25 August : Centre is in the process of introducing a ‘new accrual’ system for government accounts, to bring in more transparency and accountablity, Vinod Rai, Comptroller and Auditor General of India, said on Monday.
A road map has been formulated and in a month or six weeks time, all the states would be called for a discussion to finetune the process, Rai said at the first INKEL Forum of Excellence lecture on ‘Stregthening Financial Management systems’, in Kochi.The roll out of the new system will be over in 3-5 years period, he said.
A Government accounting advisory board at the national level has been formed with State and central government representatives.’We are hoping one year from now the process will start’, he said.
About 20 state governments have already evinced interest in the new system which will help in budget formulations.Successive governments will also become more accountable, he said.Switch over to the new system will also help in overcoming the assest-liablity mismatch.
Citing an example, he said for the 70,000 crore worth oil bonds issued by the government, there is no matching asset."Globally India has arrived. There is no doubting it. Consistently India has been growing at 9 per cent plus. Others look at India with great deal of respect which was not there 15 years ago," he said.
"During the last five to 6 months, though there has been a slowdown, we are still among the largest growing economies of the world," he said.India has inherant strengths to withstand shocks largely due to the huge human capital.
Earlier, the country’s 1.1 billion populace was considered as Non-Performing Assest (NPA), but now 54 per cent of the GDP is contributed by the services sector.Referring to a study conducted two years ago by Morgan Stantley on Brazil-India-China-Russia, by comparing 10 parameters, Rai said on 8 parameters China was ahead while India topped only in two aspects–Telecom and Financial marketing sector.
Stressing the need to build capacities at the lower levels for the proper utilisation of funds allocated to local bodies, he said in 2007-08 about 50,000 crore plan money was to have been chanellised to the local bodies.The panchayat secretaries in many states were not well educated and found it difficult to handle the funds.
To overcome this, a Technical Guidance and support scheme has been kickstarted to train people all over the country to build capacity, he said.
He said lack of Internal controls led to the Fodder scam in Bihar when in the first year over 30 per cent of the amount allocated in the budget had been spent, in the next year about 100 per cent more had been spent and in the third year a very huge amount was utilised.
”We have to avoid these pitfalls. We have the economy which is galloping at 9 per cent and we will be failing in our duty, if we do not facilitate this growth, ensure that resources are well spent”, he said.
India is ”woefully” lacking in physical infrastructure– roads, ports, airports and power are proving to become impediments in the country’s growth story. Kerala has a very low credit-deposit ratio.”There is no quick fix. let us not look for short cuts as they will lead to the crisis being faced by US”, Rai said.
Inkel Managing Director, G C Gopala Pillai, was among those who spoke.Infrastructres Kerala Ltd (INKEL) is a public-private partnership initiated by the Kerala Government to develop world class infrastrucgture facilties in the state.