our case is new, so we must think anew and act
anew.
US President Abraham Lincoln (1809-65)
64
