Bhopal, March 5 (SocialNews.XYZ) Despite slim chances, the Madhya Pradesh harbours aspirations for increased funds particularly for its ailing local bodies, some improvements are expected in accounting system in state’s ailing local bodies as visiting 16th Finance Commission is likely to focus on certain suggestions provided by ace accounting body — Comptroller and Auditor General of India (CAG).
A meeting between the visiting 16th Finance Commission, led by Chairperson Arvind Panagariya, and K. Sanjay Murthy, head of the CAG, deliberated upon various aspects of challenges and solutions in several areas of state and union finances and audits.
Additionally, the Finance Commission and its members conferred with the state’s Chief Minister, Mohan Yadav. The CAG emphasised the critical role of this meeting in the Commission’s evaluation of the financial landscape at both central and state levels. The meeting between these two paramount bodies predominantly focused on the fiscal health of local bodies, public sector enterprises, and state finances.
The CAG suggested standardising accounting practices across all levels of government, including local bodies, which urgently require an integrated financial management system for onboarding payments and fund transfers from the state to urban and rural local bodies. This would streamline accounting practices.
Citing difficulties and financial strain, a well-placed government official explained to IANS that funds routed through the Public Financial Management System (PFMS) integrated with the eGramswaraj platform.
However, state grants are routed via the Comprehensive Financial Management System (CFMS), which is not linked to eGramswaraj. State’s own source revenue is neither routed nor captured through PFMS or CFMS, with local bodies often issuing cheques manually. This lack of integration compromises transparency and accountability.
Moreover, discrepancies exist between accounts prepared on eGramswaraj and those maintained manually. Madhya Pradesh, home to 23,000 Gram Panchayats across 313 blocks with 70 per cent of the population residing in rural areas, continues to focus on service delivery, especially in tribal areas, despite poor local resource collection. Rising living standards and expectations for improved services have added pressures on local governance.
Madhya Pradesh has faced difficulties in asset management and meeting operation and maintenance costs, often relying on state support. As an immediate measure, it was proposed that the accounts of local bodies be harmonised with those of central and state governments in the top 100 cities.
The Central government has been promoting the creation of capital assets in rural areas through programs like Swachh Bharat Mission (SBM) and Jal Jeevan Mission (JJM). Operation and Maintenance (O&M) of these assets, which has been devolved to Rural Local Bodies (RLBs), is critical to maintaining service quality. Recognising the importance of water and sanitation issues, the 15th Finance Commission allocated 60 per cent of its grants for water and sanitation. These funds are released to local bodies after due verification, with overall utilisation deemed satisfactory.
However, some northeastern states face delays in providing Grant Transfer Certificates, an issue being addressed.
According to a well-placed government insider, states frequently demand that cess and surcharge be included in tax devolution, a prospect rendered unlikely post the abrogation of the Planning Commission.
The state’s finances also seek a substantial increase in devolution, much depending on the state-central relationship.
During Wednesday’s meeting in Bhopal, the CAG shed light on the financial strains and stress points hindering the improvement of human development indices, particularly in economically weaker geographies. Further discussions between the two bodies included states’ budget management targets, fiscal responsibility, and the importance of regular reporting of Off-Budget Borrowings.
The CAG observed that for better fiscal performance, states should focus on areas such as stamp duty, registration fees, and state excise collections, which hold significant potential.
Discussions also covered the need for regular updates and use of modern technology to minimise revenue leakages, bring more transparency and enhance data accuracy.
The broadening of the Goods and Services Tax (GST) net, improving GST administration, and augmenting transparency were also deliberated.
The CAG proposed several reforms aimed at broadening the tax base, such as integrating unregistered goods and service providers into the GST framework through automated data collection and enhancing taxpayer verification processes.
Source: IANS
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