2004年-世界发展银行全球_India___Orissa_State_Financial_Accountability_Assessment_130页_12mb

Orissa State Financial Accountability Assessment Summary

Core Content

This report presents a comprehensive assessment of financial accountability and management in the state of Orissa (Odisha), India, conducted by the World Bank in collaboration with DFID. It highlights the challenges and opportunities for improving public financial management, internal controls, and accountability mechanisms, particularly in the context of fiscal and fiduciary risks.

Main Points

Fiscal Position

• Orissa has one of the lowest per capita incomes among India's 14 major states and a lower growth rate than the national average.
• The state's revenue deficit and fiscal deficit have increased significantly, reaching Rs. 28 billion and Rs. 39 billion by March 31, 2002.
• Capital expenditure is only 8% of total expenditure, and interest payments consume a large portion of the state's own tax revenue.
• The state's own revenue constitutes less than half of total revenue receipts, indicating a reliance on central government and external support.
• The debt burden is considered excessive, with government debt equivalent to more than half of Orissa's annual production, compared to 25% for the rest of the country.

Fiduciary Risk

• The report emphasizes the importance of mitigating fiduciary risk, which includes misuse of funds and lack of economy and efficiency.
• The state's recent reform efforts are linked to the ability to reduce fiduciary risk.
• The current legal and institutional framework for financial accountability is in place but not effectively implemented.

Legislative Scrutiny

• Legislative control over public funds is lacking, with an estimated Rs. 68 billion of "excess" expenditure still awaiting authorization.
• The Public Accounts Committee (PAC) and Committee on Public Undertakings (COPU) are in place, but their recommendations are not being followed up on in a timely manner.

Budgeting and Implementation

• Budget preparation and approval processes are well-established and in line with Indian and international best practices.
• However, the budget has not functioned as a management control tool, with a fiscal deficit in FY 02 exceeding budget estimates by 22%.
• Budget implementation is affected by unrealistic revenue forecasts and liquidity crunches.
• Opportunities exist to improve budget realism, enhance transparency, and strengthen legislative scrutiny.

Internal Control and Audit

• Internal control and audit systems are reasonably sound but lag behind international best practices.
• Payments are often made without reference to budget availability, and internal audit does not report directly to departmental heads.
• There is a need for capacity building, modernization of financial systems, and better integration of financial and performance data.

Financial Reporting

• Financial reporting follows national standards but does not comply with International Public Sector Accounting Standards (IPSAS).
• The true and fair financial position of the state is not adequately presented due to incomplete asset and liability records.
• The "Accounts at a Glance" initiative is a positive step, but reporting formats are overly complex.

State-Owned Enterprises (SOEs)

• SOEs have a legal framework in place but are not functioning as intended.
• Corporate governance and accountability are lacking, with boards not meeting modern standards and senior management tenure being unstable.
• Performance reporting is inadequate, and there is a need for more robust internal and external audit processes.

Rural and Urban Local Bodies

• Rural Local Bodies (Panchayat Raj Institutions) have passed the necessary legislation but lack adequate financial resources and autonomy.
• Financial accountability for these bodies is limited, with inadequate resources, lack of data, and weak internal controls.
• Urban Local Bodies (ULBs) are self-governed but not self-financed, and their financial transparency is hampered by the absence of audited financial statements and outdated accounting practices.

Key Recommendations

• Capacity Building: Strengthen financial management and public accountability through training and computerization.
• Budget Realism: Improve revenue forecasting and disclosure of fiscal risks, departmental objectives, and performance benchmarks.
• Legislative Scrutiny: Enhance the effectiveness of legislative oversight and ensure timely responses to audit findings.
• Fiduciary Risk Mitigation: Implement stronger internal controls, audit systems, and risk management practices.
• Debt Relief and Fiscal Reform: Pursue debt relief and develop a medium-term fiscal framework to address fiscal imbalances.
• Modernization of Financial Systems: Adopt more transparent and simplified financial reporting formats and align with IPSAS.
• Corporate Governance: Improve governance structures for SOEs, ensuring board independence and performance accountability.
• Local Bodies Support: Provide more financial and administrative support to rural and urban local bodies to enhance their capacity for financial management and accountability.

Conclusion

The report underscores the critical need for improving financial accountability and management in Orissa to address its fiscal crisis and enhance public service delivery. It calls for a coordinated and comprehensive reform program that includes legislative, institutional, and technical improvements. The success of these reforms will be essential in ensuring that public funds are used efficiently, transparently, and in the public interest.