Bihar withers away

There is no major state in India that collects as little taxes as Bihar, which implies extensive corruption in departments like Sales Tax and Excise. The per capita tax collection in Bihar is about Rs 200; in many states it is well over Rs 1,000. The Bihar government derives nearly half its annual revenue from the Government of India, as its share of Central taxes and on other accounts. Naturally the government is on the verge of bankruptcy.

The financial mismanagement in Bihar has been going on for several years, the responsibility for which will have to be shared by the politicians, the bureaucrats and the CAG. The annual accounts of the Bihar government, vital for effective financial control, have been badly in arrears, inaccurate and undependable. The CAG who is responsible for preparing the annual accounts has been blaming the Bihar government for not supplying the monthly treasury accounts in time to prepare the annual accounts. But few CAGs have ever visited Patna to discuss the problem with the Chief Minister or appeared before the Public Accounts Committee. If this was done a crisis like the one facing the Bihar government could have been avoided and many of the financial scandals would have never occurred.

In his latest Audit Report submitted to the Bihar legislature, there is a separate volume on the fodder scam in which the CAG finds fault with the Finance Department for not detecting the fraud earlier. In a seven-page printed reply, the Finance Department has refuted the charges and tried to put the blame on the CAG.

There is a treasury at Doranda near Ranchi, which is very close to the accountant general8217;s office. In 1994-95, a sum of Rs 110 crore was paid by this treasury to the officials of the Animal Husbandry Department in a few days, when the total budget provision for this department was only Rs 74 crore. The bills in support of this payment came to the formidable number of 55,000. It is unbelievable that nobody in Audit who handled this vast bulk of paper noticed anything wrong while compiling the accounts or auditing the vouchers. Treasuries have to be inspected locally every year by the Audit Department. The Doranda treasury has not been inspected for over 10 years.

The CAG started local audit of the transactions of the Animal Husbandry Department only in June 1996, some months after the CBI took up investigations and the Bihar government itself had dismissed several officials including the Doranda treasury officer. The government auditor was the last to appear on the scene instead of the first. The audit report now goes before the Public Accounts Committee some of whose members were suspected to be involved in the scam which would recommend action to be taken on the audit report to government which is suspected to be also involved in the scam! It is a badly delayed audit report which will be dealt with by the CBI and the courts long before the Public Accounts Committee looks at it. The CAG and his department are becoming increasingly irrelevant in Bihar.

That the CAG continues to ignore major cases of possible fraud would be only too evident from a recent example. Government accounts certified as correct early this year by V. K. Shunglu, the CAG, shows that in 1995-96 Rs 190 crore were drawn in excess of budget provision to pay pensions in Bihar. The total excess on pension payments during the five-year period ending with 1995-96 comes to nearly Rs 600 crore. In a state where excess spending over budget provision gave rise to the notorious fodder scam, excess spending for pension payments on this massive scale should have aroused immediate suspicion.

The excess of Rs 190 crore in pension payments over the budget provision during 1995-96 was disposed of by the CAG light-heartedly in a brief note in the accounts he submitted to the Legislature which says, 8220;the excess requires regularisation8221;. Not a word about the possibility of fraud.

It will be wrong to believe that if the politicians, government officials and suppliers responsible for the fodder scam are punished, the functioning of the Bihar government will become normal again. The constitutional arrangements for the control of public spending through the annual budget, audit by the CAG and action on audit reports by the Public Accounts Committee have completely broken down in Bihar. Budgetary control is impossible without timely and reliable accounts and prompt and intelligent audit. None of this exists in Bihar.

A small team of experts drawn partially from outside the state can perhaps be appointed soon by the Bihar government to suggest ways of overhauling the machinery for financial control and locate the areas where serious financial irregularities have occurred. Cash awards given to the public and government employees who furnish reliable information to the team about fraud and waste, will produce great results.

The writer, a retired accountant-general, is associated with Transparency International