2014年-世界发展银行全球_Government_of_Karnataka_Public_Financial_Management_Reform_Action_Plan_2014_Volume_1_Main_Report_72页_1mb

Karnataka PFM Reform Action Plan - 2014 Summary

Core Content

The Government of Karnataka (GOK) has been actively pursuing public financial management (PFM) reforms since 2001, with a focus on improving transparency, accountability, and efficiency in financial governance. A 2004 World Bank-assisted Public Financial Management and Accountability (PFMA) Action Plan was developed to support these efforts, and while many accomplishments have been made, several challenges remain. The 2014 PFM Reform Action Plan aims to build on these achievements and further strengthen the PFM framework.

Main Objectives

• Strengthen PFM legal and institutional frameworks
• Enhance the comprehensiveness and credibility of the state budget
• Improve accounting, reporting, controls, and transparency
• Improve fiscal assets and liability management
• Strengthen audit and legislative oversight
• Improve PFM in local self-governments and public sector undertakings

Key Accomplishments from the 2004 PFMA Action Plan

• Improved fiscal discipline and budget outturns
• Increased fiscal transparency by making budget documents available to the public
• Implemented a computerized treasury system, enhancing decision-making and reducing short-term loans
• Introduced e-governance initiatives in commercial taxes, improving revenue collection and user service
• Developed a Human Resource Management System (HRMS), enabling timely salary payments and better control over expenditure
• Launched e-procurement across the state, improving competition and saving government resources
• Improved timelines for completing accounts and audit reports
• Introduced fund-based computerized accounting in urban local bodies (ULBs) and double-entry accrual accounting in gram panchayats (GPs)
• Issued new cadre and recruitment rules for KSAD staff, including mandatory training for promotions
• Liberalized the delegation of financial powers to prioritize fund release and usage
• Phased out Letter of Credit (LOC) payments and made treasury payments compulsory

Gaps and Challenges Identified

• Outdated Financial Manuals: The current PFM framework is guided by outdated manuals and handbooks that need to be revised to align with the new integrated financial management information system (IFMIS), Khajane II (KII)
• Capacity Constraints: The finance cadre and the Karnataka State Accounts Department (KSAD) face capacity constraints that hinder effective implementation of PFM reforms
• Supplementary Budgets: The use of multiple supplementary budgets affects fiscal discipline and credibility, with the need to reduce the number of such budgets to one per year
• Weak Internal Controls: Despite automation, there are still issues with reconciliation, compliance with controls, and accounting treatment, especially in the case of reversals and public deposits
• Unpaid Bills and Arrears: Departments like the Public Works Department (PWD) have accumulated significant unpaid bills and arrears, which impact fiscal indicators
• Capital Expenditure Challenges: Increasing subsidies and unfunded commitments have reduced the revenue surplus, affecting the availability of funds for capital expenditure
• Need for Performance-Based Budgeting: The state needs to align its budgeting process with a results framework and introduce performance-based budgeting

Way Forward

• Implement Khajane II (KII): The state is in the process of implementing the integrated financial management information system (IFMIS), KII, which will cover 12 core treasury modules in Phase 1 and other departments in Phase 2
• Strengthen KSAD and IFA: The Karnataka State Accounts Department (KSAD) and Internal Financial Advisors (IFA) need to be strengthened to support the implementation of PFM reforms
• Reduce Supplementary Budgets: GOK should aim to reduce the number of supplementary estimates to one per year and improve control over re-appropriations
• Improve Budgeting Practices: The budget should be prepared for filled posts and planned recruitment, reducing unnecessary provisions and the need for in-year adjustments
• Enhance Accountability Mechanisms: The state needs to improve its accountability framework by aligning with the requirements of the Karnataka Fiscal Responsibility Act (KFRA) and enhancing audit and legislative oversight
• Strengthen E-Procurement: Addressing underlying control mechanisms and data validation in the e-procurement system is critical. Key actions include CAG IT audit and implementation of a contract management module
• Improve Cash Management: The state should rework fund flow arrangements for centrally sponsored schemes and use the state treasury system/public deposit accounts instead of bank accounts of implementing agencies

Recommendations

• Update financial manuals and codes to align with the new PFM processes
• Conduct a comprehensive skills mapping and training program for KSAD and IFA
• Reduce the number of supplementary budgets and improve control over re-appropriations
• Align budgeting with the results framework and introduce performance-based budgeting
• Implement a rolling forecast (MTEF) and better scheduling of works to improve budget predictability
• Ensure data validation and audit readiness before migration to HRMS II
• Strengthen internal controls and ensure timely reconciliation of financial transactions
• Develop a strategy to clear outstanding arrears and control future capital commitments

Conclusion

The 2014 PFM Reform Action Plan represents a continuation and deepening of GOK’s efforts to modernize and strengthen its financial management systems. The plan focuses on improving transparency, accountability, and efficiency through technological upgrades, policy reforms, and institutional strengthening. It builds on the successes of the 2004 PFMA Action Plan and addresses the current gaps in the PFM framework to ensure sustainable fiscal management and better public service delivery.