2007年-世界发展银行全球_India___Synthesis_Study_of_Public_Financial_Management_and_Accountability_in_Urban_Local_Bodies_66页_623kb

Summary of the Synthesis Study on Public Financial Management and Accountability in Urban Local Bodies (India)

Core Content

This document presents a synthesis study on Public Financial Management and Accountability (PFMA) in urban local bodies (ULBs) in India, conducted by the World Bank between March and December 2006. It outlines the current state of PFMA systems, identifies good practices, and suggests ways to improve them. The study is based on the PEFA (Public Expenditure and Financial Accountability) framework and is intended to support the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) and other reform initiatives.

Main Viewpoints

• Importance of PFMA: Improved PFMA is essential for better urban governance and performance. It leads to enhanced accountability, better revenue flows, and improved service delivery.
• State-Level Variations: PFMA practices vary significantly across Indian states due to differences in legislation, capacity, and implementation.
• Legislative Framework: The 74th Constitutional Amendment Act (CAA) of 1992 established the legal basis for PFMA in ULBs. However, many states lack comprehensive and enforceable legislation.
• Budgeting and Planning: Budgeting in ULBs is often limited to statutory requirements and lacks strategic and participatory elements. Some states, such as Karnataka and Kerala, have demonstrated better practices in this area.
• Budget Execution: Weak monitoring, lack of variance analysis, and unpredictable transfers hinder effective budget execution. The implementation of a double entry accounting system is seen as a way to improve this.
• Accounting and MIS: Most ULBs use a single-entry cash basis of accounting, which limits their ability to prepare meaningful financial reports. There is a need for adoption of double-entry systems and modern MIS.
• Procurement: Procurement systems are fragmented and lack transparency. There is a need for standardization, e-procurement, and stronger oversight.
• Internal and External Audit: Internal audit systems are generally weak and non-independent, while external audit is also underdeveloped. There is a need for strengthening both through capacity building and policy reforms.
• Asset and Liability Management: ULBs hold significant fixed assets but often fail to manage them effectively. A comprehensive asset database and better policies are needed.
• Public Oversight: There is a lack of public involvement in ULB governance. Strengthening transparency and public access to financial information is crucial for accountability.

Key Information

PFMA Framework Overview

The PFMA framework in this study is based on the PEFA framework and includes the following strategic areas:

• Enabling Legislation
• Budget Planning
• Budget Execution
• Accounting and Management Information Systems (MIS)
• Reporting
• Cash and Fund Flow Management
• Procurement
• Internal Control and Audit
• Assets and Liabilities Management
• External Audit
• External Oversight

Current Practice in PFMA

• Legislative Framework: State-level municipal acts govern ULBs, but many lack comprehensive rules and enforcement mechanisms.
• Budget Planning: Budgets are often seen as a statutory requirement, not a strategic planning tool. Some states have made progress in participatory budgeting and multi-year planning.
• Budget Execution: Weak monitoring and forecasting, along with unpredictable transfers, hinder effective budget execution. Some cities, like Madurai, have shown progress in managing cash flows.
• Accounting: Single-entry cash-based accounting is still prevalent. Only Tamil Nadu has implemented a double-entry system across all ULBs.
• Procurement: Inconsistent rules and limited capacity in both public and private sectors lead to inefficiencies. E-procurement initiatives are being explored in some states.
• Internal Audit: Internal audit systems are often non-existent or poorly defined. Some ULBs have standing audit committees, but independence and effectiveness are lacking.
• External Audit: The Local Fund Audit (LFA) is the primary external audit mechanism, but it is under-resourced and faces a backlog. The Comptroller and Auditor General (C&AG) is now involved in more detailed audits.
• Assets and Liabilities: Many ULBs lack proper asset inventories and management policies. Some cities, such as Ludhiana and Indore, have taken steps to improve this.
• Reporting: Reporting is inadequate and not user-friendly. There is a need for more transparent and accessible financial reporting.
• Public Oversight: Citizen involvement is limited. Initiatives like PROOF and Citizen Report Cards in Bangalore show potential for improving public oversight.

Recommendations and Way Ahead

• Improve ULB Budget Preparation: Develop a model budgeting manual that includes output/outcome budgeting, multi-year planning, and procurement planning.
• Support for Accounting Rules: Review and update the National Municipal Accounting Manual (NMAM) to align with International Public Sector Accounting Standards (IPSAS). Establish a centralized technical assistance unit.
• Strengthen ULB Audit: Form a task force to assess and enhance audit capacity. Introduce performance and management audits, and provide training for auditors.
• Improve Procurement Performance: Develop a model procurement regulation, standardize reporting, and promote e-procurement. Introduce transparency laws and link fund releases to implementation.
• Staffing and Capacity Building: Enhance training and professional recruitment for ULB finance staff. Develop PFMA-focused curricula and courses.
• PFMA Report Card: Introduce a scoring system based on PFMA indicators to monitor progress and encourage accountability.
• Ensure Legislative Compliance: Mandate the publication of budgets and financial statements to the public. Fix timelines for action reports on audit findings.
• Improve Public Oversight: Promote the use of annual performance reports with financial statements and management analysis. Ensure public access to these reports through websites and media.

Conclusion

This study highlights the importance of PFMA in improving urban governance and service delivery in India. It identifies key challenges and offers a roadmap for reform, emphasizing the need for legislative support, capacity building, and enhanced transparency and accountability mechanisms. The recommendations are aimed at creating a more effective and responsive PFMA system in urban local bodies across the country.