report of the comptroller and auditor general of ndia on...

I

Report of the Comptroller and Auditor General of ndia

on Social, Economic, General

Revenue and Economic (PSUs) Sectors

For The Year Ended March 2012

Government of Arunachal Pradesh

Report No. 1 of 2013

I

REPORT OF THE

COMPTROLLER AND AUDITOR GENERAL

OF INDIA

ON

SOCIAL, ECONOMIC, GENERAL

REVENUE AND ECONOMIC (PSUS) SECTORS

For the year ended 31 March 2012

GOVERNMENT OF ARUNACHAL PRADESH

I

TABLE OF CONTENTS

Paragraph(s) Page(s)

Preface v

Executive Summary vii

CHAPTER I - SOCIAL SECTOR

Introduction 1.1 1

Health and Family Welfare Department

Integrated Audit of Health and Family Welfare Department 1.2 3

Sports and Youth Affairs Department

Extra expenditure due to adoption of wrong schedule of rates. 1.3 32

Undue benefit to Contractors 1.4 33

Social Welfare, Women and Child Development Department

Doubtful expenditure on distribution of SNP items 1.5 34

Education Department

Loss due to injudicious procurement of text books 1.6 36

CHAPTER II-ECONOMICSECTOR

Introduction 2.1 37

Rural Development Department

Mahatma Gandhi National Rural Employment Guarantee

Scheme (MGNREGS) 2.2 39

Tourism Department

Unfruitful expenditure on construction of,multi-purpose hall

and mini resort at Zemithang 2.3 78

Agriculture Department

Excess expenditure on procurement of crop seeds 2.4 81

Rural Works Department

Extra expenditure due to allowing higher grade/rate for soil excavation

2.5 83

Non-realisation of Departmental Charges 2.6 84

CHAPTER III - GENERAL SECTOR

Introduction 3.1 87

Secretariat General Services Department

Admission of fraudulent medical claims due to failure in exercising due diligence.

3.2 49

Land Management Department

Wasteful expenditure on defective cadastral survey work 3.3 90

Audit Report for the year ended 31 March 2012 (Social, General and Economic Sectors and PSUs)

II


Home (Police) Department and Director, Tirap and Changlang Affairs

Loss/thefit of cash due to negligence 3.4 92

CHAPTER IV-ECONOMIC SECTOR (PUBLIC SECTOR UNDERTAKINGS)

Overview of State Public Sector Undertakings 4.1 95

Department of Power

Performance Audit on Power Transmission activities 4.2 105

Unfruitful expenditure 4.3 137

Department of Hydro Power Development

Loss of interest on mobilization advance 4.4 139

CHAPTER V - REVENUE SECTOR

General 5.1 141

Taxation Department

Concealment of Purchase 5.2.1 150

Loss of Revenue due to non - deduction of tax at source 5.2.2 151

Non-registration of a dealer 5.2.3 152

Concealment of sale of cement 5.2.4 152

Non-levy of penalty due to non-submission of reports of audit

of accounts

5.2.5 153

Loss of revenue due to non-initiation of system of physical

verification of Declaration Forms

5.2.6 154

Loss of revenue due to import of taxable goods by one

unregistered dealer

5.2.7 155

Evasion of tax by fraudulent means 5.2.8 155

Evasion of tax by Government Department 5.2.9 156

Loss of revenue due to non - accountal and improper custody

of Declaration Forms

5.2.10 157

Loss of revenue due to non-registration of Government Department as dealer

5.2.11 158

Non-levy of penalty 5.2.12 159

Non-realisation of Entry Tax 5.2.13 159

State Excise Department

Non-realisation of Establishment Charges 5.2.14 160

Non-realisation of Renewal Fees and Penalty 5.2.15 160

Evasion of tax 5.2.16 161

Unchecked misuse of Declaration Forms by fraudulent dealer 5.2.17 162

Table of Contents

III


Non-realisation of tax due to evasion by unregistered dealers

and non-deduction of tax at source by Government

Departments

5.2.18 163

Non-realisation of Security Deposit 5.2.19 163

Loss of revenue 5.2.20 164

Non-realistion of Import Fee 5.2.21 165

Short/non-realisation of initial Licence Fee and Security

Deposit

5.2.22 165

Land Management Department

Non-realisation of Land Revenue 5.2.23 166


IV

APPENDICES

Page(s) Appendix - 2.2.1

Details of Sample Districts, Blocks and GPs selected for test-

check

169

Appendix - 2.2.2

Statement showing training imparted by SIRD to stake holders

170

Appendix - 2.2.3 Statement showing delays in release of fund 174

Appendix - 2.2.4 Statement showing year-wise physical and financial target and

achievement attained in execution of component-wise works/

activities under the Scheme in the State and six test-checked

districts

178

Appendix - 3.1 Statement showing total amount of medical claim admitted

vis-a-vis actual payment due and excess amount claimed and

admitted.

180

Appendix - 4.1 Statement showing particulars of up-to-date paid-up capital,

loans outstanding and Manpower as on 31 March 2012 in

respect of Government companies.

182

Appendix - 4.2 Summarised financial results of Government companies for the

latest year for which accounts were finalized 184

Appendix 4.3 Statement showing equity, loans, grants and subsidy

received/receivable, guarantees received, waiver of dues, loans

written off and loans converted into equity during the year and

guarantee commitment at the end of March 2012

186

Appendix - 4.4 Statement showing investment made by the State Government

in State government companies by way of equity, loans, grants

and others during the period which the accounts have not been

finalized.

187

Appendix - 4.5 Details of 1.32/220/400 KV transmission lines proposed to be

constructed during 2007-12. 188

Appendix - 4.6 Statement showing voltage-wise capacity additions planned,

actual additions and shortfall from 2007-08 to 2011-12. 189

Appendix - 4.7 Details of LOAs issued in connection with construction of 132

KV Transmission line from Aalo to Pasighat i/c 2 x 5 MVA at

Pasighat and By Extension at Aslo.

190

v

PREFACE

This Report of the Comptroller and Auditor General of India has been

prepared for submission to the Governor under Article 151 of the

Constitution for being laid before the State Legislature.

This Report is prepared in V Chapters. Chapters I to V deal with Social.

Economic, General, Economic (Public Sector Undertakings) and Revenue

Sectors. The Report deals with the findings of performance reviews and

audit of transactions in various departments, Statutory Corporations,

Government Companies and Revenue Receipts.

The cases mentioned in the Report are among those which came to notice

in the course of test-audit of accounts during the year 2011-13 as well as

those which had come to notice in earlier years, but could not be dealt with

in previous Reports. Matters relating to the period subsequent to 2010-12

have also been included, wherever necessary.

Audit observations on matters arising from the examination of Finance

Accounts and Appropriation Accounts of the State Government, for the

year ended 31 March 2012, are included in a separate Report on State

Government Finances.

Audit has been conducted in conformity with the Auditing Standards issued

by the Comptroller and Auditor General of India, based on the auditing

standards of the International Organisation of Supreme Audit Institutions.

v

EXECUTIVE SUMMARY


viii

EXECUTIVE SUMMARY

This Audit Report has been prepared in five Chapters. Chapters I to V deal with

Social, Economic, General, Public Sector Undertakings and Revenue Sectors. This

Report contains two Performance Reviews, one Integrated Audit and 36 Audit

Paragraphs based on the audit of certain selected programmes and activities and the

financial transactions of the Government including Revenue Receipts, audit of

Government Companies and Statutory Corporations.

According to the existing arrangements, copies of the draft audit paragraphs, draft

performance reviews and draft Chief Controlling Officer based Audit were sent to the

concerned Secretaries/Principal Secretaries to the State Government by the

Accountant General with a request to furnish replies within six weeks. The

Secretaries/Principal Secretaries were also reminded for replies. Besides, a demi-

official letter was also sent to the Chief Secretary to the State Government on the

issues raised in the draft audit paragraphs, draft performance reviews etc., for

effective inclusion of the views/comments of the Government in the Audit Report.

Even after making serious efforts, replies were not received in respect of thirty-one

audit paragraphs from the concerned Principal Secretaries/Secretaries to the State

Government.

A synopsis of the important findings contained in this Report is presented in this

Executive Summary.

CHAPTER-I

SOCIAL SECTOR

1.2 INTEGRATED AUDIT OF HEALTH AND FAMILY

WELFARE DEPARTMENT

The Department of Health and Family Welfare is responsible to deliver curative and

preventive health care services to the people of the State. This includes family welfare

services such as maternal and child health, control of communicable diseases, etc. For

this, the Department has an institutional network consisting of Health Sub-Centres

(HSCs), Primary Health Centres (PHCs) Community Health Centres (CHCs) and

District/General Hospitals.

Performance of the Department for the period 2007-12, and its various functions

(excluding National Rural Health Mission (NRHM)), was examined. Mismatch in

creation of infrastructure, irrational deployment of available manpower and not

making available of requisite qualified manpower to various units were noticed in

Audit. These were the main reasons for not utilising the available resources most

advantageously. As a result various healthcare facilities created after incurring huge

amounts remained non-operational and consequently remained unproductive. Also,

the public were deprived of much needed healthcare services. Monitoring and


viii

evaluation mechanism was absent in the Department. Following are the highlights of

the more important findings:

The Department did not have a Strategic Plan that recognised the long term healthcare

requirement of the State and roadmap to create the required infrastructure

andfacilities so needed.

(Para 1.2.7)

• During 2007-12, the department could not spend budgeted funds. Total unspent

provisions under Plan expenditure during the period were ₹32.13 crore implying that

the department was not able to implement all the activities planned during those years.

(Para 1.2.8.1)

• The available manpower was not rationally deployed. There was excess deployment of

Medical Officers/Staff Nurses in the Hospitals in urban areas, depriving the rural

populace of other Districts proper health care services.

(Para 1.2.9.1 to Para 1.2.9.3)

• Bio-Medical Waste Plant was yet to become operational at six District Hospitals. Bio-

Medical Waste was disposed off in an unscientific manner.

(Para 1.2.10.1 and 1.2.14.2)

• The objective of tele-consultation and dissemination of information, which could have

benefitted patients in peripheral and rural hospitals, could not be achieved and did not

benefit the Hospitals as Machinery/Equipment worth ₹4.52 crore supplied by the

APSCST for setting up of the ‘Telemedicine System’ were lying idle.

(Para 1.2.10.2)

• Ayurvedic IPD wings at three District Hospitals and Drug De-addiction centres

remained non-functional even after spending huge amounts on their establishment.

(Para 1.2.10.3 and Para 1.2.10.4)

• Several equipment remained idle as the same were purchased/provided without

providing the complement infrastructure and manpower required for their functioning.

(Para 1.2.11.1, Para 1.2.11.2, Para 1.2.11.3 & Para 1.2.11.4)

• The Department incurred avoidable expenditure of₹70.06 lakh on procurement of

medicines.

(Para 1.2.13.1.1., Para 1.2.13.1.2)


viii

• Inadequate facilities resulted in unhygienic storage of drugs and medicines in Hospitals

and other Health Units. Medicines were distributed/ utilized by Hospitals and other

Health Units without carrying out quality testing.

(Para 1.2.14.3)

Audit Paragraphs

Sports and Youth Affairs Department, Government of Arunachal Pradesh prepared Detailed

Project Report (DPR) for ‘Improvement of Sports Complex at Chimpu Itanagar ’ ,Chimpu

based on the Delhi Schedule of Rates instead of Arunachal Pradesh Schedule of Rates, as

prescribed in the Work Manual. The work was also got executed at this rates without

observing the requisite codal formalities. Due to these factors an extra expenditure of ₹ 94.81

lakh was incurred, besides extending undue benefit to the contractor.

(Paragraph 1.3) Sports and Youth Affairs Department extended undue benefit of ₹ 1.01 crore to the

Contractors by deducting VAT at inapplicable lower rate and consequently loss of revenue to

the State Government to that extent.

(Paragraph 1.4) Due to non-maintenance/availability of records by Social Welfare, Women and Child

Development Department, the authenticity of expenditure incurred on procurement and

distribution of SNP items could not be vouchsafed. Test check of available MPRs for the

period March 2011 to February 2012 revealed doubtful expenditure of at least ₹ 35.48 lakh on

claimed distribution of SNP items against non-functional AWCs.

(Paragraph 1.5)

CHAPTER-II

ECONOMIC SECTOR

2.2 IMPLEMENTATION OF MAHATMA GANDHI NATIONAL

RURALEMPLOYMENT GUARANTEE SCHEME (MGNREGS)

The National Rural Employment Guarantee Act (NREGA), 2005 enacted in September 2005,

guarantees 100 days wage employment in a financial year to any rural household on demand.

In the first phase during 2005-06 in Arunachal Pradesh, the Act was notified in one district

and then extended in the second phase during 2007-08 to two other districts and in the third

phase during 2008-09 to all the remaining 13 districts.

The rationale of the Act is based on combining the productive capacity of villagers to build

and nurture assets along with alleviating the problems of chronic unemployment and poverty.

The Act provides opportunities to develop rural infrastructure through watershed

development, restoration of water bodies, activities aimed at forestry, land

ix


viii

development, soil erosion and flood control, and construction of roads and

institutionfacilities.

The Performance Audit of the Scheme brought out the following significant findings:

■ Prescribed structural capacity for implementation of the programme was not

developed; State MGNREGA Rules, belatedly framed. Technical support was

inadequate; and the IEC plan for awareness generation was not formulated.

[Paras 2.2.6.1 to 2.2.6.5]

■ District Perspective Plans prepared at a cost₹3.20 crore through outsourced

agencies did not serve intended purpose and was a waste as it lacked mandatory

aspects.

[Para 2.2.7.1]

■ Annuals Work Plans were prepared on an ad-hoc basis without involving

beneflciaries/PRls and without bringing out the parameters of programme outcome,

as envisaged in the Act and Guidelines.

[Para 2.2.7.2]

■ Labour budgets were unrealistic and only 34 to 66 percent of projected employment

generation could be created. Annual average employment generation was 15 to 18

days and the percentage of households that completed 100 days work was 0.04 to

18.18.

[Paras 2.2.8.2]

■ Districts submitted incorrect progress reports and retained unspent balances every

year, varying from₹3.97 crore to ₹9.27 crore, which were adjusted with next year’s

approved outlay of Central share, which adversely affected the inflow of funds.

[Paras2.2.8.7]

■ There were instances of under-payment of wages, engagement of unregistered

workers, and delay in payment of wages.

[Para 2.2.10]

■ Unique identification numbers to avoid duplication and SoR for MGNREGA works

were wanting; Citizen Information Charts were not displayed and were not available

in work sites. “Preferred works” for the State were not identified.

[Para 2.3.11.1]

■ 77 per cent of total expenditure was spent on creation of low priority works under the

scheme.

[Para 2.3.11.3]

x

Executive Summary

xi

In test checked districts, (i) Two works completed at a cost of ₹ 6.21 lakh were again

executed for₹21.79 lakh (ii) Eight road works executed at a cost of ₹ 7.49 lakh were of

doubtful durability, (iii) An expenditure of ₹137.27 lakh was incurred on nine works

which were not permissible under the Guideline, and (iv) 14 works for ₹ 2.18 crore

were executed without administrative approval and technical sanction

[Para 2.2.11.4 to 2.2.11.8]

Physical verification reports of work (10 per cent at District level and 2 per cent at

State level) were not available or monitored by the State Government.

[Para 2.2.15.2]

The State Government had not appointed State Quality Monitors (SQMs). The Districts

had also not identified District Quality Monitors for all aspects of implementation.

■ [Para 2.2.15.3]

Audit Paragraphs

Tourism Department did not properly planned execution of the project component

'construction/development of multipurpose hall and mini-resort at Zemithang' at an estimated

cost of ₹ 1.90 crore, resulting in the asset created remaining non-functional. Further, gainful

utilisation of this asset is doubtful as a tourist lodge, which is few meters away from the

newly constructed multipurpose hall and mini-resort, constructed by the same department at a

cost of ₹ 50 lakh was in state of disuse and completely abandoned.

(Paragraph 2.3)

Procurement of High Yield Variety (HYV) Crop Seeds from a firm at higher rate resulted in

excess expenditure of₹ 49.19 lakh and excess burden amounting ₹ 45.63 lakh to farmers after

availing subsidy.

(Paragraph 2.4)

Rural Works Department allowed higher rate to a contractor for excavation of soil by

classifying it as “hard rock requiring blasting" instead of “ordinary rock not requiring

blasting” resulting in extra expenditure of ₹ 61.83 lakh. In another instance, the Department

could not levy and realise departmental charges amounting to ₹ 78.41 lakh not due to its

failure to include clause in MoU and estimate for execution of three works carried out by it

for a private party.

(Paragraph 2.5 and 2.6)

Executive Summary

xii

CHAPTER-III

GENERAL SECTOR

Audit Paragraphs

Due to failure in exercising due diligence by the Controlling Officer/Drawing Disbursing

Officer of Secretariat General Services Department, excess medical reimbursement of ₹ 42.72

lakh was obtained by the staff of the Commissioner’s Office, Itanagar, by preferring

fraudulent medical claims.

(Paragraph 3.1)

Land Management Department awarded Cadastral Survey work to a firm on an unsolicited

offer without inviting tenders and also without verifying the credential of the firm. ₹ 68.88

lakh was paid to the firm for services rendered by it, which later turned out to be defective.

The amount could not be recovered as the bank guarantee given by the firm was released even

before the assessment of the work done was carried out and the whereabouts of the firm could

not be traced.

(Paragraph 3.2)

CHAPTER-IV

ECONOMIC SECTOR (Public Sector Undertakings)

Overview of State Public Sector Undertakings

Audit of Government companies is governed by Section 619 of the Companies Act, 1956.

The accounts of Government companies are audited by Statutory Auditors appointed by

CAG. These accounts are also subject to supplementary audit conducted by CAG. As on 31

March 2012, the State of Arunachal Pradesh had seven Public Sector Undertakings (PSUs)

(all Government companies including two non-working), which employed 204 employees.

The State working PSUs registered a turnover of ₹ 5.82 crore for 2011-12 as per their latest

finalised accounts as of September 2012. This turnover was equal to 0.05 per cent of State

GDP. Thus, the State PSUs made an insignificant contribution in the State economy. The

State working PSUs incurred an overall loss of ₹5.92 crore for 2011-12 as per their latest

finalised accounts as on 30 September 2012.

Investment in PSUs

As on 31 March 2012, die total investment (Capital and long term loans) in seven PSUs was

₹33.45 crore. This total investment consisted of 65.86 per cent towards capital and 34.14 per

cent in long-term loans. The investment increased by 73.05 per cent from ₹19.33 crore in

2006-07 to ₹33.45 crore in 2011-12. The thrust of PSU investment was mainly in the Finance

and Power Sectors, which represented 32.41 and 37.22 per cent of the total investment as on

31 March 2012 respectively.

Executive Summary

xiii

Performance of PSUs

During the year 2011-12, out of five working PSUs, one PSU namely Arunachal Police

Housing and Welfare Corporation Limited earned a profit of ₹1.33 crore and remaining four

PSUs incurred loss of ₹7.25 crore as per their latest finalised accounts as on 30 September

2012. The major losses were incurred by Arunachal Pradesh Forest Corporation Limited

(₹5.20 crore).

The losses of working PSUs were mainly attributable to deficiencies in the functioning of

PSUs. A review of latest three years’ Audit Reports of CAG shows that the State working

PSUs and Government Departments (Power, Hydro-Power, Transport and Supply &

Transport) incurred losses to the tune of ₹ 26.91 crore and infructuous investments of ₹8.07

crore, which were controllable with better management.

Thus, with better management, losses can be minimised/profits can be enhanced substantially.

The PSUs can discharge their role efficiently only if they are financially self- reliant. There is

a need for professionalism and accountability in the functioning of PSUs/Government

Departments.

Arrears in accounts and winding up

Five working PSUs had arrears of 28 accounts as of September 2012. The arrears ranged

between 1 and 15 years. Government should monitor and ensure timely finalisation of

accounts in conformity with the provisions of the Companies Act, 1956. As no purpose is

served by keeping two non-working PSUs in existence, they need to be wound up quickly.

(Paragraph 4.1)

4.2. POWER TRANSMISSION ACTIVITIES OF DEPARTMENT OF POWER,

GOVERNMENT OF ARUNACHAL PRADESH

Transmission of electricity and grid operations in Arunachal Pradesh are managed and

controlled by the Department of Power (Department), Government of Arunachal Pradesh. The

present performance audit covered transmission activities of the Department for the years

from 2007-08 to 2011-12. The Department prepared Power Master Plan, 2006 and Perspective

Action Plan, 2007-22 keeping in view of the requirements upto 2022 for construction of total

28 EHT lines including eighteen 132 KV lines to be constructed during 2007-12. Out of said

18 lines, 9 lines were carried forward for construction during 2012-17. No action was taken to

construct balance nine lines except issuing of NIT for one line till December 2012.

The execution of transmission projects by the Department suffered with several deficiencies

mainly relating to project planning and preliminary works causing revisions of DPRs after

award of work, excess time taken in finalisation of tenders, deficiencies in monitoring of

works, etc. As a result, against the capacity addition of five substations (110 MVA) and

transmission lines (334.74 ckm) pertaining to previous plans and carried forward for

Executive Summary

xiv

completion during 2007-12, none of the projects was completed during 2007-12 except one

14.87 ckm line project. The transmission and distribution (T&D) losses during 2007-12

showed increasing trend and the Department could not achieve the CEA norms in any of the

five years thereby causing loss of energy to the tune of981.85 MUs.

The Arunachal Pradesh State Load Despatch Centre (SLDC) did not have any control over the

optimum scheduling and despatch of electricity withinthe State and none of the four 220/132

KV S/Ss were connected with the SLDC to monitor the efficiency of transmission system. No

Disaster Management programme was in place thereby exposing the system against the risk of

black out situations in case of major break down. The Energy accounting and audit system of

the Department was not effective in the absence of proper metering arrangements and

authentic estimation of transmission loss.

The Department sustained huge financial losses on sale of energy mainly due to high T&D

losses and significant increase in costs of energy transmitted. Though the State Electricity

Regulatory Commission (SERC) became functional in February 2011, the Department had

been increasing the tariff annually by five per cent without filing Annual Revenue Return and

without approval of the SERC.

Audit of Transactions

The investment of ₹6.04 crore made by the Department of Power, Government of Arunachal

Pradesh in construction of Sub-stations at Sagalee and Yupia remained unutilised due to non-

completion of related transmission/feeder lines.

(Paragraph 4.3)

Failure of Hydro Power Development Corporation of Arunachal Pradesh Limited to ensure

the recovery of the mobilization advance in a time bound manner contrary to CVC guidelines

resulted in loss of interest of₹0.61 crore.

(Paragraph 4.4)

CHAPTER-V

REVENUE SECTOR

Audit Paragraphs

Failure of the Assessing Officer, Taxation Department to detect import of taxable goods of ₹

20.87 crore led to evasion of tax of ₹ 64.07 lakh; besides, interest of ₹ 38.96 lakh and penalty

of₹ 64.07 lakh was also leviable.

(Paragraph 5.2.1)

Executive Summary

xv

A dealer concealed turnover of ₹ 29.92 lakh and evaded tax of ₹ 3.74 lakh as the purchasing

government department failed to deduct tax at source, on which interest of ₹ 3.44 lakh and

penalty of ₹ 7.48 lakh was also leviable.

(Paragarph 5.2.2)

A dealer registered under Section 7(2) of the CST Act, 1956 imported goods valued at ₹

21.77 lakh for resale, but did not pay revenue of ₹ 9.25 lakh as he was not registered under

the APGT Act, 2005. In another instance, a dealer evaded revenue of ₹ 8.85 lakh due to

concealment of sales turnover of cement of ₹ 17.51 lakh, which he imported from outside the

State at concessional rates

(Paragraph 5.2.3 and 5.2.4)

Penalty of ₹ 3.40 lakh was not imposed on nine dealers who failed to furnish reports of audit

of accounts. Penalty of ₹ 4.80 lakh was not levied and realised from 14 dealers who did not

furnish returns within due date.


Two unregistered dealers imported goods valued at ₹ 72.78 lakh by utilising four ‘C’ Forms

which were lost from the office of the Superintendent of Taxes, Tezu, leading to loss of

revenue of ₹ 23.37 lakh. In another case, one unregistered dealer fraudulently procured four

‘C’ Forms and concealed purchase of taxable goods valued at ₹ 47.48 lakh to evade revenue

of ₹ 14.84 lakh, including penalty. In third case, a dealer concealed turnover of ₹ 1.17 crore

and evaded tax of ₹ 14.59 lakh due to non-surrender of four ‘C’ Forms at the time of

cancellation of Registration Certificate, for which interest of₹ 13.42 lakh and penalty of₹

14.59 lakh was also payable. In a fourth case, one unregistered dealer illegally procured six

‘C’ Forms from the Department and utilised them in purchase of goods valued at ₹ 1.28 crore,

which remained undetected, resulting in loss of revenue of₹ 40.08 lakh

(Paragraph 5.2.6, 5.2.7, 5.2.8 and 5.2.10)

Turnover of at least ₹ 2.14 crore was concealed by a dealer when he imported goods from

outside the State at concessional rates for resale, resulting in evasion of₹ 56.85 lakh in the

form of tax, interest and penalty

(Paragraph 5.2.9)

Non-registration of a State Government Department resulted in non-realisation of revenue of₹

16.81 lakh and penalty of₹ one lakh on sale of sand and stone.

(Paragraph 5.2.11)

A dealer imported taxable goods valued at ₹ 3.06 crore on which Entry Tax of₹ 38.20 lakh

was leviable which was not levied and recovered

(Paragraph 5.2.1)

Executive Summary

xvi

State Excise Department failed to realise Establishment charges of ₹ 13.84 lakh in respect of

Excise officials posted in different Bonded Warehouses.

(Paragraph 5.2.14)

State Excise Department failed to initiate action against 7 Retail Licensees for nonrenewal

licences led to non-realisation of Renewal Fees of ₹ 3.20 lakh and penalty of ₹ 0.44 lakh

(Paragraph 5.2.15)

A dealer imported cement valued at ₹ 66.43 lakh by unauthorisedly utilising declaration

forms not issued to him and evaded Tax, Interest and Penalty of ₹ 26.57 lakh. In another

instance, A dealer imported taxable goods of ₹ 63.95 lakh and fraudulently evaded tax of at

least ₹ 10.75 lakh (including Interest and Penalty).


Non-registration of seven dealers by the Assessing Officer led to evasion of tax of ₹ 19.90

lakh and penalty of ₹ 7 lakh. In another case, Security deposit of ₹ 3.25 lakh was not realised

from 13 retail licensees


Failure of the Department to realise Licence Fee and Penalty before cancellation of three

licences led to loss of revenue of ₹ 4.16 lakh

(Paragraph 5.2.20)

Import Fee of ₹ 12.94 lakh was not realised on import of ₹ 6.47 lakh LPL (London Proof

Litre) of spirit by a Bottling Plant.

(Paragraph 5.2.21)

Realisation of initial licence fee of ₹ 1.50 lakh instead of ₹ 5 lakh and non-realisation of

security deposit of ₹ 0.75 lakh led to government revenue of ₹4.25 lakh not being realised.

(Paragraph 5.2.22)

Failure of Land Management Department to assess and levy lease rent led to non realisation

of revenue of ₹ 2.51 crore on 33,14,644 sq. m. of land allotted to two companies

(Paragraph 5.2.23)

Executive Summary

xvii

CHAPTER -1

SOCIAL SECTOR

CHAPTER I

SOCIAL SECTOR 1.1 INTRODUCTION

This Chapter of the Audit Report for the year ended 31 March 2012 deals with the findings on

Audit of the State Government units under social sector.

During 2011-12, total budget allocation of the State Government in major departments under

Social Sector was ₹ 2489.25 crore against which actual expenditure was ₹ 2283.08 crore.

Details of department-wise budget allocation and expenditure are given in Table 1.1 below:

Table-1.1.1

Beside the above, the central Government has been transferring a sizeable amount of funds

directly to the Implementing agencies under the social sector to different departments of the

state Government. The major transfers for implementation of flagship programmes of the

Central Government are detailed in Table 1.2 below:

(₹ in crore)

SI. No.

Name of the Departments Total Budget Allocation

Expenditure

1. Education 688.88 682.32

2. Sports and Youth Affairs 42.52 31.12

3. Library 8.25 8.25

4. Social Welfare 242.34 235.4

5. Relief and Rehabilitation 142.60 141.87

6. Food and Civil Supplies 110.85 105.09

7. Labour 5.54 5.54

8. Social and Cultural Affairs 29.68 29.96

9. Health and Family Welfare 307.56 291.63

10. Public Health Engineering 267.05 230.92

11. Urban Development and Housing 304.35 237.33

12. Rural Works 249.89 237.95

13. Panchayat Raj 89.92 45.7

Total 2489.43 2283.08 Source: Appropriation Accounts 2011-12

Chapter-I: Social Sector

2

Table-1.1.2

Planning and Conduct of Audit

Audit process starts with the assessment of risks faced by various Departments of

Government based on expenditure incurred, criticality/complexity of activities, level of

delegated financial powers, assessment of overall internal controls and concerns of

departments.

The audits were conducted involving expenditure amounting ₹ 597.46 crore of the State

Government under Social Sector. The report contains Integrated Audit of Health and Family

Welfare Department and five Transaction Audit paragraphs.

After completion of Audit of each unit, Inspection Reports containing audit findings are

issued to the heads of the departments. The departments are requested to furnish replies to the

audit findings within one month of receipt of Inspection Reports. Whenever replies are

received, audit findings are either settled or further action for compliance is advised. The

important audit observations arising out of these inspection reports are processed for inclusion

in the Audit Report, which are submitted to the Governor of the state under article 151 of the

constitution of India.

The major observations pertaining to Social Sector noticed in Audit during the year 2011-12

are discussed in the subsequent paragraph of this chapter.

(₹ in crore)

Name of the Department

Name of the Scheme/Programme Implementing Agency Amount of fund

transferred during the year

Education

Audit Education and Skill

Development Scheme A P State Literacy Mission

Authority 22.61

Rastriya Madhyamik Shiksha

Abhiyan A P Rajya Madhyamik Shiksha

Mission 20.24

Serva Shiksha Abhyan SSA, Rajya Mission 238.80

Health and Family Welfare

Forward Linkages to NRHM (new initiatives in NE)

AP state Health Society 35.58

Hospitals and Dispensaries (under

NRHM)

-do- 2.55

National Aids Control Programme,

including STD control

A.P. State Aids Control Society 7.13

National Rural Health Mission

(Centrally sponsored)

AP state Health Society 52.83

National Rural Health Mission

(NRHM) Central Sector -do- 1.48

Urban Development and Housing

Swama Jayanti Sahari Rojgar

Yojana (SJSRY) State Urban Development

Agency 1.29

Panchayat Raj

Panchayat Empowerment and

Accountability Incentive Scheme Director, Panchayat Raj

Department, Itanagar

0.67

Source: Central Plan Scheme Monitoring System (CPSMS)


3

HEALTH AND FAMILY WELFARE DEPARTMENT

1.2 INTEGRATED AUDIT OF HEALTH AND FAMILY WELFARE

DEPARTMENT

Highlights

The Department of Health and Family Welfare is responsible to deliver curative and

preventive health care services to the people of the State. This includes family welfare

services such as maternal and child health, control of communicable diseases, etc. For

this, the Department has an institutional network consisting of Health Sub-Centres

(HSCs), Primary Health Centres (PHCs) Community Health Centres (CHCs) and

District/General Hospitals.

Performance of the Department for the period 2007-12, in its various functions

(excluding National Rural Health Mission (NRHM)), was examined. In the audit

scrutiny, mismatch of infrastructure, including manpower provided to various units,

was found to be the main drawback in achieving optimum utility of the available

resources. This has resulted in avoidable idling of various components and consequent

unproductive expenditure. Following are the highlights of the more important findings:

• The Department did not have a Strategic Plan that recognised the long term

healthcare requirement of the State and roadmap to create the required

infrastructure andfacilities so needed.

(Para 1.2.7)

• During 2007-12, the department could not spend budgeted funds. Total unspent

provisions under Plan expenditure during the period were ₹32.13 crore

implying that the department was not able to implement all the activities

planned during those years.

(Para 1.2.8.1)

• There was excess deployment of Medical Officers/Staff Nurses in the Hospitals

in urban areas, depriving the rural populace of other Districts proper health

care services.

(Para 1.2.9.1, Para 1.2.9.2 and Para 1.2.9.3)

• Bio-Medical Waste Plant was yet to become operational at six District

Hospitals.

(Para 1.2.10.1)


4

1.2.1 Introduction

Health is defined as not merely the absence of disease or infirmity but complete

physical, mental and social well-being. The main objective of Health Care Services is

to provide basic health services to the people at their doorstep. The Government of

Arunachal Pradesh provides health care services through a network of 12 (twelve)

District Hospitals, 02 (two) General Hospitals, 48 functional (out of 49) Community

• Machinery/Equipment worth₹4.52 crore supplied by the APSCST for setting up

of ‘Telemedicine System’ did not benefit the Hospitals as the same were lying

idle without resultant benefits.

(Para 1.2.10.2)

• Ayurvedic IPD wings at three District Hospitals and Drug De-addiction centres

remained non-functional even after spending huge amounts on their

establishment.

(Para 1.2.10.3 and Para 1.2.10.4)

• Several equipment remain idle as the same were purchased/provided without

providing the complement infrastructure and manpower required for their

functioning, rendering expenditure incurred on their procurement

unproductive/wasteful.

(Para 1.2.11.1, Para 1.2.11.2, Para 1.2.11.3 & Para 1.2.11.4)

• The Department incurred avoidable expenditure of ₹ 70.06 lakh on procurement

of medicines.

(Para 1.2.13.1.1 and Para 1.2.13.1.2)

• Inadequate facilities resulted in unhygienic storage of drugs and medicines in

Hospitals and other Health Units. Medicines were distributed/ utilized by

Hospitals and other Health Units without carrying out quality testing.

(Para 1.2.14.3)

• Bio-Medical Waste was disposed off in an unscientific manner.

(Para 1.2.14.2)

• X-Ray units under the DHS functioned without mandatory Atomic Energy

Regulatory Board (AERB) Authorization.

(Para 1.2.14.5)

• Physical verification of stores was in huge arrears in the test-checked units

(Para 1.2.14.5)

• Monitoring and evaluation mechanism was absent in the Department.

(Para 1.2.15)


5

Health Centres (CHCs), 97 functional (out of 117) Primary Health Centres (PHCs) and 286

functional (out of 468) Health Sub-Centres (HSCs) and 69 Dispensaries (One —

Allopathic,14 Ayurvedic and 54 Homoeopathic).

1.2.2 Organisational Setup

The Health & Family Welfare Department, Government of Arunachal Pradesh, is headed by a

Secretary. Implementation of the policies of the Department is entrusted to the Director of

Health Services. He is assisted by a Joint Director, District Medical Officers, Medical

Superintendents, Medical Officers and an Assistant Drug Controller, for monitoring the

quality of drugs.

The organisational structure of the Department is given below:

The Performance Audit aims at assessing the overall performance of the Health & Family

Welfare Department, with special emphasis on Planning, Fund Management, Manpower

Management, Project Management, Asset Management and Implementation as well as

Internal control mechanism.

CHART-1.2.1

1.2.3. Scope of Audit


6

Audit began with an “Entry Conference” on 25th April 2012, attended by the Secretary,

Health Services and other Officers, where the audit objectives, scope and criteria were

discussed and inputs from the Department obtained.

Records of the Director of Health Services and 7 (seven) Districts for the period from 2007-

08 to 2011-12 were test-checked. Besides two General Hospitals and five District Hospitals

and Health Centres, relevant records maintained by District Medical Officers of seven

Districts, viz; Papumpare, East Siang, Lower Subansiri, West Siang, East Kameng,

Lohit and Tirap were also examined.

Besides the above mentioned units, several CHCs, PHCs and SCs in remote and interior rural

areas were also physically visited to assess and understand the actual problems in delivering

health services to such areas. The information/data collected from the Department was

analysed on the basis of audit criteria and audit observations incorporated in the report. On

completion of audit, an Exit Conference was held on 19th November 2012, which was

attended by the Commissioner, Health & Family Welfare Department and other officers

responsible for implementation of the policies of the Department. The Performance Audit was

finalized incorporating the replies/comments of the Department during the Exit Conference

where ever appropriate.

1.2.4. Audit Objectives

The main objectives of the Performance Audit were to examine whether:

• a plan was formulated to achieve the policy objective of the department and was it

implemented in an economic, efficient and effective manner;

• funds provided were utilised effectively and economically to achieve the desired

objective;

• available human resources were deployed rationally to achieve optimum output;

• there was efficient and effective control over execution of various projects aimed at

providing quality health care services;

• the installation and maintenance of equipment/machineries were efficient and effective;

• the system of procurement of medicines and medical equipment was efficient and

quality medicines were procured in economical manner;

• monitoring and evaluation was effective.

1.2.5 Audit Criteria

Audit finding were benchmarked against the criteria contained in the following sources and

are quoted at relevant places in the performance audit report:


7

• Rules, Notifications, Guidelines and Instructions issued from time to time by the Central

and State Governments.

• Departmental Manuals

• State Financial Rules,

• Procedures prescribed for monitoring and evaluation of schemes.

1.2.6. Acknowledgement

We place on record our appreciation for the co-operation extended by the Officers and staff of

Health & Family Welfare Department, Government of Arunachal Pradesh in facilitating our

audit.

AUDIT FINDINGS

Important points noticed during the course of performance audit of the functioning of

Health & Family Welfare Department, Government of Arunachal Pradesh are

discussed in the subsequent paragraphs.

1.2.7. Planning

Since health care is of prime importance to the people, the Government has the

primary responsibility to ensure that an adequate number of health care facilities and

personnel are available to meet the current and future needs of the State. Suitable

planning is imperative to achieve the objective in a systematic and effective manner.

Effective delivery of health care services depends upon proper planning for

establishment of health centres and provision of requisite manpower and

infrastructure. For this purpose, a Strategic Plan is required to be formulated by the

department to meet the health care needs of the people of the state by identifying

areas that require to be addressed and prioritising them based on the available

financial resources.

Though the Department had a Planning & Development Wing, a Strategic Plan was

not prepared that recognised the long term needs of the State and serve as the

roadmap to accomplish the task. Only Annual Operating Plans were formulated and

implemented. As a result there were deficiencies in the execution of the projects

resulting in unproductive and wasteful expenditure.

1.2.8. Budgetary Control and Financial Management

Funds required for functioning of the Directorate of Health Services and institutions

are provided through the State Budget. Other sources of funds like GOI grants are

also utilized for specific purposes.


8

I.2.8.I. Budget Provision and Expenditure

Realistic and operational budgetary controls and timeliness and quality of reporting

on the status of such controls are good attributes of sound financial management.

According to rule, the Administrative Department has to prepare annual Budget

Estimates relating to Plan and Non-Plan expenditure under Revenue and Capital

heads, Incomes and ‘Other Receipts’ as realistically as possible. Revised Budget

Estimates, based on the progress of expenditure during first five months and taking in

to account all post-budget developments, should also closely correspond to the actual

expenditure of the year.

Details of Plan and Non-Plan expenditure vis-as-vis budget provisions under Revenue

heads during 2007-08 to 2011-12 were as follows:

Table -1.2.1.

Details Of Budget Provisions And Expenditure Under Revenue

It was seen that significant savings, exceeding 10 per cent of the budget provision,

occurred under Plan Heads during 2007-08, 2008-09, 2009-10 and 2011-12 and under

Non-Plan Head during 2007-08. This indicates that the Budget Estimates was not

prepared by the department properly. The large saving under Plan expenditure implies

that the department was not able to implement all the activities planned during those

years.

1.2.8.2. Anticipated savings not surrendered

As per Rule 56 (1) of GFR, spending Departments are required to surrender Grants/

Appropriations or portions thereof to the Finance Department as and when savings are

anticipated. However, at the close of the financial years 2007-08 to 2011-12, savings

were not surrendered but lapsed instead.

(₹in lakh)

Year

Plan Non-Plan

Provision Expenditure Savings (percentage)

Provision Expenditure Savings (percentage)

2007-08 2065.46 1379.43 686.03 (33.21)

12582.72 10331.38 2251.34 (17.89)

2008-09 1631.79 1161.08 470.71 (28.84)

17830.88 17147.59 683.29 (3.83)

2009-10 1489.38 719.07 770.31 (51.72)

22868.71 21061.93 1806.78 (7.90)

2010-11 3268.93 3260.16 8.77 (0.26)

20924.25 20719.60 204.65 (0.09)

2011-12 6324.44 5047.64 1276.80 (20.18)

24431.74 24115.23 316.51 (1.30)

Source: Detailed Appropriation Accounts


9

The lapse of allotments served no purpose as such amounts could not be utilized for

any other Departmental activity during the year. Failure to surrender such savings

indicated poor budgetary management.

I.2.8.3. Rush of Expenditure

Rule 56 (3) of GFR requires that Government expenditure should be evenly distributed

throughout the year. Rush of expenditure, particularly in the closing month of the

financial year, is to be regarded as a breach of financial regularity and should be

avoided. Expenditure incurred by the Department in the closing month is shown as

under:

1.2.9. Human Resource Management

As a service oriented Department, adequacy of human resources and their rational

deployment has a significant role in ensuring the quality and standard of service.

It was noticed that the Department did not have any centralized data regarding the

deployment, vis-a-vis sanctioned strength and persons-in-position of Medical Officers,

Staff Nurses/Auxiliary Nursing Midwives (ANMs) and other Para-Medical staff in

various health units.

A Committee was constituted (August 2011) for evaluation of sanctioned strength and

persons-in-position of various health units of the Department in the State. The

Committee submitted its report in February 2012. Government approval for the same

was still awaited.

Deficiencies in human resource management noticed during Audit are indicated below:

1.2.9.1. Irrational Deployment of manpower in health care institutions

According to national norms, there should be four Medical Specialists, i.e. Surgeon,

Physician, Gynaecologist and Pediatrician and 21 paramedical/other staff in each CHC;

one Medical Officer and 14 paramedical/other staff in each PHC. The actual

Table -1.2.2.

Year Expenditure (₹in lakhs) Percentage of

expenditure in March Total First 11 Months During

March 2007-08 4966.14 2129.79 2836.35 57.11 %

2008-09 7798.53 5995.22 1803.31 23.12%

2009-10 5608.03 4323.09 1284.94 22.91 %

2010-11 6294.5 3014.92 3279.58 52.10%

2011-12 29162.88 20722.03 8440.85 28.95%

Source: Detailed Appropriation AJCs


10

deployment vis-a-vis requirement of manpower in 17 CHCs and 23 PHCs in seven test-

checked districts was as under:

It can be seen from the above table that at both CHCs and PHCs in test-checked districts

there were excess deployment of Medical Officers and paramedical and other staff. In

the absence of centralised data regarding the distribution of medical staff at various

health care centres, it could not be with certainty ascertained that the available staff was

judiciously distributed among all the health care centres and they were not concentrated

around urban areas. Justifications for deviation from norms were not found available on

record.

As per norms, HSCs are to be manned by two ANMs (one male and one female). The

actual deployment against requirement of manpower in 61 SCs in seven test-checked

districts was as under

It was seen that in 74 Medical Officers were deployed at these SCs though no Medical

Officer is required to be deployed. In two out of seven test-checked districts more than

one Medical Officer were deployed in seven SCs1. Justification for deviation from

norms was not found available on record. Further, gainful utilisation of services of these

Medical Officers at SCs are questionable.

1.2.9.2. Excess deployment of Medical Officers in Hospitals

The State Government fixed (October 2001) the following standard staffing pattern for

deployment of Medical Officers, including Specialists, in General/District Hospitals on

the basis of available bed strength of hospitals, as shown in the following table.

1 Balek Dispensary (02), Nirjuli SC (02), Barum SC (01), Chiputa (Mani) SC (01), RGU Campus SC

(02), Gumto SC (01) and Yupia Dispensary (03).

Table -1.2.3.

No. Requirement Actual Deployment

Excess (+) Shortfall (-)

Percentage of Excess/Shortfall

MO PS MO PS MO PS MO PS

Community Health Centres

17 68 357 72 611 (+)4 (+) 254 (+)5.88 (+)71.14

Primary Health Centres

23 23 322 43 404 (+)20 (+) 82 (+)86.95

(+)25.46

Table -1.2.4.

No. Requirement

Actual Deployment

Excess (+) Shortfall (-)

Percentage of Excess/Shortfall

MO PS MO PS MO PS MO PS

Sub Centres

61 122 74 114 (+)74 (-) 08 (+) 07


11

Records of the Chief Medical Superintendent, Arunachal State Hospital (ASH),

Naharlagun, and Joint Director of Health Services, Health Training & Research Centre

(HTRC), Pasighat, having 150 and 120 bed-strength respectively, were scrutinized (May

2012 and July 2012).

It was revealed that the Department deployed (April 2007 to March 2012) 80 to 88 and

31 to 43 Medical Officers, including Specialists, in ASH and HTRC respectively, in

excess of prescribed norms.

In contrast, there was a shortage of 37 (thirty-seven) Medical Officers and Specialists2 in

the District Hospitals of Ziro, Khonsa, Aalo, Tezu and Seppa. The irrational deployment

of Medical Officers indicated an urban bias, depriving the rural populace of other

districts proper health care services.

Justification for deviation from norms fixed by the Government in case of ASH,

Naharlagun was neither available on record nor stated. However, it was seen from

records that consequent upon the ISO Certification of General Hospital, Pasighat, the

Joint DHS, HTRC, corresponded with the Government in May 2010 for increasing the

bed strength of the hospital to 182. Response from the Government is still awaited.

1.2.9.3. Shortage of Staff Nurses

As per Indian Nursing Council norms, the minimum Staff Nurse-Bed ratio is 1:6 for

General Wards. Therefore, taking the minimum ratio of one staff nurse for six beds, the

requirement of staff nurses in General and District Hospitals was as shown in the

following table.

2Ziro - 05; Khonsa -10; Aalo - 03; Tezu - 07; Seppa -12.

Table -1.2.5.

Bed Strength Medical Officers/Specialists Required

50-150 22

150-200 48

Table -1.2.6.

Institution Total Bed

Strength

Minimum as

per INC

Norms

Existing Staff

Strength

With reference to norms

Excess (+)/

Shortage (-) Percentage of

Excess/Shortage General Hospital,

Naharlagun (ASH) 150 25 64 (+) 39 (+) 156

General Hospital,

Pasighat 120 20 17 (-) 03 (-) 15.00

District Hospital, Ziro 100 17 06 (-) 11 (-) 64.70

District Hospital, Khonsa 58 10 08 (-)02 (-) 20.00

District Hospital, Tezu 88 13 08 (-)05 (-) 38.46

District Hospital, Aalo 100 17 08 (-) 09 (-) 52.94

District Hospital, Seppa 64 11 Nil (-) 11 (-) 100


12

It can be seen from the above table that while at General Hospital, Naharlagun there was

an excess deployment of 39 staff nurses (156 per cent more than the minimum staff

required under INC norms), the number of staff nurses posted at other General Hospital

and five District Hospitals were much below the minimum required strength as per INC

norms. This is indicative of irrational deployment of staff and urban bias. The position at

District Hospital, Seppa was deplorable with no staff nurse being posted.

Immediate action needs to be taken to overcome the shortfall by rational deployment of

staff nurses, as the non-availability of nursing staff as per prescribed norms would

seriously affect the quality of patient care in these hospitals.

The department in reply stated (November 2012) that due to paucity of fund and general

restriction for creation of post, additional posts could not be created. The reply of the

department did not address the issue of irrational deployment of staff. Audit contention

was that the services of the excess staff nurses deployed at General Hospital, Naharlagun

could have been more fruitfully utilized by deploying them to the District Hospitals with

deficient staff nurses.

1.2.9.4. Training and Research

The Health Training and Research Centre (HTRC), Pasighat, under the administrative

control of the Joint Director of Health Services (Training and Research), Pasighat, is the

only institution in the State which was entrusted with the pivotal role of providing

training in Auxiliary Nurse Midwifery (ANM) and Basic Training Programmes of

Health Workers/ Assistants. The Institute, recognised in 1958 by the Indian Nursing

Council (INC), was allowed to admit a maximum of 40 students per ANM Course of 18

months duration.

Scrutiny of records (July 2012) revealed that from 2005 to 2012 the Training Institute

admitted students in excess of its intake capacity, as detailed in the following table

It can be seen from the above Table that candidates admitted in excess of the intake

capacity ranged between 17.50 to 112.50 per cent. This may adversely affect the quality

of training imparted by the institution.

Table -1.2.7.

Year Batch Enrolment Excess Precentage of

Excess 2005-07 XXXVI 49 09 22.50 2006-08 XXXVII 64 24 60.00 2007-09 XXXVIII 85 45 112.50 2008-10 XXXIX 47 07 17.50 2009-11 xxxx 70 30 75.00 2010-12 XXXXI 66 26 65.00

2011- contd. XXXXII 48 08 20.00 Source: HTRC, Pasighat


13

In reply, the Department stated that due to extreme shortage and the huge demand for

nursing staff in the State, students were admitted in excess of the intake capacity. It was

also stated that three more Nursing Schools for ANMs were being established in the

State with assistance from Gol, which would alleviate/solve the problem.

1.2.10 Project Management

In the endeavour to provide basic health services, the department undertook

implementation various projects for establishing several facilities aimed at improving the

health care facilities to provide basic health services to the people of the State.

Interesting aspects noticed in execution of some of these projects in test-checked

districts are discussed in the succeeding paragraphs.

1.2.10.1 Establishment of Bio-Medical Waste Plants

The North Eastern Council (NEC), Gol, accorded sanction (August 2009) ₹ 4.50 crore

for establishment of Bio-Medical Waste Plant in six District Hospitals3 of Arunachal

Pradesh on the basis of a Detailed Project Report (DPR) of the Director, Health Services,

Arunachal Pradesh. The plant was to be set up at a cost of₹ 75.00 lakh each. The

expenditure was to be shared between NEC and the State Government on a 90:10 basis,

i.e. ₹ 4.05 core and ₹ 0.45 crore respectively.

Accordingly, the NEC released ₹ 90 lakh as first instalment in August 2009, which in

turn was released by the State Government to the Department in March 2010. After due

tendering process, the work for supply, installation and commissioning of Biomedical

Waste Management Systems on a turnkey basis in six District Hospitals was awarded to

M/s SS Service Limited, Guwahati, at a total cost of₹ 71.65 lakh4 per hospital

Accordingly, an agreement was entered into with the firm in October 2010.

Simultaneously, the work order was placed and ₹ 90 lakh was released to the firm

(November 2010) as advance. The entire work was to be completed within three to four

months (i.e. latest by February 2011).

The second instalment of ₹ 1.50 crore was released by NEC, which in turn was released

to the Department in March 2011. The entire amount was again paid to the firm in April

2011.

From the records of the Department it could be seen that even civil work was not

commenced as of July 2011. Notwithstanding, the entire amount of ₹ one crore released

as third instalment by NEC in August 2011, was paid to the firm in

3 Lower Subansiri (Ziro), Tawang (Tawang), Lohit (Tezu), Changlang (Changlang), West Kameng

(Bomdila), Tirap (Khonsa).

4 ₹ 33.19 lakh for THERMAX Deskmat Pyrolytic Incinerators with pollution control devices,

₹27.55 lakh for Autoclaves, ₹4.87 lakh for shredders, ₹3.58 lakh towards Civil and Electrical works

and T2.46 lakh for other items


14

March 2012. Thus, entire amount of₹ 3.40 crore released by NEC (against its share of₹

4.05 crore) was in turn released to the firm. It was also observed that the

StateGovernment had not released its share of 10per cent as of April 2012.

From Departmental records, it was found that the firm had dispatched the Bio-Waste

Management Systems by road to the six locations only in February 2012.

Audit further noticed the following shortcomings in tendering process:

(a) The tendering for setting up the plants was delayed by almost one year from the date of

release of funds from NEC.

(b) Bid documents had no provision for payment of advance for setting up the plants, but a

provision was later included in the agreement for providing 50 per cent advance on

confirmed order with the successful bidder. Had this provision been included in the bid

documents, other bidders having known about the incentive could have offered more

competitive rates. It is evident from above that undue benefit was extended to the

particular firm.

(c) Further, as per the Contract Agreement the firm was entitled to an advance of ₹ 214.95

lakh (50 per cent of total contract value), whereas it was paid ₹ 340 lakh, thereby

extending undue financial benefit to the tune of₹ 125.05 lakh.

(d) No Penal Clause for delay/liquidity damages on the part of firm was incorporated in the

Deed of Agreement for timely completion of work.

Though there was abnormal delay on the part of the firm in setting up the Bio-Medical Waste

Plants the Department did not to initiate action against the firm despiteviolation of the contract

clause and payment of₹ 3.40 crore as advance.

Following are the photographs showing the status of incomplete work at District Hospial, Ziro.

1.2.10.2. Non- Functional Tele-Medicine System

The ‘Telemedicine System’project was started in Arunachal Pradesh in 2005-06 with the

participation and assistance of the Indian Space Research Organization (ISRO)

Partial construction of Bio-Medical Waste Plant at District Hospital, Ziro,


15

and Arunachal Pradesh State Council of Science and Technology (APSCST). The main

objectives of the project were tele-consultation and tele-education. The project envisaged

connecting Arunachal State Hospital (ASH), Naharlagun, with seven District Hospitals5,

oneGeneral Hospital6 and one dispensary7. Advanced information about management of

diseases was to be propagated from the ASH, Naharlagun to all District Hospitals,

including those in remote/rural areas. The total expenditure incurred on the North

Eastern Council (NEC) funded project by the State Government, other than ISRO

projects, was ₹ 4.52 crore from 2005-06 to 2009-10.

Scrutiny of records in Audit revealed the following:

(a) In ASH, Naharlagun, the equipment provided by the ISRO valued at ₹ 2.78 lakh

was lying unutilized since January 2009 due to technical problems (downlink

from satellite). Utilization of the system was minimal even prior to it becoming

non-functional (only 20 tele-consultations were held).

(b) Further, machinery and equipment worth ₹ 72.34 lakh, provided by the

Arunachal Pradesh State Council for Science and Technology (APSCST), were

also lying unutilized since receipt (March 2006).

In this connection, the Chief Medical Superintendent, ASH, Naharlagun, stated

that the system was supposed to be installed by an NGO - ‘Global Telemedicine

Healthcare Network Foundation’ - which had supplied the equipment, but the

said NGO never turned up to install the system. Later, even the whereabouts of

the NGO was not known.

(c) The Tele-medicine equipment valued at ₹ 12.30 lakhs excluding cost of

installation, connectivity and manpower (₹ 11.61 lakh) provided by the APSCST

to the District Hospital Ziro, was stolen in July 2011 and could not be recovered

as of May 2012.

(d) A set of equipment valued at ₹ 23.91 lakh, provided (October 2006) by APSCST

for setting up of tele-medicine facilities in the District Hospital, Seppa was lying

idle since receipt due to non-installation and lack of ISDN connectivity.

(e) Two sets of equipment and machinery provided by ISRO and APSCST in 2005

and 2006 valued at ₹ 2.78 lakh and ₹ 23.91 lakh respectively were lying idle in

the General Hospital, Pasighat, due to non-installation and lack of ISDN

connectivity.

(f) Records and other information relating to installation of the tele-medicine facility

in the District Hospital, Aalo, was called for during audit (September 2012) but

the Medical Superintendent could not produce the same.

5 District Hospitals in Seppa, Bomdila, Tawang, Ziro, Daporijo, Aalo and Yingkiong. 6 General Hospital, Pasighat. 7 Raj Bhavan Dispensary, Itanagar.


16

Consequently, the facility remained largely unutilized and the objective of tele-

consultation and dissemination of information, which could have benefitted patients in

peripheral and rural hospitals, could not be achieved.

Following are the photographs of part of tele-medicine equipment lying unutilised at

Arunachal State Hospital, Naharlagun.

Administrative Approvals and Expenditure Sanctions were accorded (December 2007)

by the State Government under Centrally Sponsored Scheme (CSS) for establishment of

10-bed Ayurvedic IPD Wing at District Hospitals, Ziro, Tezu and Aalo at an estimated

cost of ₹ 35 lakh8 each.

As per records maintained it was seen that the entire amount was spent on purposes for

which it was meant. However, it was observed in audit that all the three IPDs of the

Ayurvedic Wing were non-functional. Following photographs evidence of nonfunctional

status of IPDs at District Hospital Tezu and Ziro.

The Medical Officer (Ayush), District Hospital, Aalo, District Medical Officer, Tezu,

and Medical Superintendent, District Hospital, Ziro, admitted that IPDs of the Ayurvedic

Wing were non-functional since 2008 and attributed it to shortage of

8 ₹ 10 lakh each for repair, renovation of building of the Ayurvedic Wing; ₹ 15lakh each for

procurement of equipment; ₹ 7 lakh each for purchase of medicines and diet; ₹ one lakh each for training

of medical/para-medical staff and ₹ two lakh each as contingency.

1.2.10.3. Non-functional Ayurvedic IPD Wings


17

man-power. They also statedthat the medicines purchased were either utilized for OPD

patients or issued to different CHCs/ PHCs in the District.

This resulted not only in idle expenditure of ₹ 75 lakh (Civil Construction - ₹ 30 lakh

and Equipment - ₹ 45 lakh), but also deprived the people in the Districts of the intended

benefits of the alternative/Indian System of medicines.

1.2.10.4. Non-functional Drug De-Addiction Centres

With an aim of eradicating the menace of drug addiction rampant in Lohit district, two

drug de-addiction centres were set up - one at the district headquarters, Tezu, and

another at Lathao, under Namsai Sub-Division. The centre at Tezu was established with

Central Assistance of ₹ 8 lakh during 2000-01 and the other one at Lathao was

established in 1970-71, (cost not available on record) but was used as a PHC due to non-

availability of manpower.

In order to make further improvement in the infrastructure of the Lathao Centre, the

work “Infrastructure Development of Drug De-Addiction Centre, Lathao,” estimated at

₹ 3.50 crore, was proposed for execution in two phases. In the first phase, under Special

Plan Assistance (SPA) an amount of₹ 1.30 crore was released (September 2008) for

construction of boundary wall, gate, approach road, and the ground floor building/

administrative block, consisting of 11 (eleven) rooms with sanitary fittings, water supply

and electricity. The work was taken up for execution by the Executive Engineer, Water

Resources Department, Tezu Division. The completed building was handed over to the

Department in March 2010.

It was, however, noticed in audit that the Drug De-Addiction Centre could not be made

functional since construction and was lying idle (August 2012). The main reason

attributable for this was non-deployment of trained manpower, especially psychiatrist(s),

with supporting staff.

Thus, failure to provide manpower for proper functioning of the centres at Tezu and

Lathao not only rendered the expenditure incurred on its establishment wasteful, but

also deprived the people of the intended benefits.

1.2.11 Asset Management

It was noticed that there was no co-ordination between assessing the requirement of

equipment, availability of existing infrastructure for installation of equipment and

manpower to operate the equipment. In the absence of such co-ordination,

procurement was done on an ad-hoc basis, resulting in nugatory and unproductive

expenditure, as discussed in the succeeding paragraphs.


18

1.2.11.1 Idle expenditure on procurement of machinery/equipment for Regional

Diagnostic Centres

In order to set up three Regional Diagnostic Centres (RDC) at Roing, Miao and Ruksin,

the State Government sanctioned (between January 2003 and March 2005) ₹ 8.80 crore9.

Test check (April 2012) of records of the Director of Health Services, Naharlagun, and

District Medical Officers, Changlang (January 2012) and Pasighat (July 2012) revealed

that the Department released (2002-04) ₹ 1.26 crore to the Public Works Department for

construction of the buildings for the three RDCs.

The building at Miao, which was initially to be constructed at a cost of₹ 41.39 lakh,

could be completed only in July 2010 after release of an additional amount of ₹ 31 lakh

for modification of the building and electrification according to a revised site plan. For

RDC, Ruksin the Department released ₹ 41.39 lakh in 2002-03 and 2003-04 for

construction of the building. The same was however, not found completed as per the

required specifications as of June 2012.

Further scrutiny revealed that the Directorate, without ensuing completion of the

buildings for the RDCs, procured CT Scan machines for Miao and Ruksin RDCs from a

Kolkata-based firm in February 2006 at a cost of₹ 2.50 crore. The machines which were

delivered to Miao and Ruksin in May 2006 were not installed and lying idle.

Further, the Department also procured (March 2005) 33 items of diagnostic machinery &

equipment for these RDCs from three firms chosen on a limited tender basis at a total

cost of₹ 3.78 crore. Out of the equipment procured, 12 items of valued at ₹ 21.34 lakh

meant for Miao and Ruksin RDCs, were not installed and lying idle. Besides, no

manpower was sanctioned for making the RDCs operational.

The imprudent action of the Department in procurement of machinery/equipment

without ensuring completion of the buildings and failure to complete the buildings even

after a lapse of 7 (seven) years from the date of procurement of the CT Scan and

diagnostic machinery & equipment and release of required funds, rendered the

expenditure of ₹ 3.85 crore idle/unproductive and also deprived patients of the

diagnostic facilities.

Following are the photographs of machine and equipment lying in unpacked condition at

RDC, Ruskin, East Siang District

9 Buildings -₹1.26 crore; Computerized Tomography (CT) Scan Machines - ₹3.75 crore; Diagnostic

Machinery & Equipment - ₹3.79 crore


19

1.2.11.2. Unproductive expenditure on procurement of ICU Ventilator

In order to set up the “Accident and Emergency Care Service” in General Hospital,

Pasighat, under the pilot project for up-gradation and strengthening of emergency

facilities of State Hospitals of towns/cities located on National Highways, the Union

Ministry of Health & Family Welfare sanctioned ₹ 59 lakh (September 2000) for

procurement of an ambulance (₹ 9 lakh) and medical equipment (₹ 50 lakh).

Test check (July 2012) of the records of the Joint DHS, HTRC, Pasighat, revealed that

the Department procured (between March 2001 and March 2002) the ambulance and

equipment valued at ₹ 59 lakhs, including one ICU Ventilator (₹ 11.23 lakh). While the

ambulance and most of the equipment were utilized in different wings of the Hospital,

the ICU Ventilator, along with the building constructed out of Special Plan Assistance

(SPA) Funds of ₹ 31.53 lakh, was lying unutilized due to non-availability of trained

manpower.

Thus, the Accident and Emergency Wing of the General Hospital, Pasighat, was not

fully established even after incurring an expenditure of ₹ 92.53 lakh (₹ 59 lakh + ₹ 31.53

lakh). Further, the imprudent action of the Department in procurement of the ICU

Ventilator before positioning the trained staff to operate this critical equipment and non-

installation of the same rendered the expenditure of ₹42.76 lakh unproductive. Non-

installation of the ICU Ventilator for more than 10 years after procurement deprived

accident victims of the required treatment. Considering that the nearest hospital where

such emergency facilities in the State was 256 km away in Naharlagun, the

Department’s lack of a sense of urgency in installation and use of this equipment showed

apathy to provision of adequate medical care to the people.


20

Following are the photographs of idle ventilator in the Accident and Emergency Wing,

General Hospital, Pasighat.

To set up a Dialysis unit at the General Hospital, Pasighat, the Deputy Commissioner,

East Siang District, accorded administrative approval and expenditure sanction

(August 2010) for an amount of₹ 11.10 lalch out of MLA LAD funds for the year

2010-11.

Test check (July 2012) of records of the Joint DHS, HTRC, Pasighat, revealed that the

Department procured (December 2010 and March 2011) a Dialog Plus Haemo

Dialysis Machine and Reverse Osmosis Plant valued at ₹ 11.10 lakh. Besides, the

Department also incurred an expenditure of ₹ 0.82 and ₹ 0.35 lakh out of its own

funds on civil construction Following are the photographs of machine and equipment

lying in unpacked condition at RDC, Ruksin, East Siang Districtwork and

procurement of chemicals, etc.

It was noticed that the equipment was lying unutilized due to non-availability of

trained dialysis technicians to operate the equipment. Though an attempt was made

(April 2012) to recruit trained technicians, candidates selected for the post had not

reported for duty till the date as of July 2012.

Thus, procurement of equipment without ensuring required manpower to run the

equipment, not only rendered the expenditure of₹ 12.27 lakh unproductive, but also

deprived people of the intended benefits.

1.2.11.4 Idle expenditure on QBC Machine with QBC Haematology Analyzer

In order to set up a “Blood Bank” unit at the District Hospital, Aalo, the Director of

Health Services, Naharlagun, supplied a QBC machine with QBC Haematology

Analyzer valued at ₹ 9.36 lakh in January 2006.

Scrutiny of the records (September 2012) of the DMO, Aalo, revealed that the

machine, which was supplied (January 2006) to the District Hospital, Aalo, was not

1.2.11.3 Idle Expenditure on Dialysis Machine


21

installed as of September 2012. Reasons for non-installation of the machine even after a

lapse of nearly seven years was neither found on record nor stated. The present

functional status of the machine also could not be ascertained.

Non-installation of machine not only resulted in wasteful expenditure of₹ 9.36 lakh, but

the purpose for which it was purchased was frustrated as patients were deprived of the

intended benefits.

1.2.12 Support Services

1.2.12.1. Delivery of Dental Care Services

Delivery of primary health care is the foundation of the rural health care system, and

forms an integral part of the national health care system. Providing dental care at the

peripheral level is an integral component of primary health care.

Scrutiny of records revealed (August 2012) that Dental Surgeons were posted in CHC,

Doimukh, without infrastructural facilities like dental chairs, etc; Besides, a majority of

CHCs were neither equipped with infrastructure nor provided with any dental surgeons.

This showed that delivery of dental facilities were partial in the State, leaving a majority

of the rural population without any dental care service.

1.2.12.2. Testing Facilities

Testing facilities are an integral part of the delivery of health care services. During test

check of records of seven selected Districts, it was found that testing facilities in

CHCs/PHCs were either not available, or where available, was inadequate due to the

absence/non-posting of Laboratory Technicians/Assistants and absence of laboratory

reagents and other required material.

1.2.13. Procurement of Medicines/Surgical Items.

The Department neither formulated any Annual Action Plan for procurement of drugs

and surgical items for distribution to Health Care Units. It was seen that procurement of

medicines, surgical items, etc; for all public Health Care Institutions under the

Government, including hospitals, was made centrally at the Directorate level for their

further distribution to Districts and for maintenance of a buffer stock at the Central

Medical Store, Naharlagun, for emergency purposes.

Irregularities noticed in the procurement of medicines, surgical items, etc. are discussed

below:

1.2.13.1.1 Avoidable Extra Expenditure

Scrutiny of records (May 2012) revealed that consistent procedures were not followed in

awarding Supply Orders to firms for supply of medicines. In the case of


22

manufacturers, supply orders were awarded for particular items of medicines, for which

lowest rates were quoted. For instance, M/s Lark Laboratories, (Private) Limited and

M/s Lupin Limited, who had quoted the lowest rates for 35 and 15 items respectively,

were awarded Supply Orders for those 35 and 15 items.

This procedure was not followed in case of wholesalers. The supply order was placed on

a local supplier (M/s Shyam Pharmaceuticals) for supply of 130 items of medicines,

though another local wholesaler (M/s TKMPCS, Limited) had quoted the lowest rates

for 18 items out of the 130 items.

As a result of inconsistency in awarding supply orders extra expenditure of₹ 31.57

lakh procurement of 18 items of medicines at higher rates than the rates quoted by

M/s TKMPCS Limited there by extending undue benefit to M/s Shyam

Pharmaceuticals.

1.2.13.1.2 Avoidable Extra Expenditure

Rules stipulate that in case of limited tender enquiry, copies of bidding documents

should be sent directly to firms borne on the list of registered suppliers for supply of

the goods in question. The firms should be given sufficient time to submit their bids,

which should ordinarily be a minimum three weeks from the date of publication of the

tender notice or availability of the bidding documents for sale, whichever is later.

Scrutiny of records (May 2012) revealed that a 'Notice Inviting Tender' (NIT) for

supply of medicines for 2010-11 were dispatched to 149 firms by Speed Post on 13th

January 2011 and the bids were opened on 21st January 2011. There was hardly any

time for the firms to submit their bids. As a result, out of 149 registered firms (58

manufacturers and 91 wholesalers), only 08 firms (05 manufacturers and 03

wholesalers) could participate in the bidding process.

Failure of the Department to follow proper tendering process not only denied equal

opportunity to all the firms to compete, but also resulted in avoidable extra

expenditure of ₹ 38.49 lakh due to procurement of 82 items of medicines at higher

rates than the Government approved rates from a local wholesaler (M/s Shyam

Pharmaceuticals), who was a successful bidder.

1.2.13.1.3. Procurement of Medicines without inviting Tenders

As per Rule 149 of GFR, it is mandatory to float a “Notice Inviting Tender“(NIT) for

purchase of goods valued over ₹ 25 lakh.

Scrutiny of records (May 2012) revealed that the Hon’ble High Court, Guwahati

(Itanagar Permanent Bench), in an Order in 2009, directed the Department to procure

medicines in a transparent manner through tendering process. It was noticed that the

Department, in violation of the above Order, awarded Supply Orders for medicines

for 2011-12 worth ₹ 5.50 crore to 17 firms without NITs.


23

Out of 17 firms on whom supply orders were placed, only two firms, viz; M/s Lark

Laboratories and M/s Shyam Pharmaceuticals were the successful bidders of the

previous year (2010-11) on whom supply orders worth ₹ 2.80 crore and ₹ 1.20 crore

respectively were placed. The remaining 15 firms were awarded Supply Orders worth

₹ 1.50 crore, without following standard procedures or codal formalities.

1.2.13.1.4. Procurement of Ayurvedic/Homeopathic Medicines

Despite setting up of IPD Wings and Homoeopathic Speciality Clinics in seven test-

checked districts, the Government did not frame any specific policy for allocating

funds in the regular budget for procurement of Ayurvedic/Homoeopathic medicines.

In the absence of medicines, the Ayurvedic /Homeopathic dispensaries met the needs

for health care and treatment with allopathic medicines. This not only defeated the

cause of Indian System of Medicines but also encouraged unethical practice.

1.2.13.1.5. Supply of surgical items to non-functional/manpower deficient health

care centres

Scrutiny of records (August 2012) of the DMO, Seppa, revealed that during the period

from 2007-08 to 2011-12 the Department supplied 31 surgical items valued ₹ 2.51

lakh to seven health centres, which were either non-functional or did not have the

required manpower for proper use of the items supplied.

The reason for supply of the items to the non-functional/manpower deficient health

units was not found on record.

It was evident from the above that there was lack of proper planning on the part of the

Department in both procurement and distribution of the surgical items.

1.2.13.2. Storage of Drugs

Medicines and vaccines are to be stored as prescribed in the packaging labels at

specified temperatures and humidity. Keeping Intra-venous (IV) fluids and other

bottle packs in high vertical rows may lead to contamination of the contents due to

possible breakage of bottles. Storage of medicines on floors/outside the store rooms is

against the label instructions of the manufacture₹ Failure to properly store drugs at the

temperature and humidity as specified by the manufacturers may result in loss of

potency of the drug.

Instances of storage of drugs and medicines in unsafe conditions, which may lead to

contamination/damage, were noticed and are as follows:

(a) Cartons of medicines were kept on the floor of the toilet at CHC, Ruksin, due

to lack of storage space.


24

(b) Cartons of IV fluids and chemicals like bleaching powder, Dettol, Phenyl,

etc; were kept in the same storage space in most of the test-checked Health

Centres.

(c) In CHC, Doimukh, no separate room was provided for storage of

medicines.

(d) Medicines were stored in a dilapidated building in District Hospital,

Khonsa

(e) In Arunachal State Hospital, Naharlagun, and District Medical Store, Aalo,

large quantities of Dextrose-5 Solution, Dextrose Normal Saline and Ringer

Lactate Solution were found stored at the entrance of the congested store

room, exposing them to light and heat, which was likely to have adverse

effects on their potency. (f) Cold storage facilities were not provided in the CMS, Naharlagun, which is

very essential for storage of heat sensitive vaccines/injections.

Following photographs is evidence of improper storage at few health care

institutions in the state.

Medicines stored in toilets - Ruksin, CHC, East Siang District, Pasighat


25

1.2.13.3. Quality Control of Medicines/Drugs

For monitoring the quality of drugs an Assistant Drug Controller-cum-Licensing

Authority assisted by six Drugs Inspectors were appointed in the State.

To ensure supply of quality medicines, testing is mandatory. It was however, noticed

that there was no system of pre-purchase testing of medicines/drugs in the Directorate or

test-checked districts. Post-purchase testing of medicines was being done in an ad-hoc

manner at the Regional Drug Testing Laboratory (RTDL), Guwahati, and the Central

Drug Testing Laboratory (CTDL), Kolkata, on the basis of samples drawn by the

Assistant Drug Controller, Arunachal Pradesh, on a random basis immediately on

receipt of consignments of medicines in the Central Medical Store, Naharlagun.

1.2.13.3.1 Delay in Testing and Non-receipt of Test Reports

As per information furnished by the Assistant Drug Controller, reports for only 18

samples (15 per cent) out of a total of 117 samples, were received from the laboratory as

per details given inthe following table:

In any quality control mechanism, the time taken for testing should be such that test

reports should reach the medicine issuing authority before the medicines are issued to

patients. It was noticed that the time taken for receipt of laboratory reports ranged

between 2 and 8 months after medicines were issued, defeating the very purpose of

testing the medicines.

Records of the Assistant Drug Controller showed that medicines valued at ₹ 0.35 lakh

were declared sub-standard by the RDTL during 2010-11. Details of the medicines

declared sub-standard are shown in the Table below.

Table -1.2.8

Year No. of Samples

Drawn No. of Reports

Received

No. of Samples found Sub- standard

(percentage)

2007-08 - - -

2008-09 40 - -

2009-12 - - -

2010-11 18 18 02(11.12)

2011-12 59 - -

Total 117 18 02(11.12)

Source: O/o the Assistant Drug Controller


26

Due to delay in receipt of test reports, issue and consumption of sub-standard drugs by patients

was not ruled out. Though the Department received the test reports during April-July 2011,

orders for withdrawing the sub-standard medicines from circulation were issued in August

2011. Further, other than recovery of the cost (₹ 0.35 lakh) of the medicines, no action was

taken/initiated against the firms that supplied substandard medicines.

Thus, delay in receipt of laboratory reports frustrated the very purpose of quality control and

put patients at great risk.

1.2.14. Miscellaneous

1.2.14.1 Delay in setting up of State Illness Assistance Fund (Arunachal Pradesh

Arogya Nidhi)

In November 1996, the Government of India, Ministry of Health & Family Welfare, advised

all State Govemments/UT Administrations to set up an “Illness Assistance Fund” on the same

pattern as “Rashtriya Arogya Nidhi” (RAN) in their respective States/UTs. The Gol would

release Grants-in-Aid to each State/UT to the extent of 50 per cent of the contributions made

by the State Govemment/UTs to the State Fund/Society, subject to a maximum of₹ five crore

to States/UTs with a larger below poverty line percentage of population and ₹ two crore to

other States/UTs. The State/UT level funds could also receive contributions/donations from

dono₹ The Illness Assistance Fund at the State/UT level would release financial assistance to

patients in their respective States/UT up to ₹ 1.5 lakh in an individual case and forward all

other cases where the quantum of financial assistance was likely to exceed ₹ 1.5 lakh, to RAN.

Arunachal Pradesh was to receive contribution upto maximum of₹two crore.

The State Government mooted the proposal (1998) to set up the “State Illness Assistance

Fund” (SIAF) by registering the ‘SIAF’. However, the proposal did not materialise due to

shortage of funds. In spite of repeated reminders by Gol, no efforts were made to set up

‘SLAF’. In February 2012, after a lapse of nearly 14 years, a Society by the name of

“Arunachal Pradesh Arogya Nidhi” (APAN), was registered and Grants-in-Aid to the tune of ₹

one crore was provided by the State Government for its creation. The Gol was also requested

to release ₹ 50 lakh as 50 per cent

Table -1.2.9

Name of Firm Medicine Qty.

supplied

Batch

No.

Value

(₹)

Date of

Samples

Drawn

Date of

Report

M/s Montek Bio-

Pharma Decoff Syrup

500 Bottles

S-8491 14,735 16/11/2010 29/07/11

M/s JMD

Pharmaceuticals Inj. Analgin 30 ml 1000

Vials JA-06 20,210 16/11/2010 20/04/11

Source: O/o the Assistant Drug Controller


27

contribution as stipulated in the guidelines. The release of the same from the Gol is still

awaited.

Had the ‘SIAF’ been created in 1998, Central assistance of₹ 50 lakh could have been

additionally received as grants-in-aid from the GoI.

Besides, no assistance was provided out of the said fund to any patient of the State till the date

of audit (April 2012), frustrating the very purpose of its creation.

1.2.14.2. Functioning of X-Ray Units without AERB Authorization

As per provisions of the Atomic Energy Act, 1962, and Atomic Energy (Radiation Protection)

Rules, 2004, installation and operation of any X-Ray equipment in hospitals requires

registration with the Directorate of Radiation Safety (DRS) and permission from the Atomic

Energy Regulatory Board (AERB). The validity of certificates issued by the AERB and DRS

are subject to conduct of annual quality assurance tests.

Scrutiny of records (May 2012) revealed that a Directorate of Radiation Safety was never

established in the State to enforce the power and functions stipulated in the Rules and

delegated by the AERB. According to Rule 3 of the Atomic Energy (Radiation Protection)

Rules, a CT Scan facility and Cath Lab should have a licence, and all other radiation

generating diagnostic equipment should be registered with the AERB. The registration/licence

is issued by the AERB, based on the site approval report of the Director of Radiation Safety. It

was noticed that none of the radiation generating X-Ray/diagnostic installations in the

District/General Hospitals had obtained prior site approval, registered with or taken licences

from the AERB. Only the General Hospital, Pasighat, applied (September 2010) for

registration/licence from the AERB, response to which is still awaited.

In the absence of registration of the equipment and quality tests, it could not be confirmed

whether patients/operating personnel were subjected to hazardous radiation effects.

1.2.14.3. Disposal of Bio-Medical Waste

Waste generated in health care institutions are dangerous to the environment and is to be

disposed of in the manner specified in the Bio-Medical Waste (Management and Handling)

Rules, 1998, issued by the Gol under the Environment Protection Act, 1986. The Arunachal

Pradesh State Pollution Control Board (APSPCB) is the enforcing authority of the Rules in the

State.

Rule 5 of the Bio-Medical Waste (Management and Handling) Rules, 1998, prescribes that

every occupier shall set up requisite Bio-Medical Waste (BMW) treatment facilities in

compliance with the standards prescribed in the Rules. Further, all health care institutions

having not less than one thousand out-patients shall apply


28

for the statutory ‘Authorization’ from the APSPCB for managing BMW. It was, therefore,

mandatory for all PHCs, CHCs and hospitals havingindoor patient facilities and out-patient

strength of one thousand and above to take the statutory authorization. As per Schedule - VI of

the Rules, waste disposal facilities should have been created by 31 December, 2002.

Audit noticed that:

(a) None of the CHCs/PHCs test-checked in Papumpare, East Siang, Tirap, Lower

Subansiri, Lohit, West Siang and East Kameng Districts had taken the statutory

authorization or set up the Bio-Medical Waste (BMW) disposal facilities, as required

under the Rules.

(b) In District Hospitals, Tezu, Seppa and Khonsa no BMW plant was set up and the waste

generated was disposed of by burning and deep burial. The practice of deep burial

was without prescribed safeguards and entailed risk of contamination of the soil and

underground water sources.

(c) The incinerator at General Hospital, Pasighat, was out of order since November 2010

and the one at District Hospital, Aalo, was lying nonfunctional since 2008-09 due to

non-construction of a sewage tank/pit coupled with non-availability of trained

personnel to run the incinerator

(d) In Arunachal State Hospital, Naharlagun, authorization for an incinerator, installed in

2004, was not taken. The Hospital also failed to renew its authorization for another

incinerator since July 2011. Authorization was never obtained by the District

Hospitals in Aalo and Ziro from the APSPCB for setting up the incinerators.

(e) Except for the year 2009-10, Annual Reports of the categories and quantities of waste

generated by the DMO, Ziro, were not submitted for 2007-08, 2008- 09, 2010-11 and

2011-12 and by the DMO, Tezu, for 2010-11 and 2011-12 till the date of audit

(August 2012). The DMOs of Khonsa and Seppa never submitted Reports to the

APSPCB.


29

1.2.14.4.

1.2.14.4. Laundry Facilities

As per Para B.2.6 of the MCI norms, central mechanical laundries should be provided with

bulk washing machines, hydro-extractors and flat rolling machines. Laundering of hospital

linen should satisfy two basic considerations, i.e., cleanliness and disinfection. Physical

facilities for housing laundry equipment should be provided within the hospital campus.

Audit scrutiny revealed that laundry facilities as per norms were not available in the test-

checked District/General Hospitals. In the General Hospital, Pasighat, which is an ISO

certified premier hospital of the State, the work was done by two departmentally appointed

washer men (Dhobis). As there is no disinfection facility in the laundries of the

District/General Hospitals, only washing, drying and folding were done, compromising

hygiene.

Annual Physical Verification of Stores

Under Rule 116 of General Financial Rules, annual stock taking and reconciliation is a

mandatory requirement of any Stores Management, as the entire planning of procurement

depends on existing stock levels. Discrepancies between actual holdings and book balance

are to be reconciled to arrive at a correct Stock Index. It was noticed that there were huge

arrears in physical verification of stores from 2007-08 to 2011-12 (review period) in the

Directorate and test-checked units in 07 (seven) Districts, as detailed in the following

Table:

Successful implementation of the programme depends upon proper monitoring and

evaluation. Monitoring at the State level should be more detailed in case of rural

Table -1.2.10

Directorate/ Districts 2007-08 2008-09 2009-10 2010-11 2011-12

Total

Units

Total

Units

Total

Units

Total

Units

Total

Units

Veri- Veri- Veri- Veri- Veri-

Units fled Units fled Units fled Units fied Units fied

CMS, Naharlagun 01 01 01 01 01 NIL

01 NIL

01 NIL

East Siang 20 01 20 01 20 NIL 20 01 20 NIL

Tirap 10 NIL 10 NIL 10 NIL 10 NIL 10 NIL

East Kameng 09 NIL 09 NIL 09 01 09 NIL 09 NIL

Papumpare 14 NIL 14 NIL 14 NIL 14 NIL 14 NIL

West Siang 19 NIL 19 NIL 19 NIL 19 NIL 19 NIL

Lower Subansiri 10 01 10 01 10 01 10 01 10 NIL

Lohit 18 01 18 01 18 01 18 01 18 01

HTRC, Pasighat 01 NIL 01 NIL 01 NIL 01 NIL 01 NIL

ASH, Naharlagun 01 NIL

01 NIL

01 01 01 NIL

01 NIL

1.2.15 Monitoring and Evaluation


30

health services. There was no system or prescribed procedure of monitoring in the

Department. No monitoring cell was created in the Directorate to monitor activities of the

Department. Due to the absence of an internal monitoring mechanism in the Department to

oversee the performance in implementation of programmes under health delivery services,

the overall impact of implementation was not evaluated and remained un-assessed.

1.2.15.1. Non-publication of Annual Administrative Report

Administrative Reports are required to be prepared annually by all Departments of the

Government. However, since inception of the Health Department, an Annual

Administrative Report of the DHS has never been prepared. Besides Annual Operating

Plans (AOPs), a comprehensive report on the functioning of the Department and its

activities, schemes, performance during previous years, etc; was not available with the

Department.

1.2.15.2. Lack of response to Audit

The Accountant General conducts periodic audit of Government transactions and audit

findings are communicated through Inspection Reports (IRs) to the Heads of Offices/

Departments, which are required to be complied within a specific period. A half-yearly

report on pending Inspection Reports is also sent to each Department to facilitate

monitoring and compliance of audit observations.

As of March 2012 there were 19 (nineteen) Inspection Reports pending against the DHS

and its subordinate offices as detailed in the following table:

Table -1.2.11

Assessment of the performance of the Department in its various activities revealed

several deficiencies. The Department responsible for ensuring health delivery services

to the people did not have any strategic/perspective plan to overcome the deficiencies in

the sector over a period of time. Budgetary control was lacking. Shortage of manpower,

idling of equipment and buildings and the consequent unproductive expenditure were

the main drawbacks in the asset management of the Department. Lack of facilities such

as, proper laundries, storage space for medicines, proper waste

Year Number of IRs Number of Paragraphs

upto 2006-07 02 07

2007-08 04 12 2008-09 00 00

2009-10 03 07 2010-11 06 28 2011-12 04 22

TOTAL 19 76 1.2.16 Conclusion


31

disposal systems, etc; were also noticed in the test-checked hospitals and health centres.

Overall monitoring was ineffective as no internal monitoring mechanism was put in

place. Annual Administrative Reports were not prepared since inception of the

Department.

1.2.17. Recommendations

On the basis of the shortcomings and deficiencies pointed out in the foregoing paragraphs

the following recommendations are made for streamlining the system of health care

services:

• The Department should prepare a strategic/perspective plan and Annual Action Plans

with specific targets to address the need for in health centres and hospitals.

• Budgetary controls should be strengthened in the Department to ensure that funds are

fully utilised and persistent savings are avoided.

• A Purchase Manual may be formulated and followed to regulate the purchase of

medicines and equipment to avail of competitive rates.

• Infrastructural facilities for Quality Control test of medicines should be set up.

• The Department should give priority to providing bio-medical waste disposal

facilities in hospitals to prevent health/environmental hazards.

• The Trauma Centre, Pasighat and the Regional Diagnostic Centres at Miao and

Ruksin should be made operational by taking effective steps.

• The department should ensure registration of all radiation generating equipment with

the AERB.

• A Monitoring Cell in the Directorate needs to be set up to monitor the activities of the

Department.


32

SPORTS AND YOUTH AFFAIRS DEPARTMENT

1.3 Extra expenditure due to adoption of wrong schedule of rates.

Detailed Project Report (DPR) for ‘Improvement of Sports Complex at Chimpu

Itanagar Chimpu Sport Complex prepared by the Department, based on the Delhi

Schedule of Rates instead of Arunachal Pradesh Schedule of Rates, as prescribed

in the Work Manual The work was also got executed at this rates, without observing

the requisite codal formalities. Due to these factors an extra expenditure of₹94.81

lakh was incurred, besides extending undue benefit to the contractor.

The CPWD Works Manual and General Financial Rules provide that no work shall

commence until estimates containing detailed specifications and quantities of various

items have been prepared on the basis of the Schedule of Rates maintained by the

Public Works organisations. It also stipulates that open tenders are to be invited for

works over ₹ five lakh. A contract agreement is executed and the work order is issued.

The Arunachal Pradesh Schedule of Rates (APSR) maintained by the Public Works

Department (PWD) facilitates the preparation of estimates for any kind of work

commonly executed in the State.

Government of Arunachal Pradesh sanctioned (August 2007, March 2008 and January

2009) amount totalling to ₹ 4.84 crore for ‘Improvement of Sports Complex at Chimpu

Itanagar’, being Government of India share for the project. The project, inter-alia,

included construction of a boundary wall.

Test check (October - November 2010) of records of the Director of Sports and Youth

Affairs, Chimpu, revealed that the work ‘Construction of Boundary Wall at State

Sports Complex, Chimpu’ was executed by M/s Abu Tat Enterprises (the Contractor).

Neither any tender was invited nor formal work order been issued to the Contractor as

required under the prescribed rules/procedures. Only a memorandum of understanding

was signed with the Contractor (November 2007) for construction of boundary wall of

the Chimpu Sports Complex.

The Contractor was paid (March 2008) ₹ 21.15 crore for construction of wall of a

total length of 3985.85 running metre at the rate of ₹ 5306.28 per running metre.

During the same period the construction of boundary walls of Dirang and Palin State

Sports Complexes were executed through other contractors. The contractors were paid

at much lower rate of₹ 2927.60 per running meter for construction of wall.

On being pointed out, the Department in reply (January 2012) stated that while bills

of the Chimpu Sports Complex were prepared based on the Delhi Schedule of Rates

(DSR), the bills for Dirang and Palin Sports Complexes were based on APSR. The

reply is not logical as the APSR items of rates were required to be followed for all


34

works undertaken in the State including Chimpu Sports Complex as well. Reasons for adoption of

different schedule to rates for different works were not on record. Due to adoption of DSR instead

of APSAR for construction of the boundary wall at Chimpu Sports Complex, the Department

incurred extra expenditure of ₹ 94.69 lakh (₹ 5306.28 - ₹ 2927.60 per meter for 3985.85 meter)

thereby extending undue financial benefit the Contractor.

The Government in reply (October 2012) stated that the Detailed Project Report (DPR)

for Chimpu Sport Complex prepared by the Department, based on the DSR, was approved

by the Ministry of Urban Development; the work was executed at approved rates. It added

that the construction sites of the Sports Complexes at Dirang and Palin which were far

from Chimpu, therefore, the rates would automatically vary and also both rates were

approved by different bodies.

The reply of Government was silent on issues of not inviting tenders and adoption of DSR

in preparation of DPR instead of the applicable APSR, as prescribed in the Manual.

Further, rates of Chimpu complex, Itanagar should not be higher than rates of complexes

at Palin and Dirang, as the locations of these complexes are remote.

Due to adoption of wrong schedule of rates an extra expenditure of₹ 94.81 lakh was

incurred, besides extending undue benefit to the contractor.

1.4 Undue Benefit to Contractors

Undue benefit of₹1.01 crore extended to the Contractors by deducting VAT at

inapplicable lower rate.

Under provisions of the Arunachal Pradesh Goods Tax Rules, 2005 (APGTR), the

departments making payments to work contractors are liable to deduct VAT at the rate of

12.5 per cent on taxable turnover (value of work less 25 per cent for labour and service

charges). In August 2009, the Government introduced the “Simplified Accounting Method

for Work Contract”. Under this method, as stipulated under Rule 11 of APGTR, if a

contractor opts for this scheme, he has to pay 4 per cent VAT on the value of the work

contract to the tax authorities by way of prescribed Form FF-04, indicating his

Registration Number.

Test check (July 2012) of records of the Director of Sports & Youth Affairs, Itanagar,

revealed that the Directorate deducted 4 per cent VAT amounting to ₹ 74.31 lakh from 74

work bills (total value of work - ₹ 18.70 crore) paid between the period October 2011 and

March 2012. Scrutiny of vouchers for paid work bills revealed that none of the

contractors submitted a copy of the prescribed Form FF-04 and that there was no

indication in the bills regarding the submission of Form FF-04 to the tax authorities. In

the absence of Form FF-04, VAT at the rate of 12.5 per cent on taxable

33


34

turnover should have been deducted from the work bills, whereas the VAT was deducted

at the rate of 4 per cent on total value of work. This led to short deduction of VAT

amounting to ₹ 1.01 crore10, from the work bills.

Due to deduction of inapplicable lower rate of VAT under the Arunachal Pradesh Goods

Tax Rules, 2005, undue benefit of ₹ 1.01 crore was extended to work contractors.

The Government in reply (October 2012), stated that VAT was deducted at the rate of 4

per cent on total value of works bills following the ‘simplified accounting method for

work contracts’ under Rule 11 of APGTR and there was no short recovery and forwarded

a statement showing list of 74 works where in the VAT was deducted form the works bill

at 4 per cent. No copies of Form FF-04 that submitted by the contractors was furnished

by the department. The contention of the department that there was no short recovery is

not valid in view of the fact that the Department of Tax and Excise, Government of

Arunachal Pradesh has clarified in June 2010 that the department executing the work can

neither opt for this scheme nor deduct tax at the rate of 4 per cent of their own unless the

dealer/ contractor opts for this scheme in Form FF-04. In the absence of the documentary

evidence that the contractor has opted for this scheme in Form FF-04, the action of the

Department to deduct VAT at the rate of 4 per cent was not permissible.

SOCIAL WELFARE, WOMEN AND CHILD DEVELOPMENT DEPARTMENT

1.5 Doubtful Expenditure on Distribution of SNP Items

Due to non-maintenance/availability of records, the authenticity of expenditure

incurred on procurement and distribution of SNP items could not be vouchsafed. Test

check of available MPRs revealed doubtful expenditure of at least₹35.48 lakh on

claimed distribution of SNP items against non-functional A WCs

Under the Supplementary Nutrition Programme (SNP) of Integrated Child Development

Services (ICDS) Project, supplementary nutrition and kitchri items were procured by the

Directorate of Social Welfare, Women & Child Development Department, and issued to

Anganwadi Centres (AWCs) for distribution to various categories of beneficiaries

(normal children, severely malnourished children, pregnant women, nursing mothers and

adolescent girls) in accordance with laid down norms. The Government of India supports

the State toimplement the scheme as per norms laid down for various categories of

beneficiaries or 50 per cent of the actual expenditure on the SNP, whichever is less. Child

Development Project Officers (CDPOs) submit Monthly Progress Reports (MPRs) for

AWCs under their control, on the basis of which the Directorate sends consolidated

MPRs to the Union Government.

10(i) Total value of work bills ₹ 18.70 crore (ii) Less 25% for labour and service charges ₹ 04.675 crore

(iii) Taxable turnover [(i)-(ii)] ₹ 14.025 crore (iv) Applicable VAT @ 12.5 % on (iii) ₹ 01.75 crore (v) VAT actually recovered [@ 4% of (i)] ₹ 00.74 crore

Short deduction of VAT[(iv)-(v)] ₹01.01 crore


34

Mention was made in Paragraph 2.8 of the Report of the Comptroller and Auditor

General of India for the year ended 31st March 2009, that between January 2007 and

March 2008 the Directorate incurred expenditure of ₹ 14.46 crore for procurement and

distribution of SNP items in respect of 4277 AWCs. However, it was revealed that 74

AWCs were non-functional. Hence, the claimed distribution of SNP items worth ₹ 28.13

lakh against the non-functional AWCs was doubtful. It was also mentioned that though

the CDPOs were not regular in sending MPRs of AWCs under their control, the

Directorate still sent consolidated statements of MPRs to the Government of India

claiming that all the AWCs were functional. Maintenance of records was also not proper.

Scrutiny of records of the Directorate (April-May 2012) revealed that the irregularities

and lacunae pointed out in the earlier instance still persisted. Records were either not

maintained or not properly maintained. Even though, CDPOs did not submit MPRs

regularly, the Directorate continued to send consolidated statements to Government of

India asserting that all AWCs were functional.

Due to non-maintenance/non-availability of records, the authenticity of expenditure

incurred on procurement and distribution of SNP items could not be authenticated in

Audit. From the examination of available documents maintained by the Directorate, it

was noticed that between March 2011 and February 2012, the Directorate incurred an

expenditure of₹ 30.56 crore on procurement and distribution of SNP items. These items

were meant for distribution to 6028 AWCs. Further examination of records made

available to Audit revealed that 70 of the AWCs were non-functional.

Thus, the claimed expenditure of₹ 35.48 lakh on SNP items shown against 70 AWCs

during March 2011 and February 2012 was doubtful. The possibility of SNP items

purchased against these non-functional AWCs being pilfered cannot be ruled out. The

records pertaining to previous period from April 2008 till February 2011 has not been

made available to audit despite request. Instances of such irregularity during the previous

period since April 2008 till period now reported could not be ruled out.

The matter was reported to Government in August 2012; reply is still awaited as of March

2013.

35


34

EDUCATION DEPARTMENT

1.6 Loss due to injudicious procurement of text book

Due to delay in procurement and distribution of text books from private publishers, text

books worth₹33.36 lakh became obsolete.

Under the scheme ‘Universalisation of Education-2001 the Department procures text

books from NCERT, CBSE, and private publishers for free distribution to students from

Class I to Class VIII. As per prevailing procedure, the Director of School Education

(DSE), Itanagar, centrally issues the supply order to private publishers, who deliver the

books to the respective Deputy Directors of School Education (DDSEs) of the districts.

Payment to suppliers of private publishers is made by the DSE on the basis of bills

submitted, along with receipt challans submitted by DDSEs against supply orders. In July

2008, the Cabinet decided to introduce NCERT text books from the following academic

session, i.e., 2009-10.

Scrutiny (May 2012) of records of the DDSE, Bomdila, revealed that even after the

Cabinet decision to switch over to NCERT text books, the district received text books

supplied by private publishers valued at ₹ 33.36 lakh during October-December 2008 for

distribution to students of Classes I to VIII. Further scrutiny revealed to audit that out of

161 primary and middle schools under Bomdila DDSE, text books of private publishers

were issued to 48 schools which were also issued with CBSE/NCERT text books. Since

the NCERT course was adopted from 2009-10 academic session, the books sourced from

the private publishers were rendered obsolete.

The Government, in reply ( October 2012), admitted to the fact of belated receipt and

issue of the text books to be used for part of the session and stated that procedural

obligations and communication bottlenecks caused the delay for the books to reach to

beneficiaries in time.

Delay in procurement and distribution of text books from private publishers, text

books worth ₹ 33.36 lakh became obsolete.

36


34

CHAPTER - II

ECONOMIC SECTOR

37

CHAPTER II

This Chapter of the Audit Report for the year ended 31st March 2012 deals with the

findings on Audit of the State Government units under economic sector.

During 2011-12, total budget allocation of the state Government under economic sector

was ₹ 3115.52 crore against which actual expenditure was ₹ 2693.10 crore. Details of

Department wise budget allocation and expenditure are given in Table 2.1 below:

Beside the above, the central Government has been transferring a sizeable amount of

funds directly to the Implementing agencies under the economic sector to different

departments of the state Government. The major transfers for implementation of flagship

programmes of the Central Government are given Table 2.2.

ECONOMIC SECTOR

2.1 Introduction

Table-2.1.1 (₹ in crore)

SI. No.

Name of the Departments Total Budget

Allocation Expenditure

145

84

.

Industries 25.66 24.08

3. Textile & Handicrafts 31.13 30.59

4. Tourism 55.9 48.59

5. Rural Development 109.75 104.53

6. Co-operation 22.84 22.76

7. Agriculture 141.9 104.93

8. Horticulture 46.32 44.49

9. Annual Husbandry 79.04 77.64

10. Fisheries 22.78 22.65

12. Research 11.93 8.88

14. Science and Technology 21.95 21.95

15 Public Works 1139.4 1007.65

16 North Easter Areas 168.2 129.95

18 Environment and Forest 191.92 141.26

19 Transport 119.15 110.3

21 Power 604.01 562.99

22 Water Resource 305.66 213.34

23 Geology & Mining 17.98 16.52 TOTAL 3115.52 2693.10

Source: Appropriation Accounts 2011-12

Chapter-II: Economic Sector

38

2.1.1 Planning and Conduct of Audit

Audit process starts with the assessment of risks faced by various departments of


delegated financial powers, assessment of overall internal controls and concerns of the

departments.

The Audits were conducted involving expenditure amounting ₹ 489.83 crore of the State

Government under Economic Sector. The report contains Performance Audit on

'Implementation of Mahatma Gandhi National Rural Employment Guarantee Scheme and

five Transaction Audit paragraph.


issued to the heads of the Departments. The Departments are requested to furnish replies

to the audit findings within one month of receipt of Inspection Reports. Whenever replies

are received, audit findings are either settled or further action for compliance is advised.

The important audit observations arising out of these Inspection Reports are processed for

inclusion in the Audit Reports, which are submitted to the Governor of the state under

article 151 of the constitution of India.

The major observations pertaining to Economic Sector (other than Public Sector

Undertakings) detected in Audit during the year 2011-12 are discussed in the subsequent

paragraph of this chapter.


Name of the Scheme/Programme Implementing Agency Amount of fund

transferred during the year

Power Information Publicity and extension AP Energy Development

Agency 1.01

OFF Grid DRDS -do- 2.77

Aajeevika District Rural Development

Agencies (DRDAs) 3.64

DRDA, Administration DRDAs 18.31

Rural Integrated Watershed Management

Programme (IWMP)

SLNA, AP and DRDAs 38.06

Development Mahatma Gandhi National Rural

Employment Guarantee Scheme DRDAs

78.42

Pradhan Mantri Gram Sadak Yojana Rural Development

Department 214.26

Rural Housing – IAY DRDAs 31.98

Animal Husbandry &

Veterinary

National Project for Cattle & Buffalo

breeding A.P. Livestock Development

society 3.19

Water Resource National Rural Drinking Water

Programme SWSM, A.P., Agency

184.83

Science & Technology

Water Technology Initiative A.P. State Council for

Science & Technology,

Itanagar 0.78

Source: Central Plan Scheme Monitoring System (CPSMS)


39

RURAL DEVELOPMENT DEPARTMENT

2.2 MAHATMA GANDHI NATIONAL RURAL EMPLOYMENT GUARANTEE

SCHEME (MGNREGS)

Highlights

The National Rural Employment Guarantee Act (NREGA), 2005 enacted in September 2005,

guarantees 100 days wage employment in a financial year to any rural household on demand.

In the first phase during 2005-06 in Arunachal Pradesh, the Act was notified in one district

and then extended in the second phase during 2007-08 to two other districts and in the

third phase during 2008-09 to all the remaining 13 districts. A Performance Audit of the

implementation of the NREGA was carried out for the period from April 2007 to March

2012, covering 63 Gram Panchayat in 13 Blocks in six Districts. The Performance Audit

of the Scheme brought out the following significant findings:

Capacity Building

■ Prescribed structural capacity for implementation of the programme was not

developed; State MGNREGA Rules, belatedly framed. Technical support was

inadequate; and the IEC plan for awareness generation was not formulated.

[Paras 2.2.6.1 to 2.2.6.5]

■ Against the target of3350 PRIfunctionaries, only 2239 (66.84 per cent) were trained.

The target for training of vigilance and monitoring stakeholders was 1777 against

which the achievement was 419 (23.58 per cent).

[Para 2.2.6.6]

Planning

■ District Perspective Plans prepared at a cost ₹3.20 crore were unsatisfactory.

[Para 2.2.7.1]

■ Annuals Work Plans were prepared on an ad-hoc basis without involving

beneficiaries/PRIs and without bringing out the parameters of programme outcome,

as envisaged in the Act and Guidelines.

[Para 2.2.7.2]

Financial Management

■ Labour budgets were unrealistic and only 34 to 66 percent of projected employment

generation could be created. Annual average employment generation was 15 to 18

days and the percentage of households that completed 100 days work was 0.04 to

18.18.

[Paras 2.2.8.2]


40

Delayed submission of requests for release of subsequent tranches offunds led to

receipt of Central share at the end of the year and in the next year. Delay in receipt

of Central share by the Districts was up to over 6 months from the date of release;

the Districts further delayed release of funds to Blocks. The State Government did not

release its share within 15 days after release of Central share.

[Paras 2.2.8.5 and2.2.8.6]

Districts submitted incorrect progress reports and retained unspent balances every

year, varying from ₹3.97 crore to ₹9.27 crore, which were adjusted with next year’s

approved outlay of Central share, which adversely affected the inflow of funds.

[Paras2.2.8.7]

Payment of wage

There were instances of under-payment of wages, engagement of unregistered workers, and delay in payment of wages.

[Para 2.2.10]

Works and their execution

■ Unique identification numbers to avoid duplication and SoR for MGNREGA works were

wanting; Citizen Information Charts were not displayed and were not available in

work sites. “Preferred works” for the State were not identified.

[Para 2.3.11.1]

77 per cent of total expenditure was spent on creation of low priorityworks under the

scheme.

[Para 2.3.11.3]

In test checked districts, (i) Two works completed at a cost of ₹6.21 lakh were again

executed for₹21.79 lakh (ii) Eight road works executed at a cost of ₹ 7.49 lakh were

of doubtful durability, (Hi) An expenditure of₹137.27 lakh was incurred on nine

works which were not permissible under the Guideline, and (iv) 14 works for ₹ 2.18

crore were executed without administrative approval and technical sanction

[Para 2.2.11.4 to 2.2.11.8]

Monitoring and Evaluation

■ Physical verification reports of work (10 per cent at District level and 2 per cent at State

level) were not available or monitored by the State Government.

■ [Para 2.2.15.2]


41

The State Government had not appointed State Quality Monitors (SQMs). The

Districts had also not identified District Quality Monitors for all aspects of

implementation.

■ [Para 2.2.15.3]

The State had neither finalised the Citizen’s Charter nor given wide publicity to MGNREGA.

■[Para 2.2.16.3]

2.2.1 Introduction

The National Rural Employment Guarantee Act (NREGA) was enacted in 2005 with the main

objective of enhancing livelihood security to the rural populace by providing at least 100 days

of guaranteed wage employment per annum to every rural household whose adult members

volunteer to do unskilled manual work. According to the Act, rural households have a right to

register themselves with the local Gram Panchayats (GPs) and seek employment. The Act

provides opportunities to generate assets, protect the environment, empower rural women,

reduce rural-urban migration, foster social equity, strengthen social equity, and strengthen

rural governance through decentralisation and processes of transparency and accountability. In

October 2009, the name of the act was changed to Mahatma Gandhi National Rural

Employment Guarantee Act (MGNREGA). The Act was implemented as a Centrally

Sponsored Scheme (CSS) on a cost sharing basis between the Centre and the State.

The rationale of the Act is based on the productive capacity of villagers to build and nurture

assets, along with alleviating the problems of unemployment and poverty.

In Arunachal Pradesh, implementation of the programme started in one District (Upper

Subansiri) from February 2006. Two more Districts (Lohit and Changlang) were covered

under the programme from April, 2007. Implementation of MGNREGS in all Districts of the

State started from 2008-09.

The name of the Act was change to Mahatma Gandhi National Rural Employment Guarantee

Act (MGNREGA) in October 2009.

2.2.2 Organisational Structure A State Level

Under section 12 of MGNREGA The State Employment Guarantee Council (SEGC) is to be

set up by every State Government. The SEGC shall advise the State Government on the

implementation of the scheme, and evaluate and monitor it. Other roles of the State Council

include deciding on the preferred works’ to be implemented under MGNREGA, and

recommending the proposal of works to be submitted to the Central Government under

Schedule I Section l(ix) of the Act.


42

In Arunachal Pradesh, the Rural Development (RD) Department headed by Secretary, is the

Administrative Department responsible for implementation and monitoring of the scheme in

the State. Under the Secretary, RD Department, a State level NREGA cell was constituted in

September 2008 to oversee the implementation of the scheme in the State.

The Arunachal Pradesh State Employment Guarantee Council (APSEGC) was set-up on 6th

March 2006. The APSEGC is headed by the Minister Rural Development and 19 Official

members with Secretary Rural Development as Member Secretary.

B District Level

In Arunachal Pradesh the Deputy Commissioners of sixteen districts were designated as

District Programme Coordinators (DPCs) by the State Government, who are responsible for

finalizing the District Plans and the Labour Budget and for monitoring and supervising the

Employment Guarantee Scheme in the district. The DPCs will be assisted by the Project

Directors of the concerned District Rural Development Agencies (DRDAs), who were

designated as District Programme Officers (DPOs) for overall management of the scheme.

The overall responsibility for ensuring that the Scheme is implemented according to the Act

lies with the District Programme Coordinator (DPC) at the District level.

C Block Level

In Rural Development Blocks in the State, Programme Officers (POs) are responsible for the

consolidation of the GP plans at the Block level into a Block Plan and for monitoring and

supervision.

The Programme Officers essentially act as coordinators for MGNREGS at the Block level.

The chief responsibility of the Programme Officers are maintenance of job register, issue of

job cards, ensure that anyone who applies for work gets employment within fifteen days and

execution of works including maintenance of relevant records.

D Village Level

The provisions of the Act identifies the Panchayati Raj Institutions as the key implementing

agencies for the programme providing a significant opportunity for demonstrating the role of

village level institutions in transforming their village infrastructure and addressing abject

poverty. The Gram Panchayat is the pivotal body for implementation at the village level.

The Gram Sabha will recommend works to be taken up under MGNREGS, conduct social

audits on implementation of the Scheme and to be used extensively as a forum for sharing

information about the Scheme. GPs are suppose to be responsible for implementation of the

scheme at village level.


43

A chart showing organizational structure responsible for implementation of the scheme in the

state is depicted below:

The Performance Audit was undertaken to ascertain whether:

• Structural mechanisms were put in place and adequate capacity building measures

taken by the State Government for implementation of the Act;

• Procedures for preparing Perspective/Annual Plans at different levels for estimating the

likely demand for work and preparing shelves of projects, were adequate and effective;

• Funds were released, accounted for and utilised by the State Government in compliance

with the provisions of the Act/Rules;

• There was an effective process of registration of households, allotment of Job Cards,

and allocation of employment exist in compliance with the Act/Rules;

• The primary objective of ensuring livelihood security by providing 100 days of annual

CHART-I


44

employment to targeted rural communities at specified wage rates was effectively

achieved and whether the unemployment allowance for inability to provide job-on-

demand paid in accordance with the Act and relevant rules;

• MGNREGA works were properly planned and economically, efficiently and effectively

executed in a timely manner and in compliance with the Act/Rules, and durable assets

created, maintained and properly accounted for;

• The auxiliary objectives of protecting environment, empowering rural women,

reducing rural-urban migration, fostering social equity etc. were effectively achieved in

accordance with the Act and Rules.

• Convergence of scheme with other Rural Development Programmes as envisaged was

effectively achieved in ensuring sustainable livelihood to the targeted rural

communities and improving overall rural economy;

• All requisite records and data were maintained at various levels and whether

MGNREGA data was automated completely and provided reliable and timely MIS;

• Transparency was maintained in implementation of the Act by involving all

stakeholders in various stages of its implementation from planning to monitoring and

evaluation; and

• An effective mechanism existed to assess the impact of MGNREGS.

2.2.4 Audit Criteria

The main sources of audit criteria for the Performance Audit were:

• The National Rural Employment Guarantee Act, 2005 (NREGA-2005) and

amendments thereto;

• Guidelines/Operational Guidelines 2006 and 2008 issued by the Ministry of Rural

Development, GOI, regarding MGNREGA;

• Guidelines issued by the MoRD for social Audit;

• Fund Rules, 2006, Financial Rules, 2009 and Audit of Scheme Rules, 2011;

• Reports of the State/Districts by National Level Monitors, available with MoRD and

respective State NREGS Commissioners;

• Muster Roll watch guidelines;

• Guidelines/Checklist for internal monitoring by States;

• Performance indicators framed by the Government of India/State Governments; and


45

• MGNREGS Vision, Strategic Framework and Plan of Action (2010-11) by MoRD;

2.2.5. Audit Scope, Sampling and Methodology

2.2.5.1. Audit Scope

The scrutiny of records took place at the following levels:

• The State Government/ Rural Employment Guarantee Council

• Districts

• Blocks

• Gram Panchayats

• State Institute of Rural Development (SIRD)

2.2.5.2. Audit Sampling

Out of sixteen districts in the State, six Districts (Anjaw, Lower Dibang Valley,

Papumpare, West Siang, and Changlang) were selected. Out of 38 blocks in these six

districts, 13 blocks (two blocks of each of the five districts viz., Anjaw, Lower Dibang

Valley, Papumpare, Upper Subansiri, and Changlang and three blocks of West Siang) were

selected. Again, out of 237 GPs in the selected 13 blocks, 63 GPs were selected for

detailed scrutiny. Details of the selected districts, blocks and GPs are given in Appendix -

2.2.1. Sample Districts, Blocks and GPs were selected using Simple Random Sampling

without Replacement (SRSWOR).

2.2.5.3. Audit Methodology

The Performance Audit commenced with an ‘Entry Conference* on 16 April 2012,

attended by the Commissioner, Rural Development, and other Departmental officers,

wherein the Audit Objectives, Scope of Audit, Criteria were discussed. The Audit

Methodology involved examination and analysis of the records/documents of the R D

Department coupled with field visit by the Audit for scrutiny and analysis of the records of

the selected six districts, 13 blocks and 63 GPs during the period from April to June and

November 2012.The draft Performance Audit Report was issued to the Government in

December 2012 for obtaining their views/comments on audit findings. Audit findings were

also discussed with various Departmental functionaries in the ‘‘Exit Conference” held on

12th December 2012, where views/comments of the Department were expressed.

2.2.5.4. Impact Assessment

The following specific methodologies were adopted in audit for doing an impact

assessment of the Scheme:

Households’ beneficiary survey.


46

Physical verification of works executed under the Scheme.

Audit acknowledges the co-operation and assistance extended to Audit by

officers/officials of the Directorate/Department of Rural Development &

Panchayats, the SIRD, concerned Districts, Blocks, subordinate establishments and

PRIs during the course of Audit

AUDIT FINDINGS

The important points noticed during the Audit are discussed in the succeeding paragraphs:

2.2.6 Structural Mechanism and Capacity Building

2.2.6.1. Framing of Rural Employment Guarantee Rules

Section 32 (1) of the NREG Act 2005, provided that the State Government could make

rules for carrying out the provision of the Act. The rules, inter alia, were to determine the

grievance redressal mechanism at the block level and the district level and the procedure to

be followed in such matter, lay down the terms and condition to determine the eligibility for

unemployment allowance, and provide for the manner of maintaining books of accounts of

employment of labourer and the expenditure.

According to the NREGA Operational Guidelines, the State Government should prescribe

the time frame for each level i.e. GP, block and district levels for proposing, scrutinizing

and approving REGS works.

Although MGNREGS was implemented in the State from February 2006, the draft State

rules were formulated only in March 2011. During Exit Conference the Department

informed (December 2012) that the Rules have since been notified.

Delay in formulation of draft rules and absence of its notification had impacted the

implementation of the scheme right from planning stage onwards.

2.2.6.2. Rural Employment Guarantee Schemes (REGS).

The Act (Section 4) enjoined upon the State Government for setting up of Employment

Guarantee Scheme (SEGS) within six months from the date of commencement of the Act (

September 2005) duly incorporating the essential features contained in the Act for

providing not less than 100 days of guaranteed employment in a financial year to every

household.

The State Government formulated SEGS and named it “Arunachal Pradesh Rural

ACKNOWLEDGEMENT


47

Employment Guarantee Scheme (APREGS)” which inter alia covered all essential features

contained in the Act. However, the year of its formulation was not indicated therein.A

summary of the scheme was also not published in two local newspapers as required under

MGNREG act (under section 4(2) of chapter III) compromising the necessity of wide

publicity and transparency.

2.2.6.3. State Employment Guarantee Council (SEGC)

Section 12 (1) of the NREG Act stipulates that every State Government should set up a

State Employment Guarantee Council (SEGC), which is responsible for advising the

State Government on the implementations, evaluation and monitoring of the Scheme,

deciding on the “preferred works” to be executed under REGS, recommending the

proposals of works to be submitted to the Gol and preparing an Annual Report on REGS,

to be presented to the State Legislature.

The SEGC is required to hold at least two meetings a year. However, it was noticed that

since its formation, the SEGC held only one meeting and it did not perform any of its

prescribed functions and duties. Thus, the apex body of the State for MGNREGS did not

monitor and evaluate the implementation of the scheme in the State.

During Exit Conference, the Secretary (RD) stated that after taking over charge he has

looked into the matter and would attempt to ensure that the SEGC meetings are convened

as prescribed in the Statute.

2.2.6.4. Resource support

The provisions contained in the NREGA Operational Guidelines and other circulars issued

by the Ministry in respect of resources support for implementation of the MGNREGS in

the State and Audit findings there against are summarized below:

2.2.6.4.1 As per the provisions of the MGNREGA, every State Government was

required to appoint a full-time dedicated Programme Officer (PO), in each block, with

necessary supporting staff for facilitating implementation of the scheme at Block level. In

all the test check blocks the State Government did not appoint full-time dedicated POs.

The existing Block Development Officers were designated as POs and given additional

charge of the Scheme.

2.2.6.4.2 The NREGA Operational Guidelines require a State Government could

constitute panels of Accredited Engineers at the District and Block levels for the purpose

of assisting with the estimation and measurement of works. It was, however, noticed that

the State Government did not constitute panels of accredited engineers in any of the test

check Districts and Blocks for providing assistance in estimation and measurement of

works.

2.2.6.4.3 The Operational Guidelines also provided that the State Government could


48

consider appointing Technical Resource Groups at the State and District levels to assist in

planning designing, monitoring, evaluation and quality audit of various initiatives and also

assist in training, with a view to improving the quality and cost effectiveness of the

scheme. The State Government, however, did not set up panels of Technical Resource

Support Groups at any level.

2.2.6.4.4 The Ministry of Rural Development in their letter (17th June 2009)

addressed to State Government suggested the following core professional area and the

basic personnel required for these areas for strengthening of the management system.

The State Government has not appointed any personnel in the important Core Professional

Areas like: Grievance Redressal Cells, Social Audit Cell and Monitoring Cell both in the

District and the Block levels. However, these tasks at district and block level were being

performed by the existing district and block level officials. While at GP level, the tasks

were not at all carried out as no staff was appointed at GPs.

Further, despite the enhancement of administrative expenses from 04 per cent to 06 per

cent by the Ministry in March 2009, the State Government has not strengthened the

scheme management and support in terms of providing for the prescribed number of

personnel. Thus, due to the absence of dedicated personnel in core

professional areas for strengthening of the management system, there were weakness in

Table-2.2.1

Core professional area Personnel required

A. District level:

1. Grievance Redressal Cell One - Coordinator and One Assistant

2. Social Audit Cell One - Coordinator and One Assistant

3. Technical Cell (works) One - Technical Coordinator and One Technical Assistant

4. IT Wing One - IT Manager and One - Data Entry Operators

5. AccountsWing One - Accounts Manager

6. Training & IEC Cell One - Coordinator and One Assistant

7. Monitoring Cell One - Monitoring, Evaluation & Research Expert

B. Block level:

1. Grievance Redressal Cell One - Coordinator and One Assistant

2. Social Audit Cell One - Coordinator and One Assistant

3. Technical Cell (works) One - Technical Coordinator and One Technical Assistant

4. IT Wing One - IT Assistant and One - Data Entry Operator

5. AccountsWing One - Accounts Manager

6. Monitoring Cell One - Monitoring, Evaluation & Research Expert

. GP level:

1. Administration One Admn. Assistant for every GP

2. Technical works One Technical Assistant for every 5 GPs Source: Departmental records


49

the implementation of the scheme.

Accepting the fact during the Exit Conference, the Department attributed the reasons to

fund constraints and other external factors in appointment of supporting personnel for

MGNREGS. It was also stated that attempts were being made to sort out the issue.

2.2.6.5. Information, Education and Communication (IEC) Activities

The Guidelines provided that the State Government should draw up an IEC Plan and take

up an intensive IEC exercise. This IEC should target workers, rural households, and pay

special attention to deprived areas and marginalized communities.

Audit noticed that the IEC Plan had not yet been formulated in the State. Accepting the

fact during the Exit Conference, the Department stated that the matter would be looked

into.

2.2.6.6. Training

As per the Act/Guidelines, it was mandatory for the State Government to arrange basic

training on core issues to key functionaries, especially the DPC, POs, PRI functionaries,

stakeholders and other agencies performing their duties under the Act for effective

planning, work management, public disclosure, social audit and use of the Right to

Information Act, 2005. The State Institute of Rural Development (SIRD) was entrusted

with the task of training stakeholders at GP level, Block level (Accountants,

Engineers/Technical Assistants, Programme Officers, and Computer Assistants), and

District level (Works Managers and Technical Assistants, Accounts Managers, Training

Co-ordinators, Co-ordinators for Social Audit and Grievance Redressal), PRI

functionaries, and Vigilance & Monitoring stakeholders.

Prior to commencement of the implementation of MGNREGS, only orientation training

was imparted to DRDA/Block staff during 2007-08.

The position of training imparted to MGNREGs stake holders during 2008-09 to 2011-12

is given in Appendix - 2.2.2.

It would reveal from Annexure-I that there was shortfall in imparting of stake holders

compared to target:

Out of the target 3350 PRI functionaries to be trained during the period in the State,

the actual achievement was 2239 (66.84 per cent). No PRI functionary from out six

selected districts (viz., Lower Dibang Valley, Upper Subansiri and Papumpare)

trained. PRIs trained from Anjaw, Changlang and West Siang Districts were 1082,25

and 1059 respectively;

The target fixed for Vigilance & Monitoring stakeholders in the State was 1777 and

the achievement was 419 (23.58 per cent). While 73 and 25 were trained

from Anjaw and Changlang Districts respectively, none weretrained from Lower


50

Dibang Valley, Papumpare, Upper Subansiri and West Siang Districts.

Out of the targeted 309 RGSs for GPs, 156 (50.48 per cent) was achieved. In respect

of GPs of sample Districts, only 10 RGSs were trained for Anjaw District. No RGS

for the other five Districts were trained.

Inadequate training of various functionaries is bound to adversely impact on the

implementation of the scheme in the State. Accepting the fact during the Exit Conference,

the Department stated that the matter would be looked into.

2.2.7. Planning

Planning is critical to the successful implementation of the Rural Employment Guarantee

Scheme (NREGS). A key indicator of success is the timely generation of employment

within 15 days while ensuring that the design and selection of works are such that good

quality assets are created. The need to act within a given time frame necessitates advance

planning. The basic aim of the planning process is to ensure that the District is prepared

well in advance to offer productive employment on demand.

2.2.7.1. District Perspective Plans (DPPs)

Scheme guidelines stipulated the preparation of a five year District Perspective Plan (DPP)

to facilitate advance planning and provide a development perspective for the District. The

aim was to identify the types of MGNREGS works to be encouraged in the District and

potential linkage between these works with long term employment generation and

sustainable development.

It was observed that DPPs of the Districts were prepared through outsourced agencies (M/s

Agriculture Finance Corporation, Guwahati, and M/s Premix India, Kolkata.) for ₹ 3.20

crore (@ ₹ 20 lakh each for 16 Districts) as per Government approval of April 2008. Draft

Copies of DPPs were to be prepared within one year and submitted to the Government for

approval within nine months. Draft copies of DPPs were submitted in 2009, however,

approval of the Government of DPPs was still awaited (July 2012).

Audit scrutiny revealed that the DPPs lacked mandatory aspects like (a) Natural Resources

Management, along with socio-economic infrastructure requirement, so as to identify the

critical aspects of development in the area; (b) Outcome-based categories; (c) Methods for

measurement of outcomes;(d) Identification of existing programmes and financial

resources and assessment of additional resources required; and (d) the basis of working out

the Estimated Material Cost;

During the Exit Conference, the Department also expressed its reservations on DPPs being

prepared by outsourced agencies. It was also informed that the DPPs had now been

approved by the SEGC (ex post-facto). Submission of a copy of each DPP to audit,

including the SEGC Resolution, as requested by Audit during the Exit

Conference was awaited (January 2013). Thus, ₹ 3.20 crore incurred on preparation of


51

DPPs did not serve the intended purpose and was a waste.

2.2.7.2. Development/Annual Plans

As provided in Section 16 (3) (4) of the NREG Act, every Gram Panchayat shall prepare a

Development Plan and maintain a shelf of works and forward it to the Programme Officer

for scrutiny and preliminary approval prior to the commencement of the year in which it is

proposed.

The development Plan is an Annual Work Plan that should comprise a shelf of projects for

each village with administrative and technical approvals so that works can be started as

soon as there is a demand for work. The Development Plan will be like a rolling plan,

since the approved shelf of projects may carry over from one financial year to the next.

The Development Plan will include the following components:

• Assessment of labour demand.

• Identification of works to meet the estimated labour demand.

• Estimated Cost of works and wages.

• Benefits expected in terms of employment generated and physical improvements

(water conservation, land productivity).

• The plot numbers of the sites where works are to be executed should be mentioned, so

that each work has a unique location code.

• Each work taken up with unique number (irrespective of the implementing agency)

has to be recorded in the Works Register to be maintained at GP to enable verification

and prevent duplication.

The process for preparation of Development Plan as envisaged in the Act and operational

guidelines is as follows:

Every year, the Gram Sabha (GS) shall convene a meeting to estimate the demand

for labour, and to propose the number and priority of works to be taken up in the

next financial year. Based on the recommendation formulated in the GS, the GS

will prepare an Annual Plan and forward it to the PO. This Annual Plan should

indicate the existing demand for work, demand in the previous year, works taken

up in the previous year, ongoing works, proposed costs, likely costs and proposed

implementing agencies.

The PO will scrutinize the Annual Plans of individual GS for technical feasibility,

and submit a consolidated Block Level statement of proposals to the District

Programme Coordinator (DPC) at District Level.

The DPC will scrutinize the plan proposals of all the Blocks, and consolidate them

into a District Plan proposal with a block-wise shelf of projects (arranged

VC wise). This District Plan will indicate for each project- (a) the time frame, (b)


52

the person days to be generated, and (c) the full-cost. This plan will be discussed

and approved by the District Programme Coordinator (DPC). The implementing

Agency for each has to be identified keeping in view the mandatory minimum 50

per cent of the works to be executed by the Gram Panchayat.

The DPC will also coordinate the preparation of detailed technical estimates and

sanctions, with project reports for each approved work specifying technical details,

as well as the expected outputs and enduring outcomes.

Scrutiny of records of selected six districts, 13 blocks and 63 GPs revealed the following:

• There was no documentary evidence on record with GPs regarding convening of

meetings by GSs for identification of implementable works during the year on priority

and approving the development plan.

• Annual development plans are crucial in so far as it is meant to be an outcome of

participatory planning at the grass root community level. The Annual Documented

Development Plans/Works Plans were not prepared for any year by test-checked GPs.

The GS, GP, and DP were not involved in the preparation of Annual Development

Plans. This all important activity upon which the entire bottom-up planning

mechanism rests was observed to be missing.

• The works proposed to be taken up under MGNREGA were included in the Annual

Action Plans (AOP) of the District without observing the procedure prescribed in the

MGNREG Act and guideline.

• In the District AOP for MGNREGA works, no indication was made regarding benefits

expected in terms of employment generated and physical improvement; plot numbers

of sites where works were to be executed were not mentioned; and unique location

codes against each work and expected benefits to the community were wanting;

• No fund was provided to GPs for execution of works (at least 50 per cent).

While accepting the audit points during the Exit Conference, the Secretary (RD) stated that

GPs were not functional as no secretaries or other functionaries were posted by the

Government so far, but a decision in this respect would be taken by the SEGC.

Thus, there were serious deficiencies in the formulation and manner of preparation of the

Development Plans of the sampled six Districts and the democratic process at the grass

root level was not put into practice. This had led to poor generation of employment and

creation of durable assets due to ineffective implementation of the scheme.

2.2.8. Financial Performance


53

The MGNREGS is implemented as a Centrally Sponsored Scheme (CSS) on a cost-sharing

basis between the Centre and the States. The financing pattern is as follows:

A. The Central Government will bear the following costs:

i) The entire cost of wages for unskilled manual workers.

ii) Seventy-five per cent of the cost of material and wages for skilled and semi-

skilled workers.

iii) Administrative expenses as may be determined by the Central Government.

These will include, inter alia, the salary and allowances of Programme Officers

and their support staff and work site facilities.

iv) Administrative expenses of the Central Employment Guarantee Council

(CEGC).

B. The State Government will bear the following costs:

i) Twenty-five per cent of the cost of material and wages for skilled and semi-

skilled workers.

ii) Unemployment Allowance payable in case the State Government cannot provide

wage employment within 15 days of application.

iii) Administrative expenses of the State Employment Guarantee Council (SEGC).

2.2.8.1. State Employment Guarantee Funds

As provided in the Operational Guidelines, the State Government may, by notification,

establish a fund to be called the State Employment Guarantee Fund. This Fund is to be

expended and administered as a Revolving Fund, with Rules that govern and ensure its

utilization according to the purposes of the Act. Similar Revolving Funds should be set up

under NREGS at the District, Block, and Gram Panchayat levels.

The Government of Arunachal Pradesh has not constituted the SEGF (December 2012).

As a result such Employment Guarantee Funds were not created in the State level nor by

the six sample Districts as well as the 13 blocks covered in this audit and in 63 GP level.

2.2.8.2. Labour Budget

Under the provisions of the Act/Guidelines, every December, DPCs are required to prepare

a Labour Budget for the next financial year, containing the details of anticipated demand

for unskilled manual work in the District and the plan for engagement of labourers in

works covered under the scheme. Based on the Labour

Budgets of the Districts, the State Government was required to submit the Labour Budget

of the State by 31st January to GOI. The following were noticed in this regard:


54

Programme Officers did not submit the Block Plans approved by Gram abhas/GPs;

Recorded evidence for finalization and approval of District Plans by District

Panchayats was not available;

Districts did not submit Labour Budgets (LBs) to State Government in prescribed

format within the scheduled date (31st December).

There were delays in submission of Labour Budgets by sample Districts as indicated in the

following table:

Table-2.2.2

Further, Audit noticed that the Labour Budget was defective and unrealistic as mandays

expected to be generated was never achieved - 100 days employment could not be

provided as shown in the following table.

Table-2.2.3

Audit analysis of the labour budget revealed the following:

• Projections for demand of employment and of person days expected to be generated

Year

Date of Submission of Labour Budgets to the State Government

Anjaw Lower Dibang Valley

Papumpare West Siang Upper Subansiri

Changlang

2007-08 - not available -

2008-09 20.01.2009 25.11.2008 not

available 03.12.2008

not

available 15.01.2008

2009-10 07.05.2009 24.07.2009 03.07.2009 21.03.2009 09.03.2009 23.01.2009

2010-11 24.12.2009 not

available 17.03.2010 16.03.2010 24.03.2010 07.03.2010

2011-12 not

available

not

available 19.12.2011 28.02.2011 25.01.2011 24.02.2011

Source: Departmental records

Parameters 2007-08 2008-09 2009-10 2010-11 2011-12

1 No. of Households (HH) issued Job Cards 37529 135552 166263 172868 178220

2 Projected demand of HH employment NA NA 173950 101213 NA

3 No. of HHs that demanded employment 7257 109131 135983 155205 163681

4 No. of HHs provided with employment

4490 49279 87017 136430 129560 (percentage to 3 in brackets) (62) (45) (64) (88) (80)

5 Projected person days generated (in lakh) NA NA 73.95 55.30 NA

6 Actual person-days generated (in lakh)

3.28 1.69 25.31 36.75 42.94 (percentage to 5 in brackets)

(NA) (NA) (34) (66) (NA)

7 No of HHs that completed 100 days NA 19843 344 602 54 employment (percentage to 3 in

brackets) (-) (18) (0.25) (0.39) (0.03) Source: Information furnished by Department NA: Not available with Department


55

during 2007-08, 2008-09 and 2011-12 were not made in the Labour Budget.

• The number of HH provided employment to those demanded varied from 45 to 88

percent indicating inability to provide employment on demand provided in the Act.

• Projection of employment generation was unrealistic as only 34 and 66 per cent

could be achieved during 2009-10 and 2010-11.

During the Exit Conference, the Department accepted the Audit observations on Labour

Budget, projection and approval, etc;, and stated that an Action Plan was drawn up to

revamp the entire system. On this, audit requested for a copy of the same to be furnished,

but submission was still awaited (January, 2013).

2.2.8.3. Projections and approved of Labour Budget

The Empowered Committee approved the Labour Budget mainly based on past

performances. The position of projection of Labour Budgets, Labour Budgets approved by

the Gol from 2009-10 to 2011-12 is given below:

It may be seen from the above table that the State Government did not submit the Labour

Budgets to the Central Government for 2008-09. The Labour Budgets for 2009-10 to 2011-

12 were prepared by State Government after collecting projections of man-days generation

from the Districts and submitted them to the Central Government as and when meetings of

the Empowered Committee were held.

Due to poor performance and unrealistic projections the Gol approved only 20 to 32

percent of projections made in the labour budget of the state.

2.2.8.4. Financial outlay

The year-wise financial assistance provided by the Gol and State Government and total

availability of funds and expenditure there against for the period 2007-12 is as indicated in the

following table.

(₹ in lakh)

Table-2.2.4

Year Number of Job Cards Issued

Projected by State (₹ in crore)

Approved by GoI (₹ in crore)

(percent to projection)

2007-08 Not Available

2008-09

2009-10 173950 202.17 52.06(25.75)

2010-11 171140 242.56 78.16(32.22)

2011-12 179970 351.60 70.75(20.12)


56

Source: Figure furnished by Department.

(Figure in brackets indicate percentage)

It can be seen from above table that the percentage of utilisation of available funds during

2007-12 ranged between 34 per cent and 95 per cent. During five years unspent balance was

quite heavy and at the end of March 2012 it stood at ₹ 14.42 crore, which was more than 50

per cent of expenditure incurred on the scheme during the year 2011-12.

2.2.8.5. Submission of demands for release of subsequent tranches of Funds

After utilizing 60 percent of the total available funds and full compliance of pre-requisites as

laid down under MGNREGA (such as Utilisation Certificates, Certificates regarding receipt

of State Share, etc;), the District Programme Co-ordinators(DPC) may apply for the

next/subsequent instalments through the State Government.

It was noticed in audit that the DPCs of the six test checked districts delayed in submission

of requestfor release of next instalment of fund position of which is given in the following

table.

Year Opening Balance

Total Receipts Total Availability

Expenditure Closing Balance Central State Misc.

2007-08 177.23 949.88 50.00 12.99 1190.10 408.34 (34) 781.76

2008-09 1179.93 2966.54 53.27 65.76 4265.50 3179.65 (76) 1085.85

2009-10 927.54 2288.31 60.36 22.72 3298.93 2690.95 (82) 607.98

2010-11 732.68 4457.31 57.26 26.85 5274.10 5001.68 (95) 272.42

2011-12 396.96 3292.05 942.86 12.16 4644.03 3202.31 (69) 1441.72

Table-2.2.5

Chart 2: Chart showing Funds available and Expenditure incurred

Audit analysis revealed the following:


57

Table-2.2.6

It was also observed in Audit that:

Delay in submission of requests for next tranches of funds led to release of Central share at

the end of the year or in the next year, as given in the following table.

Table-2.2.7

Delayed receipt of fund had led to retention of heavy unspent balance with consequential

delays in implementation of scheme with adverse impact on generation of employment.

2.2.8.6. Release of fund by the Central/State Governments

The position of release of Central share by the Union Government to Sample Districts and

by the Districts to Blocks is shown in Appendix - 2.2.3:

The following points emerged:

a) Delay in receipt of Central share by Districts from the date of released by the

Central Government ranged between 2days and 40 days in Papum Pare district;

between 3 days and 221 days in Lower Dibang Valley district; between 08 days

and 12 days in Anjaw district; between 07 days and 130 days in West Siang

district; between 28 days and 96 days in Upper Subansiri district; and between 11 days and

Year Anjaw Lower Dibang

Valley Papumpare West Siang

Upper Subansiri

Changlang

2008-09 12.02.10 16.02.2009 Not submitte 19.03.2009 05.12.08 06.10.08

2009-10 16.11.09 01.02.10 27.01.10 Not available 12.08.09 25.02.10

2010-11 Feb. 2011 27.01.10 05.03.10 05.03.2011 23.09.10 18.11.10

2011-12 25.11.11 03.02.12 Nov. 2011 19.12.2011 25.10.11 20.12.11

Source: Records ofDPCs

Year

Central Funds received in March by Sample District (₹ in lakh)

Central Funds received during the next year (₹ in lakh)

An

jaw

Lo

wer

D

iba

ng

V

all

ey

Pa

pu

mp

are

Wes

t S

ian

g

Up

per

Su

ba

nsi

ri

Ch

an

gla

ng

All

D

istr

icts

Sample Districts

An

jaw

Lo

wer

D

iba

ng

V

all

ey

Pa

pu

mp

are

Wes

t S

ian

g

Up

per

S

ub

an

siri

Ch

an

gla

ng

2007-08 - - - - 600 - 27.16 -

2008-09 - - 250 - 472 68.95 - - - - - - -

2009-10 100 180 451 100 672.38 - 62 - - - - - -

2010-11 - 23.46 47.41 - 225.41 - 1209.98 100 - - 100 142 -

2011-12 - 23.02 135 - 89.62 - 325.95 - 23.46 - - - -

Source: Records of DPCs


58

(₹ in lakh)

Year Expenditure as per QPR/UCs

Expenditure as per Annual Accounts

Excess (+) Short (-) exhibited in QPR/UCs

2007-08 Not available

2008-09 3179.65 3337.96 (-) 158.31

2009-10 2690.55 2566.55 (+) 269.07

2010-11 5001.68 4877.14 (+) 124.54

2011-12 3202.31 5990.54 (-) 2788.23

Source: MPR & Annual Accounts

2.2.8.8. Diversion of Funds

2.2.9. Registration and Issue of Job Cards

198 days in Changlang district.

b) There was further delay in release of funds by the DPC to Blocks for

implementation of Programmes. In Papum Pare district the delay ranged between

from 2 days and 18 days in respect of Doimukh block and between 3 days and 49

days in respect of Sagalee block.

c) The State Government released its share on lump sum basis with ascertaining its

mandatory share on material and on skilled and semi-skilled wage components.

Also State Government did not release its share within 15 days of release of

Central fund.

Rule 8(3) of National Rural Employment Guarantee Financial Rules, 2009 provides that

funds given to Programme Officer as advance should not be shown as fund utilised. It

was, however, noticed in Audit that the DPCs submitted MPRs/Utilisation Certificates by

the 10 of the following month to the State Government. Districts maintained accounts on

Cash basis and funds released to Blocks were treated as final expenditure. This led to

submission of incorrect MPRs/UCs compared to actual expenditure reflected in the

Annual Accounts as below:

Table-2.2.8

The DPCs, DRDA, Lower Dibang Valley and Changlang Districts diverted MGNREGA

funds amounting to ₹ 8.39 and ₹ 16.82 lakh respectively during 2011-12 to DRDA

Administration towards salary of staff as per instruction/directive (March 2011) of the

State Government.

It is a pre-requisite for the rural household to register themselves prior to making demand

for employment and issue of job card. The process for registration of

2.2.8.7. Submission of Quarterly Progress Reports (QPRs) and Utilisation Certificates


59

households and issue of job cards, as per the NREGA Operational Guidelines, is briefly

as follows:

• Households may submit an application for registration, or submit an oral request.

• A door-to-door survey may also be undertaken to identify persons willing to register

under the Act.

• Job cards should be issued within a fortnight of the application for registration.

Photographs of adult member applicants should be attached to the job cards.

Although no door to door survey was conducted, the willing name of willing households

were sent by the village heads/ PRI members to the blocks for registration. It may be

appreciated that the POs of 38 selected GPs issued Job cards within 15 days.

However, test check of 645 job cards in 38 selected GPs carried out during beneficiary

survey, the following deficiencies were noticed:

a) Joint photos of each family member registered were wanting (169 cases)

b) Job Cards not having any photo (18 cases)

c) Registration of underage members, i.e. below 18 years (10 cases)

d) Photos in the Job Cards were not attested/signed by the ASM/GP Chairperson (426

cases)

e) Absence of signature/thumb impression of the head of the household (35 cases)

f) Date of registration was not recorded in the Job Card (01 case)

g) Job Cards were issued without signature of the issuing authority (37 cases)

h) Job Cards did not have the seal of the Registering Authority (108 cases)

i) Job Cards without the signature of the authorised officer in the Employment Record

page 15 cases

j) Applicants’ names missing from Job Cards though the names were uploaded to MIS

(07 cases)

k) It was recorded that employment for 11 days was provided to Smt. Nima Riba of

Dali Village against Job Card No. AR-06-002-025-001/29, though the name did not

appear in the list of adult members nor in the MIS data.

The following were also observed:

• No oral requests for registration of Job Cards were entertained.

• The VECs did not earmark a particular day as Employment Guarantee Day to

disclose information on registration of employment and issue of Job Cards.

• No NGO/CSO appointed by the State Government for demanding 100 days of

work.


60

2.2.10. Employment Generation

One of the objective of the MGNREGS is to enhance Livelihood security by providing

at least 100 days of guaranteed wage employment on demand.

As per monthly progress Reports (MPRs), details of job cards issued and employment

generated in six test-checked districts were as given in the following table.

Table-2.2.9

It can be seen from the above table that target man days for 2010-11 and 2011-12 were

not available for any of the six selected districts. Due to insufficient data the

SI.

No. Particulars Name of Districts

Years

2008-09 2009-10 2010-11 2011-12

1 No. of Job Cards

issued (in nos) Anjaw 4120 4485 4501 4536

Lower Dibang Valley 4783 5650 5829 5885

Papumpare 10949 10949 11826 12763

West Siang 8011 0 4169 14169

Upper Subansiri 14939 15726 15327 15327

Changlang 11540 11717 11667 11717

2 Target Mandays as per labour budget (in lakh)

Anjaw 0 0.5 0 0

Lower Dibang Valley 0 1.2 0 0

Papumpare 0 2.07 0 0

West Siang 1.05 0 0 0

Upper Subansiri 0 15.33 0 0

Changlang 1.74 7.85 0 0

3 Achieved Mandays (in lakh)

Anjaw 0.33 0.15 1.25 1.83

Lower Dibang Valley 0.40 0.27 1.75 1.19

Papumpare 0.89 4.56 1.88 7.94

West Siang 1.20 0 1.66 0.98

Upper Subansiri 14.94 0 2.30 1.94

Changlang 3.17 1.32 3.21 3.51

4 Excess(+)/short fall(-)

of

achievement of

mandays as

compared

Anjaw NA (-)0.35 NA NA

Lower Dibang Valley NA (-)0.93 NA NA

Papumpare NA (+)2.49 NA NA

West Siang (+)0.15 NA NA NA

Upper Subansiri NA NA NA NA

Changlang (+)1.43 (-)6.53 NA NA

5 No. of days of employment provided with reference to No. of job cards issued (in lakh)

Anjaw 8 5 25 37

Lower Dibang Valley 8 5 29 20

Papumpare 8 41 16 61

West Siang 15 NA 12 7

Upper Subansiri 100 NA 15 13

Changlang 29 11 27 29

Source: NREGA Website.


61

man days achieved, compared to annual projection as per labour budget, could not be

worked out.

However, the above table reveals that with reference to job cards issued, except in Upper

Subansiri District for 2008-09, 100 days of guaranteed wage employment was never

achieved. The number of days of employment provided to job card holders was only 8 to

41 days in a year.

Audit also noticed cases of under payment of wages, engagement of unregistered

workers, delay in payment of wages and other deficiencies contravening the provisions

of the Act and implementation guidelines as given below:

• With effect from 19th February 2009, the Government of Arunachal Pradesh

enhanced wage rates from ₹ 55/- to ₹ 80/-. Scrutiny of Muster Rolls pertaining to

six sample works under BDOs of Aalo East, Basar, and Liromoba revealed that a

total amount of ₹ 5.15 lakh @ ₹ 55/- was disbursed to 632 beneficiaries for 9364

man-days instead of the enhanced rate of ₹ 80/-. This resulted in denial/under-

payment of wages to beneficiaries amounting to ₹ 2.34 lakh (9364 x ₹ 15 = ₹ 2.34

lakh).

• An amount of ₹ 1298 was shown to have been paid to Smt. Nima Riba for 11 days

from 19.03.12 to 29.03.12 vide MR No: 2088 (Name of Work: ‘c/o MIC at Dalai’)

against Job Card No: A6-06-002-001/29, though her name was not found in the Job

Card/List of Adult Members or MIS data.

• In Roing-Koronu Block, payment of wages was made after one to three months.

Compensation for delay in payment of wages beyond 15 days was not made. The

PO stated that the delay occurred due to late receipt of Muster Rolls from the

Sarpanch/Anchal Samity members.

2.2.11. Execution of Works 2.2.11.1 Implementing Agencies

The Gram Panchayat is the single most important agency for executing works as the Act

mandates earmarking a minimum of 50 per cent of the works in terms of costs to be

executed by the Gram Panchayat. This statutory minimum, up to 100 per cent of the

works may be allotted to the Gram Panchayat (GP) in the annual shelf of project (SoP).

The other implementing agencies can be Intermediate and District Panchayats, Line

Departments of the Government etc., having a proven track record of performance.

The role of the Line Department is to give technical support in the nature of estimates,

measurement and supervision of the works executed. Works will be executed by Job

Card holders. Muster Rolls will be maintained. No overhead charge will be given to any

line department for this. The selection of the implementing agency, other than the

Gram Panchayat will be based on technical expertise resources, capacity to handle work


62

within the given time frame, and proven track record for work, and the overall interests

of beneficiaries.

It was, however, noticed that all works approved by the DPCs in test checked 63 GPs

were executed by the concerned blocks without either involving GPs or any line

department.

The following shortcomings in execution of works also observed:

• As per Para No 6.2.1 of the Guidelines, to avoid duplication, a unique identity

number should be given to each MGNREGA work. It was noted that the unique

identity number was not given to each work in the test-checked Districts.

• Under Schedule I to Section I (ix) of the Act, the State Government was required to

identify “preferred works” for the State and recommend the same to the Central

Government for notification. The state government did not recommend any such

works for notification by Central Government.

• As per Para 6.5.5 of the operating Guidelines of MGNREGA, Citizen Information

Boards with the NREGA logo must be set up at all work sites. These should contain

essential information like details of work, SoRs, estimates, date of commencement,

date of completion, etc;. This was required for transparency of the works taken up

under MGNREGS. It was seen during joint verification of work sites that Citizen

Information Boards with the NREGA logo containing essential information

regarding works taken up, were not found during physical revivification of works

by audit.

• As per Para 6.7.2 of Operating Guidelines of MGNREGA, the State Government

was to undertake comprehensive work, time and motion studies for the preparation

of SoRs, in order to ensure fair wage rates for works done under MGNREGS. It

was seen that the State Government did not compile SoRs for MGNREGA works

and the test-checked Blocks prepared estimates for works based on Arunachal

Pradesh PWD item rates although these rates were meant for execution of works

through contractors using machinery Technical and Administrative sanction were

also accorded by the DPC thereon. Further, the estimates included 3 to 5 per cent

contingency, which was not permissible for MGNREGS

2.2.11.2. Convergence/dovetailing with other Programmes

Convergence of the NREGA funds with funds from other sources for the creation of

durable assets is permissible.

Funds available with PRIs from other sources (such as the National Finance

Commission, State Finance Commission, State Departments) and other Central or

Centrally Sponsored Schemes and other Central or Centrally Sponsored Schemes


63

(such as the Swamjayanti Gram Swarozgar Yojana (SGSY), Drought Prone Areas

Programme (DPAP), Desert Development Programme (DDP), Backward Area Grant,

etc.)can also be dovetailed with NREGA funds for the construction of durable

community assets/works permissible under NREGA. However, NREGA funds should

not be used as a substitute for Departmental Plan funds of different departments and

agencies. Funds from other programmes for the kind of works permissible under

NREGA can be dovetailed with NREGA funds but not vice versa. These aspects should

be taken care of in the Perspective Plan.

All initiatives of convergence will be within the parameters of NREGA, especially the

need to design labour-intensive works and the need to ensure that there is a complete ban

on contractors.

It was noted that in none of the six sampled Districts the process of convergence of

NREGA funds with funds from other sources for creation of durable assets was initiated

during 2008-12 nor were these aspects taken care in the Perspective Plan of Districts

level.

Further, the State Government did not prepare any guidelines in respect of all rural

development programmes which had significant portion of wage component as required

under the Guidelines.

During the Exit Conference, the Department accepted the Audit Points and stated that a

proposal was being submitted to converge some MGNREGA works with other Rural

Development Schemes such as Total Sanitary Campaign (TSC), Indira Awaas Yojana

(IAY), etc;, and the wage component of MGNREGA registered workers be borne from

the funds of other schemes. Results of efforts made on the issue were requested for

submission to audit, but were still awaited (January 2013).

2.2.11.3. Nature of Executed Works

As per the NREG Act, focus of the Scheme shall be on the following works in their

order of priority:

(i) Water conservation and water harvesting;

(ii) Drought proofing (including afforestation and tree plantation);

(iii) Irrigation canals including micro and minor irrigation works;

(iv) Provision of irrigation facility to land owned by households belonging to the SC

and ST or to land of beneficiaries of land reforms or that of the beneficiaries

under the Indira Awas Yojana of the Gol;

(v) Renovation of traditional water bodies including desilting of tanks;

(vi) Land development;

(vii) Flood control and protection works including drainage in water logged areas;


64

(viii) Rural connectivity to provide all-weather access; and

(ix) Any other work which may be notified by the Central Government in consultation

with the State Government.

Year-wise physical and financial target and achievement attained during 2008-09 to

2011-12 in execution of component-wise works /activities under the scheme in the State

and six test checked districts are shown in Appendix - 2.2.4,

The abstract of total physical and financial target and achievement attained during 2008-

12 are given in the following table.

It can be seen from above table and Appendix 2.2.4 that in the State 77 per cent of total

expenditure was spent for creation of 78 per cent low priority works under the scheme

while in respect of the selected six districts the same were 52 per cent of total

expenditure for creation of 78 per cent completed works of these 47 per cent of total

works completed represented low ‘Rural Connectivity’ works by the state.

It was, however, noticed that District Project Coordinator (DPC)/Project Officers (PO)

of the concerned districts and blocks had not fixed and target for execution of works in a

year. In absence of physical target the difference in actual achievement could not be

assessed in Audit

The following further points were observed in Audit:

2.2.11.4. Execution of Same Work Twice

Two works, viz; ‘Construction of Link Road through Midland, Agam Gite andAsali’ at

Village Midland, (Estimated Cost; ₹ 4.12 lakh) and ‘Link Road from Jia-III to Dibana

Cultivation Area’ at village Jia-iii (Estimated Cost; ₹ 2.09 lakh) were

executed/completed in 2010-11 at a cost of₹ 4.12 lakh and ₹ 2.09 lakh respectively.

Audit observed that the same works in the same villages were again taken up during

2011-12 at an Estimated Cost of₹ 11.17 lakh and ₹ 10.62 lakh respectively, and the total

expenditure incurred against the works up to March 2012 was ₹ 5.96 and ₹ 5.93 lakh

respectively.

On this being pointed out, the PO, Roing-Koronu Block, stated that the total length of

the roads were 1577.10 and 1434.45 mtrs for the respective village roads, of which the

earlier completed lengths of roads were 191.10 and 69.45mtrs. The reply of the

Table - 2.2.10 (₹in lakh)

Total completed works Low priority works Priority works

No. of

works Amount No. of

works Amount No. of

works Amount

State 3728 5088.97 2917

(78.24)

3922.99

(77.09) 811 1165.98

Six selected district

1144 1069.19 710

(62.06)

553.94

(51.81) 434 447.93

Source: Departmental Records.


65

PO is not tenable, as in the estimate prepared during 2008-09, no mention was made

about part execution of the roads. Further the reply was not corroborated with the

original Survey Report.

2.2.11.5. Creation of Doubtful Durable Assets

An important objective of the scheme, as listed in the Act, is the creation of durable

assets. For this, the Guidelines also provide for maintenance of the assets created under

the scheme. It was seen that eight Road Works completed in West Siang District for ₹

7.49 lakh were executed by earth cutting only, without gravel/stone support for stability.

The durability of these works is doubtful. This deprived the local community to derive

long term benefits.

C/o link road to Tamuk Sbridge to Pamar area at Logum Jini without gravel

2.2.11.6. Execution of Works other than Sanctioned Works

Test check revealed that one Project, i.e., ‘Construction of Link Roadfrom Jia Village to

Nage Area’ under Jia-I Gram Panchayat, at an estimated cost of₹ 18.93 lakh was

sanctioned on 04-12-2009. The same project was included in the AOP for the year 2010-

11. It was noticed that after incurring expenditure of₹ 5.52 lakh, another work, i.e.,

‘Construction of Link Road from Village Danking WRC Area’ at Jia-I, was taken up and

the work was executed. An expenditure of ₹ 5.30 lakh was incurred up to March 2012.

Thus, there was diversion of funds from one work to another. On this being pointed out

in audit, the PO, Roing-Koronu CD - Block, stated that the work ‘Link Road from Jia-I

Village to Nage Area ’ under Jia-I Gram Panchayat was taken up during 2010-11 and

completed in the same year. Since the work was completed, and in order to generate

more employment, a new work within the purview of the Perspective Plan was taken up.


66

2.2.11.7. Execution of non-permissible Works

Cement Concrete Roads were not permissible under the MGNREGA Act and Guidelines

2008. It was noticed that in three sample districts nine cement concrete road works at a

total cost of₹ 137.27 lakh, which are non permissible works, were executed (Anjaw: four

works of₹ 32.70 lakh; Papumpare: four works for ₹ 73.24 lakh and Lower Dibang

Valley: one work for ₹ 31.33 lakh).

2.2.11.8. Execution of works without Administrative Approval & Technical

Sanction

As per Para 6.4.1 of the Operating Guidelines, all works required Administrative

Sanction and Technical Sanction in advance by December of the year preceding the

proposed implementation.

It was noticed that on 05/02/2011, Doimukh Block submitted estimates for execution of

96 works (year of execution not mentioned to the DPC) for Administrative Approval/

Technical Sanction, which were still awaited (May 2012). Pending accordance of

AA/TS, the Block executed 14 works for a total amount of ₹ 218.22 lakh during 2011-

12.

2.2.11.9. Non-maintenance of60:40 Wage-Material Ratio

Wage and non-wage (material cost) on a 60:40 basis for MGNREGA works was to be

maintained. During 2008-09, the DRDA, Papumpare, directly procured materials for ₹

103.25 lakh as against wages paid by Blocks, amounting to ₹ 59.91 lakh. The wage-

material ratio for 2008-09 was, thus, 36.72:63.28. A total amount of ₹ 37.99 lakh [total

expenditure for works: (Wages ₹ 59.91 lakh + materials ₹ 103.25 lakh = ₹ 163.16 lakh),

40 percent of which was ₹ 65.26 lakh, as against actual material cost


67

ofX103.25 lakh] was thus incurred on non-wage component. The Stock Register in

support of purchase of materials could not be made available to Audit for verification.

Materials purchased centrally by DRDA were issued by Challans to Blocks for

utilization in works, but the accounting procedure thereof by Blocks in works was not

spelt out. Though the stock received by Sagalee Block was taken into the Material-at-

Site (MAS) Account, the value of items was not mentioned either in the Challans or the

MAS Account. No Challan or receipt of materials for 35 works of Doimukh Block and

for 26 works of Sagalee Block (expenditure on wages ₹ 6.26 and ₹ 46.20 lakh

respectively) executed during 2008-09 was indicated in the Asset Register/Expenditure

Statement for theworks. The Chartered Accountants, in their Audit Report on the

accounts of Blocks and District qualified that - (a) Asset Registers were incomplete, (b)

No separate records (Cash Book/Bank Account) for Anchal Samiti/Gram Panchayat

level were maintained, Material-at-Site (MAS) Accounts were not maintained

systematically, as a result of which receipts and issues could not be properly verified,

and (c) the practice of selection of suppliers for purchase of materials under the scheme

could not be confirmed.

During the Exit Conference, the Department stated that as far as practicable the 60:40

Wage-Material Ratio was maintained, and precautions were taken for restricting the

material component to below 40 percent of work costs. On this, audit informed that

cases of minor variations in the Wage-Material Ratio were ignored but in the instant

case, the non-wage (material) component was exceedingly high and beyond permissible

limits. The Department assured that the issue would be looked into.

2.2.11.10. Project Completion Reports

As per Para 6.9 of the Operating Guidelines of MGNREGA, on completion of every

project, a Project Completion Report (PCR) should be prepared as per prescribed format

in the Works Register and the details entered therein verified by a senior officer. A

photograph of the completed project should be taken as a record of the work and

attached to PCR. The PCR should be placed in the file pertaining to the work in the

office of the implementing agency. This should serve as a verification record of

completion of work.

During test-check, it was revealed that the three stage photographs, i.e., pre, mid and

post, were not available in work files. It was also seen that the Project Completion

Report was not prepared after completion of the work in the test-checked Districts.

Admitting to the above facts during the Exit Conference, the Department stated that they

occurred due to lack of co-ordination between different levels of functionaries. It was

also stated that in a recent meeting with all the District and Block level officers, all

concerned were directed to scrupulously follow provisions of the Act and Guidelines.


68

2.2.12. Social Equity

The Act and operation guideline stipulate adequate representation of SC/ST under

MGNREGA. The person days generated during 2007-12 and employment of ST and

Women earners are tabulated below:

Representation of the ST community was high and varied from 93 to 100 per cent of

works provided. Although the share of women to jobs provided was lower (14 to 28

percent) than the minimum required (l/3rd as per the Act), a noteworthy achievement was

the active participation of women in GPs and PRIs. Payment of wages was also made

directly to individuals and not to the head of household.

2.2.13. Maintenance of Records

As per Para 9.1.1 of the Operating Guidelines, proper maintenance of records is one of

the critical factors for success in the implementation of NREGA. Information on critical

inputs, processes, outputs and outcomes have to be meticulously recorded at the levels of

District Programme Co-ordinator (DPC), Programme Officer (PO), Gram Panchayat

(GP) and other implementing agencies in prescribed registe₹ The same information/data

is to be captured electronically and uploaded to the MIS website. MGNREGA

Operational Guidelines have specified details of records and registers to be maintained at

different levels.

2.2.13.1. Maintenance of Register/Records at GP and block level

Maintenance of records under NREGA is critical to ensure verifiable compliance with

the legal guarantee of 100 days of employment of demand and payment of

unemployment allowance. The NREGA Operation Guidelines have specified details of

records and registers to be maintained at different levels.

It was noticed that the following prescribed basic records at the levels were maintained/

not maintained against each:

Table - 2.2.11

Year Person-days generated (in lakh)

Total SCs STs Women

2007-08 3.28 0 3.28 (100) 0.82 (25)

2008-09 169.07 0.02 163 (96) 23.58 (14)

2009-10 25.31 0 24.93 (98) 3.75 (15)

2010-11 36.75 0.01 33.72 (92) 10.23 (28)

2011-12 33.69 0.22 31.47 (93) 9.25 (27)

Basis: Information furnished by Department

Brackets (): Indicates Percentage


69

Audit also noticed that vital prescribed records though maintained were defective at

different levels as given below:

The POs did not maintain Muster Roll Issue Registers as MRs were not issued to

GPs and other implementing agencies though they are not involved;

Employment Demand Registers were not maintained by GPs/POs, as a result of

which details of employment demanded, provided, and eligibility for payment of

Unemployment Allowance were not available/ascertainable;

Maintenance of Asset Registers by the POs was defective. All prescribed columns

were not filled in and Completion Certificates in respect of completed works

were not annexed.

Complaint Registers were either not maintained or complaints, if received, were

not posted in the Registers at PO and DPC levels.

The Department accepted the audit points during the Exit Conference and assured to take

corrective action on maintenance and uploading of prescribed records.

Absence of records and deficiencies/improper maintenance of records rendered

verification of output and outcomes of implemented schemes a difficult task. The

absence of records also made it difficult to ascertain whether legal rights of beneficiaries

were fulfilled. In addition, requirements of accountability and transparency of schemes

were jeopardised.

2.2.13.2. Non-maintenance of Complaint Registers

Audit noticed that Complaint Registers were either not maintained or no postings therein

were made in the test-checked offices.

The Department accepted the fact during the Exit Conference.

Table-2.2.12

SL No.

Type of Register to be

maintained Purpose

Levels at

which not

maintained

1.

Job Card Application

Register/Application

Registration Register

Records details of Applications for Job Cards

of households, dates of issue of Job Cards, etc;.

GP

2. Muster Roll Receipt

Register Records receipts of Muster Rolls

GP

3. Employment Register

Records for each registered household, details

of employment demanded, employment allotted

and employment actually taken up,

performance of work and

Wages/Unemployment Allowance paid to the

worker.

GP

4. Works Register

Records details of works such as numbers and

dates of Sanction Orders, completion dates,

expenditure incurred, dates of social audit and

pre-mid-post project conditions of works, etc.

PO and GP

5. Complaint Register Records details of complaints made, action

taken on the complaint and date of final

disposal.

GP


70

2.2.14. Employment Guarantee Website

A special ‘NREGS website’ should be built by the State Government. This website

should function as an integrated access point for NREGS-related documents on the

Internet.

Whenever possible, key NREGS-related documents should be publicly accessible on the

Internet and also posted on the NREGS website. These documents should be loaded on

the NREGS website within a week of being available in electronic form.

As technological possibilities evolve, efforts should also be made to post other key

documents on the NREGS website, such as muster rolls, vouchers, measurement books

and Utilisation Certificates.

It was seen the State Government has only partially uploaded data in respect of Job

Cards. In the absence of this, vital consolidated information/data for implementation of

MGNREGS in the State, such as number of households registered, number of Job Cards

issued, Job Card numbers, employment demanded, employment provided, number of

works, expenditure, number of inspections of works, number of social audits, etc; were

not available.

2.2.15. Grievance Redressal, Transparency & Monitoring and Social

Audit

The Act and Guidelines provide that schemes were to be implemented in an accountable

transparent manner. The deficiencies noticed in Audit are shown below:

2.2.15.1. Monitoring and Evaluation Mechanism

The Act and the Operational Guidelines envisage a multi-pronged and extensive system

of internal and external monitoring mechanisms at all levels of scheme implementation.

The monitoring framework at the State level is depicted in the Chart below:

Chart - 3

Framework of Monitoring at State Level


71

As seen in the Chart, monitoring of the implementation of schemes at State and PRI

levels is to be carried out by the SEGC, State Quality Monitors, mandatory internal

verification of works and VMCs. The shortcomings noticed during audit in monitoring in the

State are discussed below:

2.2.15.2. Absence of Internal Verification of Works at Field Level

As per Operational Guidelines, the following quarterly targets were fixed for internal

verification of works at the field level by official functionaries;

■ 100 per cent at Block level

■ 10 per cent at the District level, and

■ 02 per cent at State level

Audit found that physical verification of reports of works (10 per cent at District level

and 2 per cent at State level) were not available/monitored.

During the Exit Conference, the Department admitted to the lapses and stated that the

matter would be taken care of.

2.2.15.3. Appointment of State and District Quality Monitors

All aspects of implementation, viz, timely issue of Job Cards, provision of employment,

timely and correct payment of wages, flow of funds, progress and quality of works were

required to be monitored at various levels - GP, District Panchayat and State

Government. For this purpose, as per Para 10.3.2 of the Operational Guidelines, State

Quality Monitors (SQMs) at the State level may be designated by the State Government

with the approval of the SEGC. The District would also identify District Quality

Monitors (DQMs) with the approval of the State Government.

Audit noticed that SQMs and DQMs as required for monitoring the implementation of

schemes and conducting quality inspections at prescribed intervals under the scheme

were not appointed. Thus, the State Government was deprived of the vital provision of

monitoring tools, as a result of which the quality of programme and schemes thereunder

were not ascertainable in the intended manner.

During the Exit Conference, the Department accepted the Audit Points and stated that

appointments could not be made due to fund constraints. However, the matter would be

looked into.

2.2.15.4 Absence of Vigilance and Monitoring Committees

In terms of Para 10.1.2 of the NREGA Operational Guidelines, 2008, for every work sanctioned

under the scheme, there should be a local Vigilance and Monitoring


72

Committee (VMC) comprising of 9 members of the locality/village where the work is

undertaken, to monitor the progress the quality of works in progress. Constitution of the

VMC would be the responsibility of the Programme Officer.

No record/report regarding the appointment of VMCs or their reports was available with

the test-checked Programme Office₹ Thus, the State failed to avail the opportunity to

monitor shortcomings in the implementation of the scheme and initiating remedial

measures.

2.2.16. Transparency and Accountability

The Act/Guidelines also mandated a separate set of mechanisms to be put in place for

increased transparency and accountability, as outlined below:

2.2.16.1. Social Audit

MGNREGA gives a Central role to “Social Audit” as a means of continuous public

vigilance and accountability. Section 17 of the Act required the Gram Sabhas to conduct

Social Audit. These have also been referred to as “Social Audit Fora”. As per

Guidelines, these Fora will have to be held bi-annually and conduct the given mandatory

minimum agenda. The Guidelines also required that wide publicity regarding date, time

and agenda should be given, all records be made available to Social Audit and officials

be present. The Guidelines indicated two types of Social Audit, viz. (a) Periodic

Assemblies of the Gram Sabha to scrutinise details of projects (Social Audit Forum) and

(b) The Ministry of Rural Development (MoRD) strengthened the provisions of Social

Audit by notifying the Mahatma Gandhi National Rural Guarantee Audit of Schemes

Rules, 2011. These rules required the State Government to identify/establish

independent organisations called the Social Audit Units (Units). The Units were to

facilitate conduct of Social Audit by the Gram Sabha and their functions were to -

(a) build capacities of Gram Sabhas to conduct Social Audit; towards this purpose

identify, train and deploy suitable resource persons having knowledge and

experience of working for the rights of the people at Village, Block, District and

State levels, drawing them from primary stakeholders and other civil society

organisations;

Table-2.2.13

Proactive Disclosure Social Audits Grievance Redressal Cell Citizens’ Charter

Annual Reports on

outcomes to the State

Legislature

Social Audits of all

works & activities

carried out by GPs

under MGNREGS

A Grievance Redressal Cell

to be set up at Block and

District levels. To be

monitored by an

Ombudsman

To standardize the

performance of

officials involved in

implementation

The following shortcomings were observed:


73

(b) prepare Social Audit reporting formats, resource material and Guidelines for the

Social Audit process;

(c) create awareness amongst wage earners about their rights and entitlements under

the Act;

(d) facilitate smooth conduct of Social Audit by Gram Sabha for reading out and

finalising decisions after due discussions; and

(e) host Social Audit Reports in the public domain.

Further, a National Workshop on Social Audit decided that the State Government should

start Social Audit on a pilot basis in a few selected Blocks, appoint Directors of Social

Audit and send proposals for setting up State Social Audit units and its staffing by

December 2011.

During Audit, it was noticed that no “Social Audit Forum” was constituted. Instead,

Village Employment Committees (VECs) formed in isolated villages either did not

conduct Social Audit or if conducted, it was only once a year.

Scrutiny of Social Audit Reports revealed that the mandatory agenda (level of works

done in the preceding year, updated data on demands received, registrations, number of

Job Cards issued, list of people who demanded and were given/not given employment,

funds received and spent, payments made, cost of works and details of expenditure on

them, works sanctioned and works started including their duration, person days

generated, reports of Local Committees and copies of Muster Rolls, etc;) as prescribed in

the Guidelines were not covered. Additionally, preparatory work, if undertaken by the

Social Audit team, was not on record and the Social Audit Report bringing about

irregularities was not followed.

■ The State Government had not yet formed an independent Organisation/

Directorate/Society at State level for facilitation of Social Audit;

■ The State Government had not undertaken Social Audit on a pilot basis as was

decided in the National Workshop on Social Audit held in November 2011. The

State Government had also not identified and appointed a Director of Social Audit

nor forwarded any proposal for setting up a State Social Audit unit and its staffing

for a Pilot Social Audit till December 2011;

■ Resource persons (approximately 100) in the State had not been trained by the

MoRD;

The statutory requirement of conducting purposeful Social Audit has not been fulfilled

in the State.


74

2.2.16.2. Grievance Redressal Mechanism

As per Section 19 of the Act, the State Government had to determine appropriate

grievance redressal mechanisms at the District and Block levels (the PO and DPC were

to be the Grievance Redressal Officers at Block and District levels as per Guidelines).

Grievances were to be acknowledged, disposals intimated to petitioners, and details of

redressals were to be uploaded to the Internet on a weekly basis. Further, in September

2009, the Gol directed all State Governments to establish, within three months, offices of

Ombudsmen at the District level as an independent mechanism for redressal for

MGNREGS-related grievances.

Audit noticed that none of the test-checked Districts/Blocks had so far issued any

acknowledgement to petitioners for grievances, if lodged nor had been uploaded redressal details

to the website and the State Government had not established offices of Ombudsmen at District

and Block levels.

During the Exit Conference, the Department agreed to the facts and assured to take care of

grievances.

2.2.16.3. Citizens’ Charter

As per Operational Guidelines, a model Citizens’ Charter should be developed, covering all

aspects of the duties of Panchayats and officials under the Act. The Citizens’ Charter was

todescribe the specific steps involved in the implementation of provisions of the Act, and lay

down the minimum service levels mandated by these provisions on the Panchayats and officers

concerned.

Audit observed that the State Government had not yet developed a Citizens’ Charter; as a result

MGNREGS in the State had so far been implemented without any mandated/specific duties of

PRIs and Government officials. The main stakeholders remained unaware of their duties and

functions.


2.2.17. Impact Assessment

As per Para 10.4 of the Operational Guidelines, 2008, outlays for MGNREGS had to be

transformed into outcomes. Regular evaluations and sample surveys of specific NREGS works

should be conducted to assess outcomes. Broad guidelines for evaluation studies, including

MGNREGS assessment criteria, should be framed by the SEGC. The SEGC was required to

develop its own evaluation system in collaboration with research institutions of repute and

review evaluations conducted by other agencies on parameters approved by the Central

Employment Guarantee Council. The findings of the evaluation studies were to be used by

SEGC, the District Panchayats


75

and other institutions for initiating corrective action. The Guidelines also required that the

system of evaluation studies and sample surveys of MGNREGS works should be continuous and

regular and should be carried out to judge the impact of schemes. It was observed that:

■ No evaluation studies to assess the performance the State in implementation of

schemes and their impact on individual life was conducted by the SEGC/DPC;

■ Broad guidelines for evaluation studies, including NREGS assessment criteria, were

not framed;

■ The State Government had not evaluated the performance of schemes;

■ No Annual Report on performance/implementation of MGNREGS in the State was

prepared and submitted to the Legislature.


The fact remained that the general population of the State remained unaware of the impact of

MGNREGS implemented in the State.

2.2.17.1. Non-utilization of Tools

Although the MoRD forwarded guidelines/directives for usage of GIS and Geo-ICT tools under

MGNREGA to link GIS with decentralised planning, preparation of Labour Budgets,

programme implementation, asset monitoring, and evaluation, the State is yet to utilise the

services of these tools.


2.2.18. Households Beneficiary Survey

In the course of this Performance Audit, Households Beneficiary Survey was conducted

covering 1040 Households in 63 GPs (20 Households in each GPs) in 13 sample blocks under

six districts, to assess the impact of MGNREGS at grass-root level. The Beneficiary Survey

primarily involved direct interaction with the Job Card holders to ascertain their satisfaction

level on the implementation of MGNREGS in the presence of the Presidents of the Village

Councils/ Departmental Officials.

Summary of the impact analysis out of the responses obtained from 1040 beneficiaries are given

in the following table.


76

The scheme facilitated employment generation, adequate women participation,

strengthening of rural infrastructure to a large extent, enhancement in purchasing power

of rural households, etc.

However, the implementation needed strengthening in planning involving GPs and

Stakeholders, adequate capacity building, financial management, and execution of

works. Development and Annual Plans needed to be prepared as per the stipulations in

the MGNREGS Guidelines to capture realistic projections of employment and asset

creation. Belated release of fund to Blocks needed to be ensured for timely taking up of

works and payment of wages. Data and Record

Management needed to be strengthened to capture appropriate and complete data. GPs

needed to be made functional and insisted upon to ensure provisioning of employment

within 15 days of demand. The Monitoring & Evaluation and Grievance Redressal

Mechanism needed to be made effective, and the Social Audit System revamped for

transparent implementation of the scheme, as provided in the Act and Guidelines

Table - 2.2.14

SI.

No. Questionnaire

Percentage of

‘YES’

1. Did MGNREGS bring in significant changes in life style₹ 37.90

2. Working on MGNREGS has helped to avoid going hungry₹ 29.53

3. Working on MGNREGS has helped in getting better quality food₹ 27.90

4. Working on MGNREGS has helped to avoid migration 28.13

5. Working on MGNREGS has spared our children from work so that

they can go to school₹ 28.37

6. Working on MGNREGS has helped us financially during illness 24.30

7. Working on MGNREGS has helped us to reduce debts₹ 27.09

8. Working on MGNREGS has helped us give up work which we did

not want to do₹ 38.25

9. MGNREGS has resulted in creation of useful assets in the village₹ 48.95

10. Did MGNREGS bring in improvement in family income₹ 54.30

11. Level of improvement in family income₹ 40.93

2.19 Conclusion


77

The following are the recommendations for streamlining the implementation of

MGNREGS in the State.

• Utmost priority may be accorded to planning. Development Plans and Annual

Plans may be prepared after due consultation, involving all stakeholders.

• Adequate capacity building is needed urgently.

• Fund Flow Management may be strengthened. Action may be initiated for full

and timely release of State Share of funds, and funds should be released to

Blocks on demand to facilitate timely commencement of works and payment to

wage earners.

• Suitable steps be taken to ensure that on-line data entry is done to increase

transparency, accountability and reliability of the data.

• The State Government should also ensure that the requisite levels of inspection by

different levels of officials are conducted.

• GPs may be immediately made functional and involved in planning, execution of

works, and conducting prescribed Social Audits.

• Annual Work Plans and Labour Budget may be prepared realistically to ensure

generation of expected mandays, provisioning of 100 days employment, etc;

• Stipulated Wage-Material Ratio may be adhered to and only permissible works

for creation of durable assets may be selected.

• Data and Record Management may be strengthened to ensure availability of

appropriate, complete and reliable data.

2.20 Recommendations


78

TOURISM DEPARTMENT

2.3 Unfruitful Expenditure on constuction of multi-purpose hall and mini-resort

atZemithang

Due to unplanned execution of the project, gainful utilization of tourist

infrastructure, ‘multi-purpose hall and mini-resort at Zemithang’ created at a cost

of₹1.90 crore remained doubtful. There was also unauthorized retention of₹0.35

crore for over seven yea₹

With a view to provide infrastructural facilities to tourists at Zemithang of Tawang

District, the Government of India (Gol) sanctioned (December 2004) ₹ 3.84 crore

under the “Destination Development” Programme and released ₹ 3.07 crore (80 per

cent of sanctioned amount) as first instalment. The project components comprised

Construction/development of a Multi-purpose Hall and Mini Resort at Zemithang (₹

1.90 crore), Development of Dolma Park at Lumla (₹1.09 crore) and procurement of

equipments for adventure activities (0.85 crore).

First instalment of ₹ 3.07 crore was released by the Gol with the conditions that (a)

the project should be commissioned within a maximum period of 12 months from the

date of sanction, (b) cost escalation on account of delays, etc;, would be met by the

State Government and no reimbursement would be made by the Central Government

on this account, (c) the balance amount would be released after submission of

utilisation certificates and (d) the State Government would undertake the

responsibility for maintenance of the created facilities.

Scrutiny of records of the Director of Tourism, Itanagar, revealed that out of ₹ 3.07

crore received from the Gol, ₹ 2.72 crore was shown as utilised.

• ₹ 2.39 crore on civil works (development of Multi-Purpose Hall and Mini

Resort at Zemithang and development of Dolma Park at Lumla) got executed

through the Rural Works Department and was shown as completed in March

2006 at a cost of₹ 2.39 crore.

• ₹ 28.22 lakh on procurement of water sports equipment in February 2006 and

₹ 4.69 lakh on procurement of adventure equipment during the same month.

• There was nothing no record to indicate that assets created and sports

equipment procured were put to use for the purpose for which it was meant.

In response to audit query, the Department stated (January 2012) the construction

works (ie., construction of multipurpose hall and mini resort at Zemithang, and

development of Dolma Park at Lumla) were completed in July 2007 and it was ready

to take over the buildings to lease out it under public private partnership, thereby

admitting that the assets for providing better tourist infrastructure was yet to gainfully


79

utilised. It also admitted that ₹ 35 lakh meant for purchase of Aer o-spots equipments

were remaining unspent with the department. However, in January 2012, District

Tourism Officer, Tawang, brought to the notice of the Executive Engineer, RWD that the

structurally completed multi-purpose hall at Zemithang had developed several cracks

while construction of the mini resort at Zemithang was incomplete and further

construction work had been stopped. This is reflective of lackadaisical attitude of the

department as it was unaware of ground realities and seriousness with which the

department monitors the projects involving huge public money.

The Department contradicting its earlier reply stated (August 2012) that that civil works

were in the finishing stages and the assets had not yet been handed over to the

Department by the implementing agency (Rural Works Department). It also added that

the second instalment of₹ 59 lakh was released by Gol in December 2011, which has

been released to Rural Works Department in March 2012. Delay in release of second

instalment was apparently due to delay in submission of utilisation and completion

certificates for the amount released in the first instalment.

The following photographs (taken in August 2012) of the assets created at Zemithang

during the physical verification confirms the fact that the construction of multipurpose

hall and mini resort was not complete and also depicts poor quality of construction with

cracks as alleged by District Tourism Officer.


80

It is evident the above that the buildings are no way near completion so that it could be

used fruitfully and purposefully in the near future. Incidentally, few metres away from

the upcoming another building which was constructed to cater for tourist visiting

Zemithang was in the state of disuse and completely abandoned with shattered windows

and filth spread around as could be seen from the following photographs (taken in August

2012).

Neither the District Administration nor District Tourism Officer of Tawang District have

information regarding the reasons to why the tourist lodge which was completed at a cost

of ₹ 50 lakh and was inaugurated by then Chief Minister of Arunachal


81

Pradesh on October 1998 was in the state of disuse. No information was furnished by the

department regarding the source of fund that was made available for the construction of

tourist lodge which is in state of disuse.

As such, the fruitful and purposeful utilisation of the coming up multipurpose hall and

mini-resort funded by Gol is doubtful and entire amount of expenditure ₹ 1.90 crore that

is likely to incurred on construction (more than 80 per cent already incurred as of March

2012) would be a waste.

The matter was reported to Government in July 2012; reply is still awaited as of March

2013.

AGRICULTURE DEPARTMENT

2.4. Excess Expenditure on Procurement of Crop Seeds

Procurement of High Yield Variety (HYV) Crop Seeds from a firm at higher rate

resulted in excess expenditure of ₹ 49.19 lakh and excess burden amounting ₹45.63

lakh to farmers after availing subsidy.

Under the Centrally Sponsored Macro-Management of Agriculture (MMA) Scheme, the

Government of India provides assistance for distribution of certified/high yield variety

seeds, mini kits, agricultural equipment, etc. for promoting agricultural production and

productivity.

The Government of Arunachal Pradesh sanctioned (March 2011)₹ 699.82 lakh under

MMA, out of which ₹ 259.32 lakh was provided for ‘Seed Management’. The Seed

Management component included ₹ 171.74 lakh as assistance to farmers for distribution

of certified/high yield variety seeds in Papumpare District to be procured by the Director

of Agriculture, Naharlagun. Quantity and variety of high yield variety seeds, pattern of

assistance, and financial involvement were as indicated in the following table:

Scrutiny of records (November 2011) of the Director of Agriculture, Naharlagun,

revealed bulk purchase of the high yield variety seeds was made from the approved

Table - 2.4.1

Name of high yield variety crop seed

Quantity to be distributed (in quintals)

Quantum of assistance given to farmers (Subsidy)

(^/quintal)

Maize 6250 800

Toria/Mustard 4166 1200

Wheat 800 500

Pea 4145 1200

Black Gram 1500 1200


82

local dealer, viz., M/s AYU Agency of the seed producer (M/s Nirmal Seed Company,

Jalgaon), and other two local dealers (viz., M/s T.Y Enterprises and M/s T.P Enterprises)

at approved rates of the same seed producer.

Apart from this, the Director of Agriculture, Naharlagun, procured the high yield variety

seeds from M/s Agency Centre, Naharlagun. Rates at which seeds were procured from

M/s Agency Centre were much higher than the rates at which seeds were procured from

the approved local dealers of Nirmal Seed Company. Reasons for the purchase of high

yield variety seeds from M/s Agency Centre was not on record made available to Audit.

This has resulted in an excess expenditure of ₹ 49.19 lakh, in the following table.

Besides, farmers have to bear extra financial burden of ₹ 45.63 lakh.

Further, records relating to realisation of sale proceeds of the seeds and details of quantity

of crop seeds procured and distributed to farmers under high yield variety crop seeds

against the sanctioned amount, were neither available on record nor submitted to Audit.

The matter was referred to Government in January 2013. In its reply, the Director of

Agriculture stated (February 2013) stated that for the last three to four years, high yield

variety seeds were procured from Nirmal Seed Company or its dealers as Nirmal Seeds

were preferred by most farmers due to better production and productivity and added that

the hybrid seeds procured from M/s T.Y Enterprises, M/s T.P Enterprises and M/s

Agency Centre were as per the price list of Nirmal Seed Company.

The reply of the Government that the seeds were procured from M/s Agency Centre was

as per price list of Nirmal Seed Company is not acceptable as the rate at which the seed

was procured from this firm was higher than the rates at which the seeds were procured

from the other two firms M/s T.Y Enterprises and M/s T.P Enterprises.

Table - 2.4.2

HYV Crop Seed

Rate at which purchased from Difference in

rate

(T/qt)

Quantity purchased

from M/s T.Y Enterprise (in

qt)

Excess

Expenditure

(₹ in lakh)

Excess financial burden to

farmers (₹ in lakh)

M/S Agency Centre & TP Enterprises

(₹/qt)

from TY Enterprise

(₹/qt)

Maize 4200 20,000 15,800 154 24.33 23.10

Mustard 7500 19,000 11,500 155.77 17.91 16.04

Wheat 2800 8,500 5,700 28.25 1.61 1.47

Pea 6000 24,000 18,000 18.75 3.38 3.15

Black Gram 7500 34,500 27,000 7.24 1.96 1.87

TOTAL 49.19 45.63


83

RURAL WORKS DEPARTMENT

2.5. Extra Expenditure due to allowing Higher Grade/Rate for Soil Excavation

Extra expenditure of ₹ 61.83 lakh incurred due to allowing higher rate to a contractor

for excavation of soil in “ordinary rock not requiring blasting” by classifying as “hard

rock requiring blasting”.

Under the Prime Minister Gram Sadak Yojna (PMGSY) the work “Construction of

Road from Quibang to Mangung - Stage-I” (Length: 16.10 km) was administratively

sanctioned (October 2009) by Ministry of Rural Development, Government of India, at

an estimated cost of₹ 10.28 crore. The work was awarded (November 2009) to a

contractor, M/s Susil Kumar Agarwala of Dhemaji and accordingly, an Agreement for

the same was executed in November 2009. The scope of work included excavation of soil

in hilly areas by mechanical means; cement concrete and reinforced cement concrete

works; cleaning and garbing; etc. As per Agreement, the rate per cubic metre (cum) for

excavation of soil ‘ordinary rock not requiring blasting’ and ‘hard rock requiring

blasting’ was ₹ 140 and ₹ 247 respectively. The work commenced from November2009.

Test check (February 2012) of records of the Executive Engineer (EE), Rural Works

Department, Hawai Division, revealed that up to the 4th Running Bill (for works executed

between November 2009 and May 2011), the contractor’s claim of ₹ 142.72 lakh for

excavation of 57,781.22 cum of soil classified as “hard rock requiring blasting” at the

rate of ₹ 247/- per cum, was admitted by the Division and passed for payment.

Scrutiny of the Measurement Book and Material-at-Site Account revealed that there was

no evidence in support of the fact that blasting material, viz., gelatine, detonators, fuse

coils, etc. were procured and issued to the contractor by the License holder. Further , a

statement of the theoretical requirement/consumption of material was not attached to the

bill, as required under Paragraph 6.03 of the Manual for Civil Engineering Works (Part-

I). Also, no certificate in this regard was recorded on the body of the bill, as required in

terms of Rule 25.3 of the CPWD Works Manual. There was also no recorded evidence

about resorting to the ‘hot and cold’ method for excavation of hard rock.

In the absence of any evidence to prove that excavation was done utilising blasting

materials, the payment made for excavation of 57781.22 cum at the rate of₹ 247/- per

cum, treating it as ‘hard rock requiring blasting’ was questionable. Further, that the entire

excavation done so far fell in the ‘hard rock requiring blasting’ category made it more

suspect. Making payment to the contractor for excavation work carried out by


84

him at the higher rate of ₹ 247/- per cum by classifying the soil as ‘hard rock requiring

blasting’, instead of at the rate of₹ 140/- per cum, applicable for excavation of ‘ordinary

rock not requiring blasting’ resulted in extra payment of₹ 61.83 lakh to the contractor. By

doing so, Department passed on undue benefit to the contractor.

Similarly, in the same Division, another instance of wrong classification of soil resulting

in extra payment of₹ 38.01 lakh to the contractor was noticed in audit in respect work

‘Construction of Road from Hayuliang (Dalai Bridge Point) to Bajigam (0-9.894

km)’ and a mention was made regarding it in Paragraph 2.5 of the Report of the

Comptroller and Auditor General of India for the year ended 31 March 2011,

Government of Arunachal Pradesh.

As this was not the only instance of similar occurrences, collusion between Departmental

officials and contractors cannot be ruled out. The matter should be thoroughly

investigated and proper action initiated.

The matter was reported to Government in August 2012; reply is still awaited as of

March 2013.

2.6 Non-realisation of Departmental Charges

Due to failure to include clause in MoU and estimate for execution of three works of a

private party, Departmental Charges amounting to ₹ 78.41 lakh was not levied and

realised.

Under provisions of the CPWD Works Manual, the Department can undertake works of

private parties as ‘Deposit Works’. Whenever a deposit work is to be carried out, the

contribution should be realised before any liability is incurred on account of the work.

One per cent of the anticipated project cost should be realised before preparation of

preliminary estimates. In addition to the amount payable by contributors, departmental

charges at such percentages as prescribed by the Government of India from time to time

was also to be recovered in advance. Departmental Charges @12 per cent of preliminary

estimates for works costing up to ₹ two crore and @ 8 per cent on works costing between

₹ two crore and ₹ five crore were to be levied and realised in advance from the client

before the work was taken up for execution.

Test check (June-July 2011) of the records of the Executive Engineer, Rural Works

Division, Changlang, revealed that between November 2007 and January 2009 the

Department signed three Memoranda of Understanding (MoU) with M/s Geopetrol

International, Panama (the firm), having a Branch office at New Delhi, for execution


85

of three works in connection with oil and natural gas exploration undertaken by the firm.

From the MoU entered into with the firm it could be observed that instead of recovering

the entire estimated cost of work in advance, the department agreed for receiving

payment in instalments linked to progress of work as stipulated in the MoU. It was also

observed that the departmental charges as applicable, which works out to ₹ 77.11 lakh,

were not levied and realized from the firm as indcated in the following table.

Against the total estimated cost of ₹ 877.53 lakh, funds totalling ₹ 603.86 lakh was

received from the firm for execution of three works and almost entire amount was spent

by the department on the execution of the work. However, execution of the works was

not completed and stopped at various stages, for want of further funds from the firm. The

work has not commenced even after lapse nearly two to three years after the stoppage.

Thus, it is clear that the firm is either no longer in position to fund the works further or

has abandoned its venture in the state.

Thus, due to lapse on the part of the department to include the element of departmental

charges leviable for deposit works undertaken by it on behalf of the firm led to non-

realisation of the departmental charges in advance and consequential loss of₹ 77.11 lakh

to State exchequer.

In reply (June 2012) the Executive Engineer, Changlang Division stated that since this

was the first time that the work was being executed for a private party, the rules were not

known to the Division and added that a claim for departmental charges was lodged with

the firm in June 2012. Acceptance of the claim by the firm was still awaited (September

2012).

Table - 2.6.1

SI. No.

Name of Work Date of signing MoU

Estimated Cost of work as

per MoU

Depart- mental

Charges leviable

Date of stoppage of work

Funds received and expenditure

incurred

1.

Improvement and construction of 0.00 km to 9.00 km section of RWD road under Geopetrol International Inc. from Nampong to Khamlang

Novembe r2007

441.62 35.33 January 2009

276.93 276.93

2.

Improvement and construction of Nampong to Khamlang from 3.50 km point to location JRM-D.

Decembe r2008

172.79 20.73 January 2010

129.59 128.56

3.

Improvement and construction of 0.00 to 3.50 km stretch of rural link road from Nampong to Khamlang and of 2.59 km stretch of rural link road starting from 3.20 km point on Khamlang road towards Machum Hill.

January 2009

263.12 21.05 July 2010 197.34 197.34

877.53 77.11

603.86 602.83


86

The reply of the Executive Engineer of the Division is not acceptable as the MoU and

Estimates were prepared and finalised at the level of Chief Engineer and the Department

was expected to be aware of the Rules. Further, in the absence of a specific clause in the

MoU and lodging of the claim with the firm at this belated stage, the chances of

realization of departmental charges amounting to ₹ 77.11 lakh, were remote.

The matter was reported to Government in November 2012; reply is still awaited as of

March 2013.

CHAPTER - III

GENERAL SECTOR

87

CHAPTER III

GENERAL SECTOR

3.1 Introduction

This Chapter of the Audit Report for the year ended 31st March 2012 deals with the findings on

Audit of the State Government units under general sector.

During 2011-12, total budget allocation of the State Government in the major

deparments under General Sector was ₹ 952.15 crore against which actual expenditure

was ₹ 864.69 crore. Details of Department wise budget allocation and expenditure are

given in Table 3.1 below:

Table 3.1

3.1.1 Planning and Conduct of Audit

Audit process starts with the assessment of risks faced by various departments of


delegated financial powers, assessment of overall internal controls and concerns of the

department.

(₹ in crore) SI. No.

Name of the Departments

Total Budget Allocation Expenditure

1. Governor 4.13 3.83

2. Legislative 36.26 29.65 3. General Administration 451 408.46

4. Home 340.03 321.70

5. Legal Metrology 8.37 8.41

6. Election 13.70 13.54

7. Fire Services 15.55 14.53

8. Land Management 17.60 16.20

9. Administration of Justice 25.00 9.74

10. Stationery and Profiting 7.25 6.91 11. Protocol 1.07 1.05

12. Parliamentary Affairs 5.57 5.49

13. Information and Public Relation 16.14 15.58

14. State Public Service Commission 4.83 4.82

15 Administrative Training Institute 3.28 3.14

16 State Information Commission 1.48 1.22 17 State Lotteries 0.89 0.42

TOTAL 952.15 864.69 Source: Appropriation Accounts 2011-12

Chapter-Ill: General Sector

88

The Audits were conducted involving expenditure amounting ₹ 75.27 crore of the state

Government under general sector. This chapter of Audit Report contains three

Transaction Audit paragraph pertaining to General Sector.


issued to the heads of the Departments. The Departments are requested to furnish replies

to the audit findings within one month of receipt of Inspection Reports. Whenever

replies are received, audit findings are either settled or further action for compliance is

advised. The important audit observations arising out of these inspection reports are

processed for inclusion in the Audit Reports, which are submitted to the Governor of the

state under article 151 of the constitution of India.

The major observations pertaining to General Sector detected in Audit during the year

2011-12 are discussed in the subsequent paragraph of this chapter.


89

SECRETARIAT GENERAL SERVICES DEPARTMENT

3.2 Admission of fradulent medical claims due to failure in exercising due diligence

Due to failure in exercising due diligence by Controlling Officer/Drawing Disbursing

Officer, excess medical reimbursement of ₹42.72 lakh of was obtained by the staff of the

Commissioner's Office, Itanagar, by preferring fraudulent medical claims.

Rule 3(2) of the Medical Attendant Rules states - “provided that the Controlling

Officer shall reject any medical claim, if he is not satisfied with its genuineness on facts

and circumstances of each case after giving an opportunity of being heard in the

matterRule 5 of Appendix-II of the rules further provides that all bills for charges on

account of medical attendance and treatment should be countersigned by the

controlling authority. The Controlling Officer is responsible for careful scrutiny to

ensure the genuineness of medical expenses before signing or countersigning the

claims.

Scrutiny of Treasury Vouchers/Bills for the month of March 2009 pertaining to the

Office of Commissioner, Secretariat General Services Department, Itanagar, in Central

Audit in June 2011, revealed that medical reimbursement claims totalling ₹ 44.31 lakh

in 16 bills preferred by 11 staff attached to the Commissioner’s office, Itanagar, for

themselves/family members were passed for payment in the month of March 2009

against the claims preferred by these staff between April 2008 and December 2008.

Individual claims ranged from ₹ 2.02 lakh to ₹ 9.78 lakh.

Scrutiny further revealed that the claims were apparently passed for payment by the

Controlling Officer (CO)/Drawing & Disbursement Officer (DDO), without exercising

prescribed mandatory checks. The claims were manipulated by inflating the prices of

medicines (in 15 bills - ₹ 36.73 lakh), preferring reimbursement claims for medicines

not prescribed by a doctor (in 3 bills - ₹ 2.15 lakh), laboratory charges not supported by

cash memos nor prescribed by a doctor (in 5 bills - ₹ 1.77 lakh) and making claims

without supporting cash memos (in 4 bills - ₹ 2.07 lakh). The actual admissible

amount, duly supported by doctors’ prescriptions and cash memos of the medical

store/pharmacy or laboratory worked out to only ₹ 1.59 lakh in respect of the 11

employees, whereas the Department reimbursed medical claims amounting to ₹ 44.31

lakh, resulting in excess payment of ₹ 42.72 lakh, as detailed in the Appendix 3.1.

Failure on the part of CO/DDO to exercise the prescribed checks while passing the

medical reimbursement bills, resulted in fraudulent drawal of excess medical claims

amounting to ₹42.72 lakh. Action needs to be taken to recover the inadmissible amount

and also appropriate administrative action be taken against not only the staff


90

whopreferred fraudulent claims but also against the authorities who failed to discharge

their duties diligently, which facilitated the payment of fraudulent claims.

The matter was reported to the Government in July 2011; reply is still awaited as of

March2013.

LAND MANAGEMENT DEPARTMENT

3.3. Wasteful Expenditure on defective Cadastral Survey Work

The State Government accorded (December 2003) Administrative Approval and

Expenditure Sanction (AA & ES) of ₹ 72.50 lakh for carrying out Cadastral Survey and

Settlement operations at Roing (₹ 51 lakh) and Changlang (₹ 21.50 lakh) Townships

under the Eleventh Finance Commission (EFC) ‘Upgradation and Special Problem ’

Grant.

Scrutiny of records (July 2011) of the Director of Land Management, Itanagar, revealed

that an unsolicited offer (September 2003) from M/s Abhinava Info Systems,

Guwahati, was received by the Department. The firm identified themselves as a

pioneering institute of the North Eastern Region, having professional competence for

the work. In the follow-up letter (October 2003), outlining their methodology of

Cadastral Survey, the firm put forth the specific advantage of their offer (a) imparting

training and demonstrations to concerned officers, and (b) undertaking a two year

responsibility for maintenance of the entire Land Management System, if the work was

allotted to them.

In this case, no Tender/Quotation was invited for the work either to obtain competitive

rates or to evaluate the best offer, on the ground that there was not enough time, as the

project was to be completed within the financial year. Accordingly, in October 2003, a

work order for ₹ 72.50 lakh was issued to the firm even before the AA & ES was

accorded (December 2003) by the Government. Verification of credentials of the firm

before issue of the work order was not available on record.

In the Work Order issued to the firm, responsibility for maintenance of the entire Land

Management System for two years, as offered by the firm in October 2003, was not

included. Reasons for the non-inclusion this clause was not on record. As per

Cadastral Survey work awarded to a firm on an unsolicited offer without inviting

tenders, ₹68.88 lakh paid for services was a waste as the work done by the firm was

later on turned defective. The amount could not be recovered from the firm as the

bank guarantee provided has been released even before the assessment of the work

done was carried out and the whereabouts of the firm was traceable.


91

terms and conditions of the work order, advance payment would be made against a

bank guarantee and final payment would be made after submission of all outputs. The

work was to be completed within five months, i.e., by March 2004. Failing which the

work order was to be cancelled and the work allotted to another firm and suitable

compensation realised from the defaulting firm. All CDs/Soft Copies/Hard

Copies/Maps, etc; were to be returned to the Department. An amount of₹ 50 lakh was

paid (December 2003) as advance against a Bank Guarantee.

The firm however sought extension, in April 2004, on the ground of late receipt of

satellite images from the National Remote Sensing Agency and unprecedented

continuous rain. The firm submitted its final Survey Report in November 2004. There

was no clause in the work order for quality evaluation regarding satisfactory

performance before release of payment to the firm. An amount of ₹ 16 lakh was further

paid to the firm in February 2005. The Department then released ₹ 2.88 lakh against a

Final Bill in April 2005. Thus, a total of₹ 68.88 lakh was paid to the firm for services

rendered. Thereafter, the Bank Guarantee was released.

In March 2005, a Quality Evaluation Team (QET) was constituted to evaluate the

quality of the Cadastral Survey works, like maps and other output prepared and

submitted by the firm. The QET conducted field verification (August 2005) and

reported defects in the survey works carried out by the firm, viz., Control Pillars were

much smaller than the standard size, serial numbers of Control Pillars were not

inscribed, Cadastral Survey Maps were not prepared based on natural and physical

boundaries as per norms, test-checked plots did not tally with the actual ground area,

etc;.

The firm did not turn up to rectify the defects pointed out by the QET despite repeated

requests. Finally, in December 2008, the Department declared that the whereabouts of

the firm were not known. Apart from issuing of letter to the firm no formal complaint

was lodge with the authorities to locate the firm.

Thus, due to (i) failure to verify the credential of the firm before award of work and (ii)

payment of entire amount due for the work done and even release of bank guarantee

before the quality of the work done was evaluated; the department could not force the

firm to rectify the defects pointed out by QET as the whereabouts of the firm was not

known, which resulted in rendering entire amount of₹ 68.88 lakh paid to the firm

unfruitful.

The matter was reported to Government in August 2012; reply is still awaited as of

March 2013.


92

HOME (POLICE) DEPARTMENT AND DIRECTOR, TIRAP AND

CHANGLANG AFFAIRS

3.4. Loss/Theft of Cash due to negligence

Due to practice of withdrawing the cash for making payment of suppliers bills

instead of payment by cheque/bank draft, contravening prescribed rules, there was

theft of cash amounting to₹19.19 lakh

Rule 30 (i) of ‘Receipt and Payment Rules’ provides that payments to suppliers be

made by cheques/bank drafts. Further, Rule 13 of the ibid Rules stipulate that security

coverage should be provided (one or two guards) when the amount of cash to be

handled is large. Government departments have also the facility to endorse bills

through treasury challans for remittance to suppliers’/contractors’ bank accounts.

Test-check of records of the Superintendent of Police (Telecommunication), Itanagar,

and the Director of Tirap & Changlang Affairs, Chimpu, during January 2011 and

January 2012 respectively, revealed that due to non-observance of prescribed rules,

there were two cases of loss/theft of cash totalling to ₹ 19.19 lakh drawn from the bank

for payment of suppliers’ bills as discussed in the following paragraphs:

a) On 24 October 2009, the Superintendent of Police (Telecommunication) drew ₹

12.59 lakh from the bank for payment to suppliers against bills kept under

Deposit at Call, out of which ₹ 12 lakh was reported lost in transit as the cash

carrying team got down from the vehicle leaving the cash behind (in the

vehicle). No security guard was provided to the team for transporting the cash

from bank. A FIR on the matter was lodged on the same day with the Itanagar

Police Station. The officials of team carrying cash were placed under

suspension and the matter assigned to a Special Investigation Team (SIT) on 13

January 2011 for investigation. The SIT Report was still awaited (January

2013).

b) On 28 April 2011, the Assistant-cum-Cashier of the office of the Director of

Tirap and Changlang Affairs, Chimpu, Itanagar obtained the signature of the

Drawing and Disbursing Officer (DDO) on the Deposit at Call for ₹ 7.19 lakh

against a vehicle repair bill. On 02 May 2011, the Assistant-cum-Cashier went

to bank by his own car and on return reported that the cash drawn was

stolen/robbed from his parked car breaking the window when he was taking

food at nearby hotel. No security guard was arranged for transporting the cash

from the bank. In this case also, a FIR was lodged on the matter with Itanagar

Police Station on 02 May 2011. The Assistant was placed under suspension and

a departmental inquiry committee was constituted on 20 May 2011 to

investigate the matter. The inquiry committee in its report (undated) concluded

that circumstantial evidence indicated clandestine involvement, pre-planned


93

motive and complete negligence of the Assistant-cum-Cashier from the

beginning to the end of the series of events that occurred. The Police

investigation report and further developments in the case were still awaited

(September 2012).

In both cases the incidents occurred due to non-observance of prescribed rules, which

led to the theft of cash totalling to ₹ 19.19 lakh and consequent loss to the State

exchequer.

The matter was reported to Government in November 2012; reply is still awaited as of

March 2013.

CHAPTER - IV

ECONOMIC SECTOR (PUBLIC SECTOR UNDERTAKINGS)

95

CHAPTER IV

ECOMOMIC SECTOR (PSUS)

GOVERNMENT COMMERCIAL AND TRADING ACTIVITIES

4.1 Overview of State Public Sector Undertakings

Introduction

4.1.1 State Public Sector Undertakings (PSUs) consist of State Government

Companies and Statutory Corporations. State PSUs are established to carry out activities

of a commercial nature while keeping in view the welfare of the people. In Arunachal

Pradesh, there were seven PSUs (all Government Companies, including two non-

working Companies). None of these Companies were listed on the Stock Exchange.

4.1.2 The State working PSUs registered a turnover of₹ 5.82 crore for 2011-12 as per

their latest finalised accounts as of September 2012. This turnover was equal to 0.05 per

cent of the State Gross Domestic Product (GDP). Thus, the State PSUs make an

insignificant or negligible contribution to the State economy. Major activities of

Arunachal Pradesh State PSUs are concentrated in the Finance and Power Secto₹ The

working PSUs incurred an overall loss of ₹ 5.92 crore in aggregate for 2011-12, as per

their latest finalized accounts as on 30 September 2012. They employed 204employees

as on 31 March 2012. The State PSUs did not include prominent Departments which

perform activities of a commercial nature, such as Power, Hydro-Power Development,

Transport or Supply & Transport Department. Audit findings of these Government

Departments are, however, incorporated in this Chapter.

4.1.3 During the year 2009-10, assets of the two non-working PSUs, viz., Parasuram

Cements Limited and Arunachal Horticultural Processing Industries Limited were

transferred to a newly formed private sector company namely, Arunachal Pradesh

Infrastructure Development Company Limited as per the orders (August 2008) of the

State Government.

State GDP figures in respect of 2011-12 is taken at Factor Cost by Industry of Origin at Current Prices As per details provided by five PSUs. A joint venture company formed by Arunachal Pradesh Industrial Development and Finance Corporation Limited (a State

PSU) and ROOFS Limited, Navi Mumbai.

Chapter-IV: Economic Sector (PSXJs)

96

Audit Mandate

Investment in State PSUs

4.1.4 Audit of Government Companies is governed by Section 619 of the Companies Act,

1956. According to Section 617, a Government Company is one where not less than 51

per cent of the paid up capital is held by Govemment(s). A Government Company also

includes subsidiary of a Government Company. Further, a Company in which not less

than 51 per cent of the paid up capital is held in any combination by Govemment(s),

Government Companies and Corporations controlled by Govemment(s) is treated as if it

were a Government Company (deemed Government Company) as per Section 619-B of

the Companies Act.

4.1.5 Accounts of the State Government Companies, as defined in Section 617 of the

Companies Act, 1956, are audited by Statutory Auditors, who are appointed by the

Comptroller and Auditor General of India (CAG) as per the provisions of Section

619(2) of the Companies Act, 1956. These accounts are also subject to supplementary

audit conducted by CAG as per provisions of Section 619 of the Companies Act, 1956.

4.1.6 As on 31 March 2012, the investment (capital and long-term loans) in seven

PSUs was ₹ 33.45 crore as per details given below.

The position of Government investment in State PSUs is summarised in

Appendix-4.1.

4.1.7 As on 31 March 2012, out of the total investment in State PSUs, 90.55 per cent

was in working PSUs and the remaining 9.45 per cent in non-working PSUs. This total

investment consisted of 65.86 per cent towards capital and 34.14 per cent in long-term

loans. The investment has increased by 73.05 per cent from ₹ 19.33 crore in 2006-07 to

₹ 33.45 crore in 2011-12 as shown in the following Graph.

The State has no 619 B Company.

(₹ in crore)

Type of PSUs Government Companies

Capital Long Term Loans Grand Total

Working PSUs 21.60 8.69 30.29

Non-working PSUs 0.43 2.73 3.16

TOTAL 22.03 11.42 33.45


97

4.1.8 Investment in various important sectors and percentage thereof at the end of 31

March 2007 and 31 March 2012 are indicated below in the Bar Diagram.

It may be noticed that the thrust of PSU investment was mainly in the Finance and

Power Sectors, which had 32.41 and 37.22 per cent of investment as on 31 March 2012.

The power sector had the highest investment of₹ 12.45 crore among all the sectors. The

power sector investment represented the equity contribution made by the State

Government in the only power sector state PSU namely, Hydro Power Development

Corporation of Arunachal Pradesh Limited.

Budgetary Outgo, Grants/Subsidies, Guarantees and Loans

4.1.9 Details regarding budgetary outgo towards Equity, Loans, Grants/Subsidies and

Guarantees issued in respect of State PSUs are given in Appendix - 4.3. During the year 2011-

12, no financial assistance was provided by the State Government to any of the State PSUs out

of the State budget. Summarized details for three years ended 2011-12 are as follows:


98

Reconciliation with Finance Accounts

4.1.10. Details regarding budgetary outgo towards Equity, Loans and Grants/Subsidies for

the past six years are given in a Graph below.

4.1.11 It can be seen from above that the budgetary outgo was at the highest in 2009-

10 at ₹ 22.87 crore during six years period from 2006-07 to 2011-12. The budgetary

outgo, however, reduced thereafter and was at ‘nil’ during 2011-12. As on 31 March

2012, guarantee commitment of ₹ 2.00 crore extended by the State Government to

one PSU (viz. Arunachal Pradesh Industrial Development & Financial Corporation

Limited) was yet to be availed by the said PSU. No guarantee commission was

payable to the State Government by the State PSUs. There was no case of conversion

of Government loan into equity, moratorium in repayment of loan and waiver of

interest.

5.1.12 Figures in respect of equity and loans as per records of State PSUs should

agree with the figures appearing in the Finance Accounts of the State. In case the

figures do not agree, the concerned PSUs and the Finance Department should carry

SI. No.

Particulars

2009-10 2010-11 2011-12

No. of PSUs

Amount No. of PSUs

Amount No. of PSUs

Amount

1. Equity Capital Outgo

from Budget 1 2.50 - - - -

2. Loans given from

Budget 1 20.37 - - - -

3. Grants/Subsidies

Received - -

1 2.45 - -

4. Total Outgo (1+2+3) - 22.87 - 2.45 - -

5. Guarantees Issued - - - - - -

6. Guarantee Commitment 1 2.00 1 2.00 1 2.00

(₹ in crore)


99

Performance of PSUs

out reconciliation of differences. The position in this regard as on 31 March 2012 is

stated below.

4.1.13 It was observed that there were differences in respect of all PSUs and the

differences were pending reconciliation over a period of more than ten yea₹ The

Accountant General has been taking up the matter from time to time with the Secretary,

Finance Department, Government of Arunachal Pradesh, Administrative Departments

of respective PSUs and Managing Directors of PSUs for reconciliation of the

differences. However, no significant progress in this direction was noticed. The

Government and PSUs should take concrete steps to reconcile the differences in a time-

bound manner.

The financial results of PSUs are detailed in Appendix 4.2. A ratio of PSU turnover to

State GDP shows the extent of PSU activities in the State economy. The Table below

shows details of working PSUs turnover and State GDP from 2006-07 to 2011-12.

4.1.14

It can be seen that the percentage of turnover to State GDP was on a declining trend and

reduced from 0.17 in 2006-07 to 0.05 in 2011-12, which indicated that the annual

increase in turnover was not commensurate with the annual growth in the State GDP.

4.1.15 Profit (losses) earned (incurred) by State working PSUs during 2006-07 to 2011-

12 are given below in a Bar Diagram below:

Turnover of working PSUs as per the latest finalised accounts as of 30 September 2012.

(₹ in crore)

Outstanding in

respect of

Amount as per Finance

Accounts

Amount as per

records of PSUs Difference

Equity 9.04 22.03 12.99

Loans -- 11.42 11.42

(₹in crore)

Particulars 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 Turnover 5.94 5.72 5.57 7.79 6.37 5.82 State GDP 3413 3888 4547 6258 8350.16 11135.53 Percentage of Turnover to State GDP

0.17 0.15 0.12 0.12 0.08 0.05


100

(Figures in brackets show the number of working PSUs in respective years)

4.1.16 It may be noticed that the State Working PSUs had shown overall adverse working

results during all the six years ending 2011-12 except during 2008-09. The overall losses of

State Working PSUs reached at the highest in six years during 2011-12 at ₹ 5.92 crore. During

2011-12, out of five working PSUs, one PSU earned a profit of ₹ 1.33 crore and four PSUs

incurred losses of ₹ 7.25 crore. The sole contributor to profit was ‘Arunachal Police Housing

and Welfare Corporation Limited’ (₹ 1.33 crore) while heavy losses were incurred by

‘Arunachal Pradesh Forest Corporation Limited’ (₹ 5.20 crore).

4.1.17 The losses incurred by State PSUs and State Government Departments, as highlighted

in the Audit Reports of CAG each year, were mainly attributed to deficiencies in financial

management, planning, implementation of projects, running of operations and monitoring. A

review of the latest Audit Reports of the C&AG showed that the working State PSUs and

Government Departments (Power, Hydro- Power, Transport and Supply & Transport) incurred

losses to the tune of ₹ 26.91 crore and infructuous investment of ₹ 8.07 crore, which could have

been avoided with better management. Year-wise details from Audit Reports are stated below.

4.1.18 The above losses pointed out by Audit Reports of the C&AG were based on test check

of records of PSUs/Govemment Departments (Power, Hydro-Power, Transport and Supply &

Transport). Actual controllable losses would be much more. With better management, the losses

shown in the Table above could be minimized/eliminated and profits enhanced substantially.

PSUs/Govemment Departments would be able to discharge their roles efficiently only if they

are financially self-reliant. The above situation points towards a need for professionalism and

accountability in the functioning of PSUs/ Government Departments.

(₹in crore)

Particulars 2009-10 2010-11 2011-12 Total

Controllable losses as per Audit Report 15.72 10.58 0.61 26.91

Infructuous Investment - 2.03 6.04 8.07


101

Arrears in Finalisation of Accounts

4.1.19 Some other key parameters pertaining to State PSUs are given below.

4.1.20 It may be noticed that the turnover of State Working PSUs during 2006-12 had

shown decreasing trend (excepting 2009-10) while the debt figures of State PSUs had

increased during three out of six years. As a result, the debt/tumover ratio had

deteriorated from 1.66:1 (2006-07) to 1.96:1 (2011-12).

Further, the return on capital employed had been negative throughout the period of six

years from 2006-07 to 2011-12 excepting 2008-09 on account of negative working

results of the State PSUs.

4.1.21 The State Government had not formulated (November 2012) any dividend

policy to make it mandatory for the PSUs to pay a minimum return on the paid up share

capital contributed by the State Government.

4.1.22 Under Sections 166, 210, 230, 619 and 619-B of the Companies Act, 1956,

accounts of Companies for every financial year are required to be finalised within six

months from the end of the relevant financial year. The Table below shows details of

progress made by working PSUs in finalisation of accounts by September 2012.

4.1.23 It may be noticed that the average number of accounts in arrears per PSU was

very high in all the five years and ranged between 5.4 and 6.2 accounts per working

PSU. Delays in finalization of accounts were mainly attributable to inadequacy of

manpower and abnormal delays in compilation/approval of the Annual Accounts by

Nil figure represents negative return on capital employed. Turnover of working PSUs as per the latest finalised accounts as of 30 September 2012.

(₹ in crore)

Particulars 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 Return on Capital Employed (Per cent)

- - 6.09 - - -

Debt 9.87 11.76 9.87 10.33 11.69 11.42

Turnover 5.94 5.72 5.57 7.79 6.37 5.82 Debt/ Turnover Ratio 1.66:1 2.06:1 1.77:1 1.33:1 1.84:1 1.96:1 Interest Payments 0.03 0.03 0.39 0.78 0.25 0.15 Accumulated Profits (losses)

(-) 1.62 (-) 3.19 2.64 4.06 (-) 3.73 (-) 16.30

SI.

No. Particulars 2007-08 2008-09 2009-10 2010-11 2011-12

1. Number of Working PSUs 5 5 5 5 5

2. Number of accounts finalised during

the year 1 1 5 7 6

3. Number of accounts in arrears 27 31 31 29 28

4. Average arrears perPSU (3/1) 5.40 6.2 6.2 5.8 5.6

5. Number of Working PSUs with

arrears in accounts 5 5 5 5 5

6. Extent of arrears in years 1 to 14 1 to 15 1 to 16 1 to 15 1 to 15


102

the PSUs. In addition to above, there were also the arrears in finalisation of accounts by

non-working PSUs. The two non-working PSUs had arrears of accounts for 12 to 14

years.

4.1.24 The State Government invested an aggregate amount of₹ 49.86 crore in four

PSUs (Equity - ₹ 3.20 crore, Loans - ₹ 21.88 crore, Grant/Subsidy - ₹ 9.45 crore and

Others - ₹ 15.33 crore) during the years for which accounts were not finalised, as

detailed in Appendix - 4.4. Delay in finalisation of accounts run the risk of fraud and

leakage of public money apart from violation of the provisions of the Companies Act,

1956.

4.1.25 Administrative Departments have the responsibility to oversee the activities of

these entities and to ensure that the accounts are finalised and adopted by these PSUs

within the prescribed period. Attention of the concerned Administrative Departments

and officials of the Government on the issue of arrears in finalisation of accounts was

regularly drawn by the Accountant General on a quarterly basis, emphasizing on the

need for clearing of arrears. The issue has also periodically been taken up with the Chief

Secretary/ Finance Secretary, Government of Arunachal Pradesh, to expedite the

backlog of accounts in a time-bound manner. No significant progress was, however,

noticed in the matter. As a result, the net worth of these PSUs could not be assessed in

audit.

In view of the above position of arrears, it is recommended that:

The Government should monitor and ensure timely finalisation of accounts by the

State PSUs in conformity with the provisions of the Companies Act, 1956.

Winding up of Non-Working PSUs

4.1.26 There were two Non-working PSUs in the State as on 31 March 2012. Both of

the non-working PSUs had commenced the liquidation process.

4.1.27 Both the Non-working PSUs, viz. Parasuram Cements Limited and Arunachal

Horticultural Processing Industries Limited, need to be wound up quickly as their

existence does not serve any purpose to the State.

Comments on Accounts and Internal Audit

4.1.28 Five Working Companies forwarded their six audited accounts to the

Accountant General during the year 2011-12. Non-Review Certificates were issued on

all six Accounts. During the year 2011-12, no Company was selected for Supplementary

Audit. Audit Reports of the Statutory Auditors appointed by the C&AG and

Supplementary Audit of the C&AG indicated that the quality of maintenance of

accounts needed to be improved substantially. Details of aggregate money value of

comments of Statutory Auditors and the C&AG are given below.


103

Reforms in the Power Sector

4.1.29 The Statutory Auditors (Chartered Accountants) were required to furnish a

detailed report upon various aspects, including Internal Control/Intemal Audit Systems

in the Companies audited, in accordance with the directions issued by the C&AG to

them under Section 619(3) (a) of the Companies Act, 1956, and to identify areas which

needed improvement. An illustrative resume of major comments made by the Statutory

Auditors on possible improvement in the Internal Control /Internal Audit System in

respect of three Companies, viz;. Arunachal Pradesh Industrial Development and

Financial Corporation Limited, Arunachal Pradesh Forest Corporation Limited and

Arunachal Pradesh Mineral Development and Trading Corporation Limited, during the

year 2011-12 as follows:

4.1.30 During the course of Propriety Audit in 2011-12, potential recoveries of ₹ 7.28

crore were pointed out to the State Government Departments and the Management of

various PSUs. No amount was, however, recovered by the Management during the year

2011-12.

4.1.31 A Single Member Electricity Regulatory Commission had been formed

(February 2011) in Arunachal Pradesh under provisions of Section 83 of the Electricity

Act, 2003, with the objective of rationalisation of Electricity Tariff, advising in matters

relating to electricity Generation, Transmission and Distribution in the State and issue of

Licenses.

4.1.32 A Memorandum of Agreement (MoA) was signed (July 2002) between the

Union Ministry of Power and the State Government with a joint commitment for

SI.

No. Particulars

2008-09 2009-10 2010-11

No. of

Accounts Amount

No. of

Accounts Amount

No. of

Accounts Amount

1. Decrease in profit 1 0.02 1 2.80 ------ -----

2. Increase in Loss __ ___ 1 4.17 ------- ------

3. Increase in Profit 1 0.05 ___ - ----- -----

4. Non-disclosure of material facts

2 -- 1 1.53 --- ----

5. Errors of

Classification - -- - - --- --

6. General 2 --- 1 ------ -------- -----

(₹ in crore)

SI. No. Nature of comments made by Statutory Auditors

Absence of a Credit Policy, policy of providing for Doubtful Debts/Write Off and Liquidated Damages.

2. Deficiency in the Internal Audit System, i.e., frequency and scope of audit needed to be increased. Compliance mechanism needed to be strengthened.

3. Absence of an Internal Audit System commensurate with the nature and size of business of the Company

Recoveries at the instance of Audit

1..

.

.


104

implementation of reforms programmes in the Power Sector with identified milestones.

Progress achieved so far in respect of important milestones is stated below:

From the table, it may be observed that even after a lapse of more than 10 years of

signing the MOA, the milestone set under Power Sector Reforms Programme could not

be achieved fully by the State Government in any of the four identified areas.

SI.

No. Milestone Achievement as at March 2012

1. Corporatisation of the

Electricity Department by 2006- 07

Department of Power (DOP) and Department of

Hydro-Power Development (DHPD) are not yet

Corporatized (December 2012).

2. Setting up of a State Electricity

Regulatory Commission (SERC) A Single Member Electricity Regulatory Commission

constituted (May 2010) and the Chairman of the

commission took charge in February 2011. No tariff

revision was, however, finalised by the SERC so far.

(December 2012)

3. State Government will ensure timely

payment of subsidies required in

pursuance of orders on the tariff

determined by SERC.

APSERC has not fixed any tariff since then.

(December 2012).

4. State Government will achieve 100

% electrification of villages by 2007.

3231 out of 4593 villages (70.35 %) have been

electrified (December 2012).


105

DEPARTMENT OF POWER

4.2 Performance Audit of Power Transmission activities of Department of Power,

Government of Arunachal Pradesh

Highlights

Transmission of electricity and grid operations in Arunachal Pradesh are managed and

controlled by the Department of Power (Department), Government of Arunachal Pradesh.

The present performance audit covered transmission activities of the Department for the

years from 2007-08 to 2011-12. The Department prepared Power Master Plan, 2006 and

Perspective Action Plan, 2007-22 keeping in view of the requirements upto 2022 for

construction of total 28 EHT lines including eighteen 132 KV lines to be constructed

during 2007-12. Out of said 18 lines, 9 lines were carried forward for construction during

2012-17. No action was taken to construct balance nine lines except issuing of NIT for

one line till December 2012.

The execution of transmission projects by the Department suffered with several

deficiencies mainly relating to project planning and preliminary works causing revisions

of DPRs after award of work, excess time taken in finalisation of tenders, deficiencies in

monitoring of works, etc. As a result, against the capacity addition of five substations

(110 MV A) and transmission lines (334.74 ckm) pertaining to previous plans and carried

forward for completion during 2007-12, none of the projects was completed during 2007-

12 except one 14.87 ckm line project. The transmission and distribution (T&D) losses

during 2007-12 showed increasing trend and the Department could not achieve the CEA

norms in any of the five years thereby causing loss of energy to the tune of 981.85 MUs.

The Arunachal Pradesh State Load Despatch Centre (SLDC) did not have any control

over the optimum scheduling and despatch of electricity within the State and none of the

four 220/132 KV S/Ss were connected with the SLDC to monitor the efficiency of

transmission system. No Disaster Management programme was in place thereby exposing

the system against the risk of black out situations in case of major break down. The

Energy accounting and audit system of the Department was not effective in the absence

of proper metering arrangements and authentic estimation of transmission loss.

The Department sustained huge financial losses on sale of energy mainly due to high

T&D losses and significant increase in costs of energy transmitted. Though the State

Electricity Regulatory Commission (SERC) became functional in February 2011, the

Department had been increasing the tariff annually by five per cent without filing Annual

Revenue Return and without approval of the SERC.

Following are the main highlights of the performance audit:


106

Against the targeted capacity additions of five Sub-stations (110 MV A) and

transmission lines (334.74 ckm) under annual plans during 2007-12, the Department

could complete only one 14.87 ckm (4per cent) transmission lines and none of the

substations were completed.

(Paragraph 4.2.10)

Construction of two new Sub-stations and two transmission lines were delayed for

periods ranging from 6 to 56 months resulting in cost over-run of ₹ 65.51 crore and

the projects were still incomplete (November 2012)

(Paragraph 4.2.12.1)

Recorded transmission and distribution losses ranged between 41.42 and 58.52 per

cent against the Central Electricity Authority norm of 15 per cent. As a result, the

Department sustained energy loss of 981.85 MUs valued at ₹ 345.45 crore during the

period from 2007-08 to 2011-12.

(Paragraph 4.2.24)

Due to lack of adequate monitoring equipment in the SLDC, the Department could

not monitor and control the usage of power. This had led to over-drawal of power

from the grid during low frequency, which ultimately resulted in high power

purchase cost on account of the indirect hike in the power tariff against UI charges

(₹ 79.23 crore) incurred during 2007-12 .

(Paragraph 4.2.25)

The revenue from sale of power during 2007-12 decreased from ₹ 109.37 crore to ₹

79.94 crore as a result, the realisation per unit decreased from ₹ 3.27 to ₹ 3.21

during the performance audit period. The cost per unit increased by more than 3.5

times from ₹ 1.43 (2008-09) to ₹ 5.23 (2011-12) due to significant increase in fixed

and variable costs.

(Paragraph 4.2.34)

Introduction

4.2.1 With a view to supply reliable and quality power to all by 2012, the Government

of India (Gol) prepared the National Electricity Policy (NEP) in February 2005, which

stated that the Transmission System required adequate and timely investment besides

efficient and coordinated action to develop a robust and integrated power system for the

country. It also, inter-alia recognized the need for development of National and State Grid

in co-ordination with Central/State Transmission Utilities. Transmission of electricity and

grid operations in Arunachal Pradesh are managed and controlled by the Department of

Power, Government of Arunachal Pradesh.

4.2.2 The management and day-to-day operations were carried out by two Zonal Chief

Engineers (Power) up to February 2011. Subsequently, a separate office/post of


107

Chief Engineer, (Planning & Monitoring) was created in February 2011 and was later re-

designated (March 2012) as Chief Engineer (Transmission, Planning & Monitoring).

Presently, there are three Zonal Chief Engineers (Power) in the Department. The Chief

Engineer (Transmission, Planning & Monitoring) is responsible for the power

transmission system in the State. The Chief Engineers are assisted by 7 Superintending

Engineers at the Circle level and 17 Executive Engineers at the Divisional level. During

2007-08, 571.08 MUs of energy was transmitted by the Department, which increased to

600.20 MUs in 2011-12, viz. an increase of 5.10 per cent during 2007-12. As on 31

March 2012, the Department had a transmission network of 202.698 ckm and four Sub-

Stations (S/Ss) with an installed capacity of 189.30 MVA, capable of annually

transmitting 600.20 MUs at 220/132 KV. The turnover of the Department was ₹ 79.94

crore in 2011-12 from sale of power. It employed 10,011 employees as on 31 March

2012.

One paragraph each on Implementation of Accelerated Power Development and Reforms

Programme and on Implementation of Rural Electrification and two Paragraphs on

Implementation of Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) and Billing

Efficiency were included in the Reports of the Comptroller and Auditor General of India,

Government of Arunachal Pradesh, for the years ended 31 March 2007, 31 March 2008

and 31 March 2011 respectively. These Reports were yet to be discussed by the

Committee on Public Undertakings (COPU).

Scope of Audit

4.2.3 The present Performance Audit conducted during May to July 2012 covered

transmission activities of the Department of Power, Government of Arunachal Pradesh

from 2007-08 to 2011-12. Audit examination involved scrutiny of records of different

wings at Department’s three Zonal offices, State Load Despatch Centre (SLDC) and two

out of four S/Ss as well as related two transmission lines (TLs) (out of three lines).

During the performance audit period (2007-08 to 2011-12), the Department took up

construction of 2 new S/Ss (at Chimpu and Pasighat) and 2 new TLs (from Aalo to

Pasighat and Hoj to Itanagar) relating to previous five year plans. In addition, spillover

works of three S/Ss (at Along, Lekhi and Deomali) and three related TLs (viz. from Lekhi

to Itanagar, Zero to Along and Kothalguri to Deomali), which were already commenced

prior to 2007-08 were also undertaken. None of the above new and spillover projects

were completed by the Department as of March 2012 except one spilled over TL project

from Lekhi to Itanagar (14.87 ckm). For examining the aspects relating to the project

execution by the Department, all these ongoing projects were examined.


108

Audit Objectives

4.2.4 The objectives of the Performance Audit were to assess whether:

❖ A Perspective Plan was prepared as per guidelines of the National Electricity

Policy/Plan and State Electricity Regulatory Commission (SERC) and assessment

of the impact of the Plan, if any;

❖ The transmission system was developed and commissioned in an economical,

efficient and effective manner;

❖ Operation and maintenance of the transmission system was carried out in an

economical, efficient and effective manner;

❖ An effective failure analysis system was set up;

❖ A Disaster Management System was set up to safeguard operations against

unforeseen disruptions/events;

❖ Efficient and effective energy conservation measures were undertaken as per the

National Electricity Plan (NEP) and establishment of an Energy Audit System;

❖ There was an effective and efficient Financial Management system with emphasis

on raising and collection of bills and filing of Aggregate Requirement Revenue

(ARR) for tariff revision in time;

❖ There was an efficient and effective system for procurement of material and an

Inventory Control mechanism; and

❖ There was a monitoring system in place to review existing/ongoing projects, take

corrective measures to overcome deficiencies identified and respond

promptly/adequately to Audit/ Internal Audit observations.

Audit Criteria

4.2.5 The Audit Criteria adopted for assessing the achievement of the Audit Objectives

were:

❖ Provisions of the National Electricity Policy/Plan and the National Tariff Policy;

❖ Perspective Plan and Project Reports of the Department;

❖ Standard procedures for award of contracts with reference to principles of

economy, efficiency, effectiveness, equity and ethics;

❖ ARRs filed with the SERC for tariff fixation, Circulars, Manuals and MIS reports;

❖ Manual of Transmission Planning Criteria (MTPC);


109

❖ Code of Technical Interface (CTI)/Grid Code consisting of planning, operation and

connection codes;

❖ Directives from the State Govemment/Ministry of Power (MoP);

❖ Norms/Guidelines issued by the SERC/Central Electricity Authority (CEA);

❖ Reports of the Committee constituted by the Ministry of Power to recommend

“Best Practices in Transmission”

❖ Report of the Task Force constituted by the Ministry of Power to analyse critical

elements in transmission project implementation; and

❖ Reports of the Regional Power Committee (RPC)/Regional Load Dispatch Centre

(RLDC).

Audit Methodology

4.2.6 Audit followed the following methodologies:

❖ Review of Minutes of RPC/RLDC meetings, Annual Reports, Accounts and

Regional Energy Accounts (REA);

❖ Scrutiny of physical and financial progress reports;

❖ Analysis of data from annual budgets and physical/financial progress with

completion reports;

❖ Scrutiny of records relating to project execution, procurement, receipt of funds and

expenditure; and

❖ Interaction with the Management during Entry and Exit Conferences.

❖ The Audit objectives were also explained to the Department in an ‘Entry

Conference’ held on 19 April 2012. Subsequently, Audit findings were reported to

the Department and the State Government in September 2012 and discussed in the

‘Exit Conference’ held on 7 November 2012. The Exit Conference was attended by

the Secretary (Power) along with four Chief Engineers of the Department. The

Department/State Government replied to audit findings in October 2012. The

replies/views expressed by them have been appropriately considered while

finalising this Performance Audit Report.

Brief Description of the Transmission Process

4.2.7 Transmission of electricity is defined as bulk transfer of power over long

distances at high voltage, generally at 132 KV and above. Electric power generated at

relatively low voltage in power plants is stepped up to high voltage power before it is

transmitted to reduce the loss in transmission and to increase efficiency in the Grid. S/Ss

are facilities within the high voltage electric system used for stepping- up/stepping-down

voltage from one level to another, connecting electrical systems


110

and switching equipment in and out of the system. The step-up transmission S/Ss at the

generating stations use transformers to increase voltage for transmission over long

distances.

Transmission lines carry high voltage electric power. The step-down transmission S/Ss

decrease the voltage to sub-transmission voltage levels for distribution to consumers. The

distribution system includes lines, poles, transformers and other equipment needed to

deliver electricity at specific voltages.

As electrical energy cannot be stored, generation must match with the requirement.

Therefore, every transmission system requires a sophisticated system of controls called

Grid Management to ensure a balance between power generation and demand. A pictorial

representation of the transmission process is given below:

4.2.8 The audit findings of performance audit have been finalized after taking into

consideration the replies and views expressed by the representatives of the Department

and Government during exit conference. The audit findings are discussed in subsequent

paragraphs.

Planning and Development

National Electricity Policy/Plan

4.2.9 The Central Transmission Utility (CTU) and State Transmission Utilities (STUs)

have the key responsibility of network planning and development, based on the National

Electricity Plan (NEP), in co-ordination with all concerned agencies. At the end of the 10

Plan (March 2007), the transmission system in the country at

765/HVDC/400/230/220/KV stood at 1.98 lakh circuit kilometers (ckms.) of TLs which

was planned to be increased to 2.93 lakh ckms by the end of the 11 Plan, i.e. March 2012.

The NEP assessed the total inter-regional transmission capacity at the

AUDIT FINDINGS


111

end of 2006-07 as 14100 MW and further planned to add another 23600 MW in the 11

Plan, bringing the total inter-regional capacity to 37700 MW.

Similarly, the Department’s transmission network at the beginning of 2007-08 consisted

of four Extra High Tension (EHT) S/Ss with a transmission capacity of 189.30 MVA and

187.828 ckms of EHT TLs which remained unchanged as on 31 March 2012. The

additional 14.87 ckms of 132 KV lines constructed by the Department during 2007-12

between Lekhi to Itanagar was, however, used for the retail distribution of power at the

33 KV level.

The Department is responsible for planning and development of the intra-state

transmission system. Assessment of demand is an important pre-requisite for planning

capacity addition. The Department prepared (November 2006) a Power Master Plan,

keeping in view of the requirements upto 2022. The main features of the Power Master

Plan, 2006, included the following -

a) Conversion of the Department into an autonomous Corporation.

b) Operation of a 132 KV State Power Grid by 2012.

c) Construction of parallel Extra High Voltage - High Capacity power transmission

lines commensurate with development of generation projects.

Subsequently, based on the ‘Pasighat Proclamation on Power’ (January 2007), a

Perspective Action Plan, 2007-2022 was prepared (March 2007) by the Department

taking into account spillover works of previous Five Year Plans (up to 10th Five Year

Plan - 2002-07) for completion during 11th to 13th Five Year Plans (2007-22) looking into

the needs of the State, Region and country as a whole in terms of short, medium and long

term needs.

Under the Perspective Action Plan Short-term Plan (2007-08) covered the development

of a State Grid at 132 KV level; the Medium-term Plan (2007-12) covered the

development of a stable 132 KV and 220 KV connectivity across the State to enhance

economic and commercial activities, and; the Long-term Plan (2012 onwards) covered

the development of an Extra High Voltage system at the level of 400 KV and above to

pool the power from Major Hydro Projects. Accordingly, it was proposed to construct

eighteen 132 KV lines during 2007-12 and further six 220 KV lines and four 400 KV

lines during 2012-22 connecting different locations as detailed in Appendix 4.5. It was

observed that out of eighteen 132 KV lines proposed for construction during 2007-12,

nine 132 KV lines had been carried forward (March 2007) for construction during 2012-

17 as mentioned in Appendix 4.5No action was, however, taken by the Department to

construct the balance nine 132 KV lines till date (December 2012) except issuing of

Notice Inviting Tender


112

* spillover works of the previous year are carried forward to next year.

**details of nine lines planned for construction during 2007-12 under Perspective Action Plan 2007-22 not available. Hence, these figures as provided by the Department and included in the table are considered to be the additions planned in previous five year plans. a132 KV transmission line from Lekhi to Itanagar.

(NIT) for construction of one 132 KV TL from Khuppi to Tawang. Details of the length

of these nine lines were, however, not provided by the Department.

Transmission Network and its Growth

4.2.10 The transmission capacity of the Department at EHT level during 2007-08 to

2011-12 is given below:

As seen from the above table, there was no change in the number of S/Ss or the capacity

of transformers. Though there was an increase of 14.87 ckms in TLs of 132 KV

capacities, it did not improve the transmission capacity of extra high voltage lines, as the

line was used for transmitting energy at the 33 KV level. Further, only one (4.5 MW) out

of 94 Micro, Mini and Small Hydel Projects (capacity-59.18 MW) operating in the State

as on 31 March 2012 was connected to the State Grid. Absence of a State Grid crippled

the transfer of power from these Hydel Projects to various load centers.


113

3

5 5 5 5

0123456789

10

2007-08 2008-09 2009-10 2010-11 2011-12

250

200

150

100

50

0

2007-08 2008-09 2009-10 2010-11 2011-12

Increase/Shortfall in addition of lines planned

Line Graph: Increasing trend in shortfall in addition of S/Ss in numbers and

accretion to transformation capacity

----- Shortfall in Sub-Stations ----

Line Graph: Increasing trend in shortfall in addition of lines in Circuit Kilometres

350

300

Against the targeted construction of five S/Ss (110 MV A) as well as construction of

334.74 ckms of 132 KV transmission lines during 2007-12, the Department did not

complete any transmission project excepting one spillover EHT (132 KV) line project

(14.87 ckms) which was used for transmitting energy at the 33 KV level.

Particulars of voltage-wise capacity additions planned, actual additions, shortfall in

capacity, etc., during review period are given in Appendix 4.6.

The poor performance of the Department in execution of the projects was primarily

attributable to the reasons like improper planning, revision of Detailed Project Reports

(DPRs) after award of works, inadequacy of initial project related works, viz., survey,

study, drawings, design for the works, excessive time taken in completing the pre-

tendering activities, delays in completion of works by the contractors, ineffective

monitoring of works, etc. as discussed in succeeding paragraphs (4.2.12 to 4.2.15).

pertaining to previous five year plans but carried forward for completion during 2007-12.

319.87


114

Project Management of Transmission System

4.2.11 A transmission project involves various activities from concept to commissioning.

Major activities in a transmission project are (i) Project formulation, appraisal and

approval phase and (ii) Project execution phase. For reduction in the project

implementation period, the Ministry of Power, Government of India, constituted a Task

Force on transmission projects (February 2005) with the following objectives:

❖ analyse the critical elements in transmission project implementation,

❖ implementation of best practices of CTU and STUs, and

❖ suggest a model transmission project schedule of 24 months duration.

The Task Force suggested and recommended (July 2005) the following remedial actions

to accelerate the completion of transmission systems.

❖ Undertake various preparatory activities such as surveys, design & testing,

processing for forest and other statutory clearances, tendering activities, etc. in

advance/parallel to the project appraisal and approval phase and go ahead with

construction activities once transmission line project sanction/approval is

received;

❖ Break-down the transmission projects into clearly defined packages in such a

manner that the packages can be procured and implemented requiring least co-

ordination and interfacing, at the same time ensuring that they attract competition

facilitating cost effective procurement; and

❖ Standardise designs of tower fabrication so that 6-12 months can be saved in

project execution.

Delay in award and implementation of works

4.2.12 Stage-wise details of time taken in pre and post-work award activities of the four

new projects (two S/Ss and two TLs) spilled over from previous plans and taken up

during 2007-12 and test-checked are as follows:


115

It would be seen from the table that there was a delay ranging from 19 to 75 months in

the issue of Work Orders/LOA by the Department after obtaining sanctions from the

Ministry of Development of North Eastern Region/North Eastern Council

(DoNER/NEC) Government of India (Gol). Further, it was observed that there was a

delay ranging 6 to 56 months in execution of works after issue of the work orders.

Execution of Projects

4.2.12.1 Notwithstanding the elaborate guidelines given by the Task Force Committee

for timely completion of projects, the Department failed to execute the four new

projects relating to two S/Ss and two TLs planned during 2007-12 as follows:

SI.

No. Name of Work

Date of

approval/

Sanction of

DPR

Date of Notice

Inviting

Tender (NIT)

Date of

Work

Order/ LOA

Time taken in

issue of Work

Order after

sanction of the

project (in

months)

Schedule date

of completion

(from the date

of LOA)

Actual date of completion

Delay in

months (as

on Nov

2012)

Construction of Sub-Station and Bay Extension

1.

2x20 MVA, 132/33 KV Sub- Station at Chimpu including Two outgoing Systems and Bays at Hoj

June 2005 September

2007 November

2008 41 May 2010

Work in

Progress 29

2.

132/33 KV, 2x5 MVA Sub- Station at Pasighat including Bay Extension at 132/33 KV Sub- Station, Aalo

August 2005

January 2008

August. 2009

48 February

2010 Work in Progress

33

Construction of Transmission Lines

1.

132 KV DC Line from Hoj to Itanagar (supply/erection of towers and stringing of lines)

June 2005 November

2008 August 2009

50 August 2011

Work in Progress

15

2.

132 KV Transmission Line from Aalo to Pasighat (supply/erection of towers and stringing of lines)

Aug 2005

Dec. 2006

Jan. 2008

Aug. 2010

Mar 2007 to Nov.

2011 19 to 75

Mar 2008 to May 2012

Work in Progress

6 to 56

Capacity in KV

Total No. Under Construction

No. Test checked by

Audit

Delay in Construction

(Numbers)

Time Overrun as of November

(range in months)

Cost Overrun (₹ crore)

SSs Lines SSs Lines SSs Lines SSs Lines S/Ss/Lines Under Construction (Numbers)

132 KV 2 2 2 2 2 2 29-33 6-56 65.51


116

Construction of two S/Ss and two TLs mentioned in the Table were delayed for

periods ranging from 6 to 56 months resulting in cost over-run of₹ 65.51 crore and the

projects were still incomplete (November 2012).

The Case Study on project execution has been presented under Paragraphs 4.2.12.2

to 4.2.15 below.

New Projects

Construction of 132 KV DC Transmission Line from Hoj to Itanagar including

2x20 MV A S/S at Chimpu

4.2.12.2 The Department decided (2002-03) to construct a Single Circuit (SC)

132 KV Line from Hoj to Niijuli, including 2x25 MV A, 132/33KV S/S at

Niijuli/Doimukh. The proposal was approved by the NEC for ₹ 14.50 crore, with

certain revisions in June 2005. After three revisions (during 2006, 2007 and 2008),

however, the DPR was finally approved (2008) at revised cost of ₹ 49.50 crore

(grants: 90 per centand State Government loans: 10 per cent)at cost overrun of more

than 240 per cent.The Department had received total amount of ₹ 40.45 crore towards

project funding from NEC upto January 2010. The work order for construction of the

TL was issued (August 2009) by the Department after more than one year of final

approval of DPR with stipulation to complete the work by August 2011.

As per the recommendations of the Task Force, all preparatory activities (viz. surveys,

design, testing, etc.) should be undertaken in advance/parallel to the project

appraisal/approval stage so as to complete the project in time. The execution of the

project, however, suffered due to failure of the Department in timely completion of

preparatory works (viz. detailed survey for work, fixing of route alignment, mapping,

route profiling, etc.) contrary to the recommendations of the Task Force.

Though the Department originally planned the project in 2002-03 and subsequently

revised the DPRs on three occasions, survey works like fixing of route alignment, map

on Topo Sheet, route profiling, tower spotting, tower marking and tower schedule for

132 KV DC Line from Hoj to Itanagar, etc. were commenced only in October 2007

thereby causing considerable delays in execution of the project.

Further, handling of the main scope of the works was initially entrusted to two

Divisions of the Department. The implementation of the project was, however,

delayed due to lack of co-ordination between these Divisions. Though the Department

decided (December 2007) to transfer implementation of entire project to Central

Electrical Division (CED), the decision was implemented after almost one year in

November 2008. Even after the transfer of entire works to CED, the progress of

implementation of the project as of November 2012 was poor as the Department had

merely issued three NITs for execution of works, viz. (i) supply and erection of


117

2 x20 MVA, 132/33 KV S/S at Chimpu (September 2007), (ii) construction of 132

KV TL from Hoj to Itanagar (November/December 2008), and (iii) construction of

two outgoing systems and bays at Hoj (July 2011). The audit findings relating to

execution of these works are discussed in the following paragraphs.

Construction of 132 KV DC Line from Hoj to Itanagar

4.2.12.2 A Work of detailed survey, including fixing of route alignment, map on

Topo Sheet, route profiling, tower spotting, tower marking etc, for the 132 KV DC TL

from Hoj to Itanagar (TL) was awarded (October 2007) to Huma Enterprises &

Consultants Pvt. Limited (survey contractor) for completion within 90 days (by

January 2008). The reports submitted (December 2008) by the survey contractor,

however, contained several deficiencies relating to route maps, tower

scheduling/marking, etc. Meanwhile, the work for construction of TL was issued

(August 2009) to Nabam Tullon- Kumar Traders (contractor) with stipulation to

complete the work by August 2011. The Department, however, failed to collect the

corrected report on route profile, tower spotting, tower marking, etc. from survey

contractor and provide the same to the contractor before award of work. This led to

considerable delays in completion of the TL works and same was still incomplete

(August 2012). The delay in completion of the project had correspondingly postponed

the achievement of intended benefits of the project besides avoidable increase in the

project cost.

Supply and Erection of 2 x 20 MVA, 132/33 KV S/S at Chimpu

4.2.12.2B The Department prepared (September 2005) an estimate for construction of

2 x 20 MVA, 132/33 KV S/S at Chimpu, Itanagar, at a cost of₹ 7.15 crore. The project

estimate was subsequently revised (2007) to ₹ 11.25 crore and accordingly, NIT for

the work was issued (September 2007). The Department issued (November 2008) the

Letter of Award (LoA) for the work in favour of T&T Project (contractor) after taking

an excessive period of 11 months in finalisation of tende₹The project was scheduled

for completion by May 2010.

It was further observed that the contractor had been requesting the Department time

and again for extension of scheduled time for completing the project. Based on the

requests of the contractor, the Department granted extension on three occasions

rescheduling to complete the project by June 2012. The project was, however, still not

completed (November 2012).

Scrutiny of the records also revealed that the provision of one 145 KV Circuit Breaker

was essentially required to be fixed in the incoming of the Chimpu S/S. The

Department, however, while preparing the project estimates omitted to include the

same in the DPR of the project. On realising the need for the said Circuit Breaker, the

Department had to include (July 2010) the same in the project work thereby causing

additional time and cost in completion of the project. This was indicative of

deficiencies in planning for execution of the project.


118

Construction of two Outgoing Systems and Bays at Hoj

4.2.12.2C The Department issued (July 2011) NIT for construction of two outgoing

systems and bays at 132 KV Switchyard at Hoj connecting 132/33 KV S/S, Chimpu an

estimated cost of₹ 1.39 crore. Though two firms qualified in the bidding, Firm LI was

rejected on the ground that the rates offered by them were very high. After expiry of

seven months, the work was offered (February 2012) to the contractor (T&T Project)

who was also executing construction work of 132/33 KV S/S at Chimpu, at the same

rate and terms. Though a significant period of nine months had expired, the

Department did not receive any confirmation from the contractor for taking up the

work (November 2012). The Department had, however, not taken any action for

inviting fresh tenders for execution of the work. As the construction of 132/33 KV S/S

at Chimpu was likely to be completed shortly (by December 2012), uncertainty in

completion of related 132 KV Switchyard may cause idling of the S/S Chimpu for

want of connectivity.

Construction of 132 KV Transmission Line from Aalo to Pasighat, including

construction of 2 x 5 MV A SS at Pasighat and Bay extension at Aalo.

4.2.12.3 The Department prepared a DPR for construction of a 132 KV SC

Transmission Line from Aalo to Pasighat, including S/Ss at Pasighat and Aalo at an

estimated cost of ₹ 27 crore and submitted (January 2003) the same to the Gol for

approval. It was, however, observed that the DPR for the project was prepared on the

basis of a walk-over survey only without going deep into the details of the topography

of the project locations.

As a result, the DPR was revised based on the observations of CEA and re-submitted

(March 2005) for approval of the Gol. The Ministry of DoNER approved (August

2005) the project for central financial assistance under the Non-Lapsable Central Pool

of Resources (NLCPR) for a sum of₹ 26.12 crore (being 90 per cent of the approved

project cost of₹ 29.02 crore). The balance 10 per cent of the project cost was to be

provided by the State Government in the form of loan. The Administrative approval

by DoNER was subject to completion of the project before March 2009. In case the

project was unduly delayed, it was open for DoNER to adjust the project funding

against other NLCPR sanctioned projects and close the project. The Department also

received an amount of₹ 10.80 crore for the project up to December 2007. No progress

was, however, made in the project works till December 2007 except completing the

preliminary survey work.

The DPR was subsequently revised (October 2008) by the State Government at

enhanced project cost of₹ 57.51 crore mainly on account of significant increase in the

cost of the material. The Administrative Approval of DoNER, however, remained

unchanged for completing all the project works by March 2009. The Department

issued (March 2007 to November 2011) LoAs for the project works with stipulation to

complete the same by May 2012 as per the details given in Appendix 4.7. Findings on

major works under the project are discussed in the following paragraphs.


119

Stringing of 132 KV ACSR conductor and earthwire from Aalo to Pasighat,

including supply of accessories

4.2.12.3A As per the Administrative Approval of DoNER, the project of construction

of 132 KV SC TL from Aalo to Pasighat (including S/S at Pasighat and extension bay

at Aalo S/S) was to be completed by March 2009. Stringing of 132 KV ACSR

conductors and earthwire was an integral component for successful commissioning of

the project. Initially it was decided to execute the work departmentally. Accordingly,

the works relating to stringing of conductors and other allied items on the portion of

the line already erected from Pasighat end onwards were entrusted to the Electrical

Divisions of Pasighat, Aalo and Rumgong of the Department. The Department also

procured (March 2008-May 2011) material worth ₹ 2.84 crore for utilising in the

above works. The execution of works, however, suffered due to lack of tools and

experienced manpower as well as absence of desired level of coordination among

three project implementing divisions of the Department. The Department, therefore,

decided (May 2011) to execute the work through open tendering. Accordingly, the

work of stringing of 132 KV ACSR conductor and earthwire from Aalo to Pasighat,

including supply of accessories was entrusted (November 2011) to T&T Projects

Limited (contractor) at a cost of ₹ 2.60 crore, after adjustment of materials already

procured by the Department. As per the agreement, the work was to be completed by

May 2012. It was, however, observed that the progress of the work was very slow as

the contractor could complete the stringing work of only 10 ckm out of 77 ckm (13

per cent). Thus, due to imprudent decision of the department to implement the project

departmentally without assessing the availability of required manpower and skill, the

project had already been delayed by 45 months and same was still incomplete

(December 2012).

Construction of 132/33 KV, 2 x 5 MV A S/S at Pasighat

4.2.12.3B The Department issued (January 2008) the NIT for construction of 132/33

KV, 2X5 MVA S/S at Dorakorong, Pasighat. The LoA was issued (August 2009) in

favour of Northeastern Cables & Conductors (P) Ltd (contractor) with stipulation to

complete the works within six months (by February 2010) at a total cost of₹ 11.85

crore.

As per the administrative approval of DoNER, the entire project should be completed

by March 2009. It was, however, observed that there had been overall delay of 45

months in completing the work of Pasighat S/S and the same was still not completed

(December 2012)

It was observed that the Department took an excessive time of 18 months in issuing

(August 2009) of the work order after issue (January 2008) of NIT, which caused

corresponding_delay in completion of the work. The completion of the project was

further delayed due to delay in finalising the single line diagram of the S/S, which was

provided (February 2010) to the contractor after six months of issuing the LOA.


120

The Department also failed to effectively monitor the work executed by the contractor.

As a result, the slow progress of the work by the contractor further delayed the overall

completion of the project.

Besides, the DPR prepared by the Department also contained vital deficiencies having

significant impact on the overall objectives of the project. It was noticed that provision

of 33 KV out-going feeders from the S/S to the existing 33 KV transmission line on

the way to Pasighat was essential for evacuation of power from the new S/S. The

Department, however, did not make any provision for the same in the DPR. Though

the construction of S/S at Dorakorong was likely to be completed shortly, the

Department had not taken any concrete decision on this issue (November 2012).

Construction of Bay Extension at 132/33 KV Sub-Station, Aalo

4.2.12.3C As per DoNER approval, the project was scheduled to be completed in

March 2009. The Department, however, took excessive time in completing the pre-

tendering activities and award of the work order for the project. It was observed that

though the revised DPR for the project was approved in October 2008, the Department

issued the NITs for Bay Extension at 132/33 KV S/S, Aalo after 27 months in January

2011. The Department took another seven months in finalisation of tenders and issued

(August 2011) the LoA at a cost of₹ 1.56 crore to Everest Infra Energy Limited (the

contactor), with stipulation to complete the work within three months (by November

2011). The contractor was not able to complete the work till date (August 2012). In

absence of the Bay Extension at the S/S energy cannot be fed to the TL to Pasighat

even if other works under the project were completed.

Supply and Erection of Towers for construction of 132 KV SC Line from Aalo to

Pasighat

4.2.12.3D As part of construction of the 132 KV SC line from Aalo to Pasighat, the

Department issued (March 2007) LoAs for supply of material and erection of towers

from AP 01 to AP 26 (26 towers) (cost ₹ 3.99 crore) and from AP 170 to AP 147 (20

towers) (cost ₹ 3.69 crore) in favour of Huma Enterprises & Consultants (Huma) and

Trade & Technology (T&T) respectively with stipulation to complete the works by

March 2008. Subsequently, an additional LOA was issued in favour of Huma (March

2008) for additional works at a cost of₹ 1.99 crore. Later, without any NIT, the

Department decided to entrust the work of supply and erection of the remaining towers

to the same firm at the same rates and terms by way of a repeat order at a cost of ₹

23.62 crore. It was observed that awarding the work on repeat order basis without

inviting open tenders was contrary to the standard practice and might not be in the best

interest of the Department. Further, awarding of additional work to the same firm by

way of repeat order had adverse impact on completion of works as well on account of

possible capacity constraints of the firm. It was observed that till


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January 2013, the erection of 119 out of 180 towers (55 per cent) could be completed

and all the incomplete towers pertain to Huma.

As per conditions in the sanction of Administrative Approval by the Ministry of

DoNER, the project was to be completed by March 2009. Further, there was no

certainty regarding completion of the project, as even the locations of some towers

were yet to be finalised by the Department. The delay in the completion of the project

was also due to the failure of the Department in conducting proper survey and

investigation, insufficient ground clearance between towers and re-alignment of the

line due to construction of the Trans-Arunachal Highway, which should have been

taken up as preparatory activities.

Thus, it may be concluded that though the Department had already spent (up to

December 2012) the entire amount of₹ 44.95 crore received against project funding

from DoNER {(₹ 23.51 crore), PMP (SPA) (₹ 1.42 crore) and State Government (₹

20.02 crore)}, the probable date of completion of the project could not be projected

exactly on account of shortcomings discussed above. The deficiencies pointed out

were indicative of absence of proper project planning, preparation of DPRs without

proper survey and study and excessive time taken in finalisation of tenders for

different works, etc;.

Further, as the project funding by DoNER was subject to completion/commissioning

of the project by March 2009/August 2009, the central financial assistance for the

project was liable for cancellation by DoNER due to delay in completion of the

project. In the event of cancellation of DoNER funding, the State Government would

be liable to bear the entire cost of the project.

Other Projects (commenced prior to 2007-08)

Installation of PLCC equipment in the S/Ss.

4.2.13 As a part of the approved projects, the Department had installed (May 2007)

Power Line Carrier Communication (PLCC) through the Power Grid Corporation of

India Limited (PGCIL) in its 220/132/33 KV S/Ss at Deomali, Daporijo and Aalo. The

said system was installed to monitor the overdrawal of power and to prevent failure of

transmission grid as per advice of the CEA and CTU.

It was observed that the PLCC equipment installed in all these S/Ss had failed

immediately after the S/Ss were taken over by the Department. The Department had,

however, not taken up the matter with PGCIL nor any action was taken by the

Department to rectify the problem (November 2012).Though, the Department was

well aware that the procurement and installation of PLCC equipment in the S/Ss at

Deomali, Aalo and Daporijo were unfruitful, the Department issued separate LOAs for

their installation at the 132/33 KV SSs under construction at Pasighat (August 2009),

Chimpu (November 2008) and the Bay Extension for Pasighat feeder


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at Aalo S/S (August 2011) at a cost of ₹ 1.64 crore. Thus, procurement and installation

of PLCC system by the Department without assessing its previous performance and

without ascertaining the technical reasons for failure of PLCC installed earlier might

not be a prudent decision.

Unfruitful investment on construction 33 KV Bays and 33 KV Bay Line Feeders

4.2.14 For construction of a S/S, the load growth and anticipated increase of demand

in future, along with permissible limits of voltage regulations are required to be

considered mandatory, prior to taking up of the project, so that unnecessary

expenditure can be avoided. Load forecasts for the proposed new schemes should also

consider the anticipated physical and financial benefit to be derived. It was observed

that the 220 KV line from Kathalguri to Deomali and 220/132 KV S/S at Deomali

along with four 33 KV bay line feeders and two 33 KV bays were constructed (May

2007) with the objective to link major areas of the State such as Khonsa, Changlang,

Miao, Namsai, Tezu, Roing, Pasighat, etc. through 132 KV lines. The Department,

however, did not initiate any action to construct the related lines for connecting the

said areas except completing the survey work of 132 KV lines from Deomali to

Khonsa. Thus, in absence of the linkage of newly constructed 220 KV line (Kathalguri

to Deomali) and 220/132 KV S/S (at Deomali) with major areas of the State, the said

line and S/S could not be utilized to its full capacity. It was observed that as against

the transmission capacity of 23 MW of new TL/S/S, the maximum utilisation was to

the extent of 5.1 MW only (December 2012), defeating the very purpose of their

construction. It was observed that out of four 33 KV bay line feeders and two 33 KV

bays constructed in the 220/132/33 KV S/S at Deomali at a cost of ₹ 63.26 lakh, only

one bay feeder was being used for commercial operations. Even after considering one

bay line feeder as a standby, the installation of the remaining two bay line feeders

involving investment of ₹ 21.09 lakh was not required. Thus, the investment of₹ 21.09

lakh on these two bay line feeders remained unfruitful.

Construction of 132 KV DC LILO line and associated S/S at Lekhi.

4.2.15 The Department entered (March 2004) into an agreement with SMS Smelters

Limited (the consumer) for supply of bulk power by constructing a 132 KV Double

Circuit Line through Loop-in Loop-Out (LILO) arrangement between Ranganadi

Hydro Electric Project (RHEP) and Nirjuli 132 KV transmission system of Power

Grid Corporation of India Limited (PGCIL). As per the agreement, the construction of

the 132 KV Double Circuit LILO line along with the associated S/S and LILO

Switchyard was to be completed by the consumer on Build, Operate and Transfer

(BOT) basis. The project cost was to be shared equally by the Department and the

consumer. The entire project cost (₹ 5.88 crore) was to be borne by the consumer

initially and the Department’s share of 50 per cent (viz. ₹ 2.94 crore) was to be

reimbursed through adjustment of energy bills.


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It was observed that the Department failed to incorporate an enabling clause in the

agreement for penalising the consumer in case of delay or non-completion of the

works so as to ensure timely completion of the project. The consumer completed the

works valued ₹ 5.34 crore but did not complete the remaining works (valued ₹ 0.54

crore) such as installation of PLCC system, circuit breakers, separate control room and

staff quarters etc. without furnishing any reasons. The Department did not pursue the

issue with the consumer for completion of the balance work. In absence of an enabling

clause in the agreement, no penal action could be initiated by the Department against

the consumer for non-completion of the project.

It was also noticed that three towers constructed by the consumer in the LILO line

were damaged in 2008 due to floods. Though the project as a whole was not

completed and handed over by the consumer, the supply in the line was already

commenced. The Department managed the flow of energy through temporary erection

constructed at its cost details of which were not available.

As per clause 3.1 of the agreement, the operation, maintenance and ownership of the

assets created under BOT was vested with the Department after the commencement of

the supply. As such, the agreement was silent on the issue of bearing the cost of

damages to the line works before handing over of the same to the Department. Thus,

in absence of a clear clause on the issue, the Department was not able to recover the

costs incurred on temporary erection of line damaged before handing over by the

consumer.

Performance of Transmission System

4.2.16 The performance of the Department mainly depends on efficient maintenance

of its EHT Transmission Network for supply of quality power with minimum

interruptions. In the course of operation of S/Ss and lines, the supply-demand profile

within the constituent sub-systems is identified and system improvement schemes are

undertaken to reduce line losses and ensure reliability of power by improving the

voltage profile. These schemes are for augmentation of existing transformer

capacities, installation of additional transformers, laying of additional lines and

installation of capacitor banks. The performance of the Department with regard to

Operation &Maintenance of the system is discussed in the succeeding paragraphs.

Transmission Capacity

4.2.17 In order to evacuate power from Generating Stations and to meet the load

growth in different areas of the State, the Department constructs lines and S/Ss at

different EHT voltages. A transformer converts AC voltages and currents to different

levels at a very high efficiency. The voltage levels can be stepped up or down to

obtain an increase or decrease of AC voltage with minimum loss in the process. The

evacuation is normally done at 220 KV S/Ss. The transmission capacity (220 KV)


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created vis-a-vis the transmitted capacity (peak demand met) at the end of each year

by the Department during the five years ending March 2012 are as follows:

From the above table, it can be observed that the overall transmission capacity was in

excess of the requirement every year. The existing transmission capacity, excluding 30

per cent towards redundancy, worked out to an excess of 86.23 MVA as of March 2012

compared to peak demand. The investment on this account worked out to ₹3.36 crore

(₹1.12 crore per 33.3 MVA power transformer), which was a burden passed on to

consumers in the form of depreciation on the capital assets included in the cost of

wheeling charges.

Sub-Stations

Adequacy of Sub-Stations

4.2.18 The Manual on Transmission Planning Criteria (MTPC) stipulates the

permissible maximum capacity for different S/Ss, i.e., 320 MVA for 220 KV and 150

MVA for 132 KV S/Ss. Scrutiny of maximum capacity levels of S/Ss revealed that 220

KV/132 KV S/Ss were within permitted levels. It was also observed that the above S/Ss

were constructed with not less than two transformers as stipulated by the MTPC.

Voltage Management

4.2.19 Licensees using intra-state transmission systems should make all possible efforts

to ensure that grid voltage always remained within limits. As per the Indian Electricity

Grid Code, STUs should maintain voltage ranges between 198-245 KV (in 220 KV line)

and 119-145 KV (in 132 KV line) so that reliable power was supplied by the Department.

Audit of the 220/132 KV bus voltages in two out of four S/Ss test checked for the period

April 2007 to March 2012 revealed that in both the S/Ss, voltages were maintained within

the permissible limits.

EHT Lines

4.2.20 As per the MTPC permissible line loading cannot normally be more than the

Thermal Loading Limit (TLL). The TLL limits the temperature attained by the

Transmission Capacity (in MVA)

Year Installed After leaving 30 per cent Peak demand, including Excess

towards margin non- coincident demand (3-4)

2007-08 132.30 92.61 2.50 90.11

2008-09 132.30 92.61 3.13 89.48

2009-10 132.30 92.61 3.75 88.86

2010-11 132.30 92.61 4.38 88.23

2011-12 132.30 92.61 6.38 86.23


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energized conductors and restricts sag and loss of tensile strength of the lines. The TLL

also limits the maximum power flow of the lines. As per the MTPC, the TLL of a 132 KV

line with ACSR Panther 210 sq. mm. conductor was 366 amperes. Scrutiny of the line

loadings on the 132 KV feeders of two out of three commissioned lines test checked

revealed that the load of the feeders was within the permissible limit during the period

covered by Audit.

Bus Bar Protection Panel (BBPP)

4.2.21 A Bus Bar Protection Panel is used as an application for inter-connection of

incoming and outgoing TLs and transformers in electrical S/Ss. BBPP limits the impact

of the bus bar faults on the entire power network, which prevents unnecessary tripping

and selective to trip only those breakers necessary to clear the bus bar fault. As per Grid

norms and best practices in Transmission System, BBPP is to be kept in service for all

220 KV S/Ss to maintain system stability during Grid disturbances and to provide faster

clearance of faults on 220 KV buses. It was observed that in the only 220 KV S/S of the

Department, the double bus BBPP was installed as per the requirement and the same was

functioning normally.

Maintenance

Non- replacement of Current Transformers (CT)

4.2.22 Since Current Transformers are one of the most important and cost-intensive

components of electrical energy supply networks, it is important to prolong their

functional life and reduce their maintenance expenditure. For detailed information

regarding the operation/conditions of CTs, various kinds of analyses like the standard oil

Dissolved Gas Analysis (DGA) tests are generally conducted. For CT insulation, a

combination of an insulating liquid and a solid insulation impregnated therein are used.

For evaluation of the actual condition of this insulating system, a DGA is usually used, as

failures inside the CT lead to a degradation of the liquid insulation in such a way that the

compound of the gases enables an identification of the failure cause.

It was observed that due to the absence of periodical maintenance, one out of five MVA

Transformers installed at 132/33 KV S/S at Aalo failed (April 2012) and entire areas of

East, West and Upper Siang Districts blacked out for five days due to disruption of

power. It was also observed that the Department never tested/calibrated any of the

protective relays since commissioning of the TLs and S/Ss. Nonmaintenance of Lines,

S/Ss and Relays at prescribed intervals resulted in problems with distance relay.

Aluminium Conductor Steel Reinforced a unit of electric current equal to a flow of one coulomb per second


126

It was noticed that in SF6 Circuit Breaker, installed in 220 KV inlet point in the

220/132/33 KV S/S at Deomali, problems started (2008) surfacing in tripping, closing

spring, frequent manual charging, etc,. The General Manager (Maintenance), AGBP, 220

KV Grid Station, Kathalguri, had also expressed his resentment over improper

maintenance of the equipment and warned of the possible discontinuation of providing

power supply to the Department in the event of failure of the device.

It was also observed that the air-conditioning system of the receiving end Control Room

of the 220/132/33KV S/S at Deomali and 132/33 KV S/S at Aalo did not function since

2008 which affected the normal functioning of relays, PLCC and other devices and

equipment in the Control Room. As a result, there were more chances of breakdown of

relays, mountings and accessories of the panel and the Control Rooms. Although higher

authorities like the Chief and Superintending Engineers visited the S/Ss several times

after their commissioning and taking over, the audit could not find any records on

remedial measures required to be taken to improve the condition.

Working of Hot Line Division/Sub-Divisions

4.2.23 Regular and periodic maintenance of a transmission system is of utmost

importance for its uninterrupted operation. Apart from scheduled patrolling of lines, the

following techniques were prescribed in the Report of the Committee for updating the

Best Practices of Transmission in the country for maintenance of lines:

❖ Hot Line Maintenance

❖ Hot Line Washing.

❖ Hot Line Puncture Detection of Insulato₹

❖ Preventive Maintenance by using portable earthing hot line tools.

❖ Vibration Measurement of lines.

❖ Thermo-scanning.

❖ Pollution Measurement of equipment.

A Hot Line Techniques (HLT) envisages attending to maintenance works like hot spots,

tightening of nuts and bolts, damage to conductors, replacement of insulators, etc. of S/Ss

and lines without switching off. This includes thermo scanning of all lines and S/Ss

towards preventive maintenance. HLT was introduced in India in 1958. The Department

was yet to establish Hot Line Divisions/Sub-Divisions. In absence of the hot line

technique, the Department had no other option but to shut down the transmission system

for carrying out the maintenance works causing interruptions in power supply during

routine maintenance/repair works.


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Transmission & Distribution Losses

4.2.24 While energy is carried from the generating station to the consumer through the

Transmission & Distribution (T&D) network some energy, which is termed as T&D loss

is lost in the process. Transmission loss is the difference between energy received by the

Transmission Wing from the Generating Station/Grid and energy sent to Distribution

Wing of the Department. Due to non-availability of separate operational data for

Transmission Wing and Distribution Wing of the Department, the combined T&D losses

have been considered for analysis. The details of combined T&D losses from 2007-08 to

2011-12 are given below:

It can be seen from the above that T&D losses were on an increasing trend during the

years from 2007-08 to 2011-12 and exceeded the CEA norm of 15 per cent in all the five

yea₹ The aggregate T&D losses suffered by the Department in excess of the norm fixed

by the CEA during 2007-12 worked out at 981.85 MU valuing ₹ 345.45 crore. Audit

analysis revealed that the major factors attributable for high T&D losses were;

transmission of energy for long distances through Low Tension lines for covering

the scattered villages;

over-aging of TLs and lack of re-conditioning due to funds constraints;

theft of energy through meter tampering by the consumers and unauthorised

tapping/hooking by the non consumers;

non-functioning /malfunctioning of most the consumer meters.

Grid Management

Maintenance of Grid and Performance of SLDC

4.2.25 Transmission and Grid Management are essential functions for smooth

evacuation of power from generating stations to consume₹ Grid Management ensures

moment-to-moment power balance in the inter-connected power system to take care of

reliability, security, economy and efficiency of the power system. Grid

Particulars Unit Year

2007-08 2008-09 2009-10 2010-11 2011-12

Power received for Transmission MUs 571.08 592.10 432.40 568.89 600.20

Net power Transmitted MUs 334.61 346.79 177.06 260.68 248.99

Actual T&D Losses MUs 236.47 245.31 255.34 308.21 351.21

% age 41.41 41.43 59.05 54.18 58.52

Target T&D losses as per the CEA

norm % age 15.00 15.00 15.00 15.00 15.00

T&D losses in excess of CEA norm

MUs

*₹in

crore

150.81 49.31

156.50 53.21

190.48 81.53 222.88

77.56 261.18 83.84

*Arrived at based on year-wise realization per unit worked out under Para 4.2.34 (refer table under Para 4.2.34)


128

management in India is carried out in accordance with the standards/directions given in

the Grid Code issued by the CEA. The National Grid consists of five regions, viz.,

Northern, Eastern, Western, North-Eastern and Southern Grids, each of these having a

Regional Load Despatch Centre (RLDC), an apex body to ensure integrated operation of

the power system in the concerned region. The Arunachal Pradesh State Load Despatch

Centre (SLDC), a constituent of North Eastern Regional Load Despatch Centre

(NERLDC), Shillong, was established in the State in April 2005. The SLDC did not have

any control over the optimum scheduling and despatch of electricity within the State, as it

functions with a Log Book to record the directions received over the landline phone and

facsimile machine installed in the Control Room.

It was observed that the said phone/machine installed in SLDC were frequently out of

order due to communication failures. Earlier the SLDC was connected to the NERLDC at

Shillong through a BSNL leased line, but it became non-operational for several yea₹

Other equipment such as Supervisory Control & Data Acquisition system (SCADA), 5

KVA ACDB Input and Output Panel, Battery Bank, 5 KVA & 7.5 KVA Isolation

Transformers, etc;, installed in the Control Room had also not been functioning for

several yea₹ Though a Voice over Instrument Phone (VoIP) owned by PGCIL, was

installed in the Control Room to improve efficiency, the same was also not working

properly. It was further, observed that due to the absence of adequate monitoring

equipment in the SLDC, the Department could not monitor and control the usage of

power within the State. This resulted in over-drawal of power from the grid during low

frequency Wing, which ultimately resulted in high power purchase cost to the ultimate

consumer on account of the indirect hike in the power tariff against Unscheduled

Interchange Charges (₹ 79.23 crore) (net of UI receipts) and Interest on overdue payment

of UI charges (₹ 0.46 crore) during 2007-12 as per the following details;

Further, it was noticed that there were no Area Load Despatch Centres (ALDCs) for data

acquisition & transfer to SLDC and supervisory control of 132 KV and 33 KV

equipment.

(Rupees in crore)

Year UI charges paid (Net) Penal charges paid

2007-08 16.42 -----

2008-09 26.40 0.45

2009-10 8.68 ------

2010-11 8.80 -------

2011-12 18.73 0.01

Total 79.23 0.46


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Infrastructure for Load Monitoring

4.2.26 Remote Terminal Unit/Sub-Station Management Systems (RTUS/SMSs) are

essential for monitoring the efficiency of the transmission system and loads during

emergencies in Load Despatch Centres as per Grid norms for all S/Ss. It was observed

that there was only one 220 KV S/S in the State with one generator which was provided

with RTUs for recording real time data for an efficient Energy Management System. All

the remaining three 132 KV S/Ss in the State, though, were provided with generators,

none of them were provided with RTUs. Further, none of the four 220/132 KV S/Ss were

connected with the SLDC to monitor the efficiency of transmission system and load

monitoring on real time basis.

Grid Discipline by Frequency Management

4.2.27 As per the Grid Code, Transmission Utilities are required to maintain Grid

discipline for efficient functioning of the Grid. All the constituent members of the Grid

are expected to maintain a system frequency between 49 and 50.5 Hertz (Hz) [49.2 and

50.3 Hz with effect from 1st April 2009]. Grid frequency, however, goes below or above

the permitted frequency levels due to various reasons such as shortage in generating

capacities, high demand, Grid indiscipline in maintaining load generation balance,

inadequate load monitoring and management. To enforce Grid discipline, the SLDC

issues three types of violation messages (A, B, C). Message A is issued when the

frequency is less than 49.2 Hz and over-drawal is more than 50 MW or 10 per cent of the

scheduled drawal, whichever is less. Message B is issued when the frequency is less than

49.2 Hz and over-drawal is between 50 and 200 MW for more than ten minutes or 200

MW for more than five minutes. Message C (serious nature) is issued 15 minutes after the

issue of message B when the frequency continues to be less than 49.2 Hz and over drawal

is more than 100 MW or ten per cent of the scheduled drawal, whichever is less. It was

observed that the Department received total three ‘C’ messages in April 2010. Besides,

the Department received a total number of 313, 378 and 356 of ‘A’ and ‘B’ messages

during 2009-10, 2010-11 and 2011-12 respectively. This was indicative of ineffective

maintenance of grid discipline by the Department.

Grid Discipline

4.2.28 For maintenance of Grid discipline the CERC takes up suo-motu petitions on over

drawal of power from the Grid at a lower frequency, putting the Grid at risk. Though the

Department violated Grid discipline, as explained in the preceding para, no penalty had

been levied on them so far. The details of grid discipline violated by the Department

during last three years are given below:


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The Department stated that the violations of Grid discipline were not deliberate but

happened spontaneously due to techno-administrative bottlenecks prevailing at the

moment due to technical infrastructure inadequacies. Hence, it had no means of keeping

records of such unintended Grid discipline violations.

It was, however, observed that such violations of grid discipline occurred in absence of an

effective integrated State Load Dispatch Centre for monitoring and ensuring the drawal of

power as per the schedule.

Backing Down Instructions (BDI)

4.2.29 When the frequency exceeds the ideal limit, i.e., a situation where generation is

more and drawal is less (at a frequency above 50 Hz), the SLDC takes action by issuing

Backing Down Instructions (BDI) to the Generators to reduce generation for ensuring

integrated Grid operations and achieving maximum economy and efficiency in the

operation of the power system in the State. Failure of the generators to follow SLDC

instructions would constitute violation of the Grid code and would entail penalties. It was

observed that as only two projects of 3 MW capacity were connected to the State Grid, as

against 80 MW to 110 MW power flow in the State, the Backing Down Instructions did

not have much impact on the generation of energy in the State.

Planning for Power Procurement

4.2.30 The Department draws up a Long Term Supply Plan taking into account the

contracted generation capacity, allocation from the Central Sector and future committed

projects. It also draws up a Day Ahead Plan for assessing its day to day power

requirement. The details of total requirement of the State, total power supplied and

shortage of power for the five years from 2007-08 to 2011-12 are given below:

It can be seen from the above that the percentage of shortage of power during 2007-12

was on increasing trend (excepting 2010-11) as it increased from 66.54 per cent (2007-

08) and 82.22 per cent (2010-11).

Including generation, short and long term purchases and drawl from Central Generating Stations.

SI. No. Year of Violation Number of Occasions of

Violation Penalty Levied (₹ in lakh)

1. 2009-10 313 Nil

2. 2010-11 378 Nil

3. 2011-12 356 Nil

(Figures in MUs)

Sl.No. Details 2007-08 2008-09 2009-10 2010-11 2011-12

1. Total Power Requirement 1000 1260 1300 1350 1400

2.

Total Power Supplied 334.60 346.79 177.06 260.68 248.99

3. Power Short Supplied 665.40 913.21 1122.94 1089.32 1151.01

4. Percentage of Shortage 66.54 72.48 86.38 80.69 82.22


131

The gap in demand-supply position also leads to variation between actual generation or

actual drawal and scheduled generation or scheduled drawal, which is accounted through

Unscheduled Interchange (UI) charges. UI charges are levied for the supply and

consumption of energy in variation from the pre-committed daily schedule. This charge

varies inversely with the system frequency prevailing at the time of supply/consumption.

It reflects the marginal value of energy at the time of supply. The levying of UI charges

acts as a commercial deterrent to curb over-drawals from CGS during low frequency

conditions.

The SLDC, is responsible for regularly carrying out necessary exercises for short and

long- term demand estimations for their respective States, to enable them to plan in

advance to meet their consumer load, without overdrawing from the grid. It was observed

that the Department had overdrawn power from the CGS during low frequency, which

ultimately resulted in high costs in the purchase of power by way of UI charges

amounting to ₹ 79.23 crore and an additional expenditure of₹ 0.46 crore towards interest

on overdue payment of UI charges as explained in Para 4.2.25 ibid.

Disaster Management

4.2.31 Disaster Management (DM) aims at mitigating the impact of a major breakdown

of the system and restoring it in the shortest possible time. As per the Best Practices, DM

should be set up by all power utilities for immediate restoration of the transmission

system in the event of a major failure. It is carried out by deploying Emergency

Restoration System, DG Sets, vehicles, fire-fighting equipment and skilled/specialized

manpower.

The Disaster Management Centre, National Load Dispatch Centre, New Delhi, will act as

a Central Control Room in case of any disaster. It was, however, observed that the

Department did not carry out any programme as part of DM during the period under

Audit.

Inadequate facilities for DM

4.2.32 The Department did not identify vulnerable installations for provision of metal

detectors, etc; and handing over security of the sites to the Central Industrial Security

Force to meet crises that may arise due to terrorist attacks, sabotage and bomb threats.

Further, during test check of three out of four S/Ss, it was observed that there were no

trained personnel deputed for security of the S/Ss. It was further noticed that the fire

extinguishers provided in the S/Ss were not recharged regularly, no sand buckets were

provided in the premises to meet fire emergencies, etc. This reflected that the DM system

of the Department needed to be strengthened.

Central Generating Stations


132

In the field of Extra High Voltage (EHV) grid operations and maintenance; the PGCIL

suggested the following measures-

creation of a separate Division/Sub-Division dedicated for grid O&M

arrangement of O&M Training for staff, and

regular patrolling of TLs in vulnerable locations.

It was, however, observed that none of the above suggestions were taken into

consideration by the Department so as to overcome the blackout situation due to system

failure as recently reported (April 2012) in three Districts of the State.

Thus, in absence of effective DM system, the transmission system of the Department was

exposed against the risk of blackout situation for longer duration in case of major

transmission system failure.

Energy Accounting and Audit

4.2.33 Energy accounting and audit is necessary to assess and reduce transmission

losses. Transmission losses are calculated from readings obtained from Generation to

Transmission (GT) and Transmission to Distribution (TD) Boundary metering points

through Meter Reading Instrument (MRI).

It was observed that the special energy meters installed in the Control Room of 132/33

KV S/S at Aalo to record the transmission of energy from Daporijo to Aalo through 132

KV TL and receipt of the same by the S/S at Aalo, were malfunctioning from the date of

taking over of the S/S from PGCIL. As a result, data on energy injected to the TL, energy

received by the S/S and transmission loss as per the records of the Department could not

be relied upon.

Further, commercial use of the TL and S/Ss in the State, viz., 132 KV S/C Ziro-

Daporijo-Aalo with 132/33 KV S/S at Daporijo & Aalo and 220 KV S/C Kathalguri-

Deomali with 220/132/33 KV S/S at Deomali commenced in February and May 2007

respectively. The Department, however, did not call for information on actual energy

received at the inlet point of the TLs and energy recorded and transmitted to the 33 KV

feeders by the S/Ss. The concerned Division also did not submit the required details to the

higher authorities of the Department for Energy Accounting and Audit, which would

have helped in controlling transmission losses. Thus, in the absence of proper metering

arrangements and authentic estimation of transmission loss, the energy accounting and

audit system of the Department was not effective.


133

Financial Management

4.2.34 Details of working results like revenue realisation, net surplus/loss and earnings

and cost per unit of transmission are given below:

It may be noticed from the table that T&D losses of the Department were at increasing

trend during five years from 2007-08 to 2011-12. The revenue from sale of power also

decreased from ₹ 109.37 crore (2007-08) to ₹ 79.94 crore (2011-12) during the said

period. As a result, the realisation per unit had decreased from ₹ 3.27 (2007-08) to ₹ 3.21

(2011-12).

Further, per unit cost of energy transmitted had increased by more than 3.5 times during

last four years from ₹ 1.43 (2008-09) to ₹ 5.23 (2011-12) due to significant increase in

the fixed and variable costs during the period. This had turned the per unit profit of₹ 1.97

(2008-09) to per unit loss of₹ 2.02 (2011-12) during the last four years ending 2011-12.

Including private generation. Due to non-availability of separate figures of T&D losses, combined T&D loss figures have been adopted.

(₹ in crore) SI. No.

Description 2007-08 2008-09 2009-10 2010-11 2011-12

1. Income

Revenue from Sale of Power 109.37 118.00 75.81 90.84 79.94

Other Income 0 0 0 0 0

Total Income 109.37 118.00 75.81 90.84 79.94

2. Transmission

(a) Installed Capacity (MVA) 189.30 189.30 189.30 189.30 189.30

(b) Power received from Generation Units (MUs)

514.89 526.61 404.67 534.60 486.70

(c) Power purchased (MUs) (including free power)

56.19 65.49 27.73 34.29 113.50

Total 571.08 592.10 432.40 568.89 600.20

(d) Loss in Transmission & Distribution (MUs)

236.47 245.31 255.34 308.21 351.21

Net Power Transmitted (b) + (c) - (d)

in MUs 334.61 346.79 177.06 260.68 248.99

3. Expenditure

(a) Fixed Costs

(i) Employees Cost NA 41.77 100.37 88.13 108.22

(ii) Administrative & General Expenses - - - - -

(iii) Depreciation - - - - -

(iv) Interest and Finance Charges - - - - -

Total fixed cost NA 41.77 100.37 88.13 108.22

(b) Variable Costs - Repairs &Maintenance

NA 7.69 16.86 20.00 22.00

(c) Total Cost 3 (a) + (b) - 49.46 117.23 108.13 130.22

4. Realisation (₹ per unit) 3.27 3.40 4.28 3.48 3.21

5. Fixed Cost (₹ per unit) - 1.21 5.67 3.38 4.35

6. Variable Cost (T per unit) - 0.22 0.95 0.77 0.88 7. Total Cost (₹ per unit) (5 + 6)

- 1.43 6.62 4.15 5.23

8. Contribution (₹ per unit) (4-6) - 3.18 3.33 2.71 2.33

9. Profit (+)/Loss(-) (4 -7) (T per unit)

- 1.97 (-)2.34 (-)0.67 (-)2.02

Note: The data presented in the above table include figures of revenue, expenditure, Transmission loss relating to the overall activities of the Department of Power


134

It was also evident from the above table that employee cost, repairs and maintenance cost

constituted the major elements of cost in 2011-12 which represented 83.11 per cent and

16.89 per cent of the cost in that year respectively. On the other hand, revenue from sale

of power was the only element of revenue in 2011-12.

Tariff Fixation

4.2.35 The financial viability of the Department depends upon generation of surplus

(including fair returns) from operations to finance their operating expenses and future

capital expansion programmes by adopting prudent financial practices. Revenue

collection is the main source for generation of funds for the Department; issues relating to

tariff are discussed hereunder.

Though the single member Arunachal Pradesh State Electricity Commission (APSERC)

was constituted (May 2010), the Chairman, took charge after eight months only in

February 2011. The APSERC notified (December.2011) the terms and conditions for

determination of tariff and formats for tariff filing - Regulations 2011. As per Tariff

Regulation 2011 issued by APSERC the tariff structure of the Department is subject to

annual revision. As per Tariff Regulation, the Department is required to file an Annual

Revenue Requirement (ARR) petition with APSERC within a stipulated date (viz. 30

November each year) for the revenue requirement of the next financial year. After

considering all suggestions and objections against the ARR, if any, from the public and

other stakeholders, the APSERC approves the application filed by the Department with

such modifications/conditions as may be deemed just and appropriate. Filing of the first

ARR by the Department was, however, still pending (December 2012).

The Department, however, had been increasing the tariff by five per cent each year

without filing any ARR and without approval of APSERC, in violation of the Tariff

Regulation 2011 issued by APSERC.

Material Management

4.2.36 The key functions in Material Management are formulation of an Inventory

Control Policy, procurement of materials and disposal of obsolete materials/equipment.

The Department had not formulated any procurement policy or an inventory control

mechanism for economical procurement and efficient control over inventory.

4.2.37 Scrutiny of the records of the Department revealed that it purchased the minimum

materials required for operation of the transmission system in the State, as it did not

undertake any major maintenance work of S/Ss and TLs during the period covered by

Audit. The Department also did not maintain any separate Stock Registers


135

to record transmission materials. During the field visit of two out of four S/Ss, it was

observed that surplus material worth ₹ 17 lakh was lying idle in the S/S at Deomali since

May 2003. This material was lying idle in the premises of the S/S for more than nine

years in absence of instructions/direction from the higher authorities on

utilisation/transfer of the material to deficit units.

Monitoring and Control

4.2.38 Performance of S/Ss and lines of 220/132 KV on various parameters like

Maximum and Minimum voltage levels, breakdowns, voltage profiles, etc;, should be

recorded/maintained as per the Grid Code standards, ft was noticed that year-wise

cumulative performance of S/Ss and lines were neither being maintained nor consolidated

for evaluation of their annual performance. The field Divisions of TL & S/S units also did

not compile monthly MIS reports, indicating performance of units and equipment

installed. Further, programmed overhaul of equipment like Circuit Breakers, On Load

Tap Changer (OLTC). operations, due dates of next oil change, dates of maintenance

works, performance of S/S batteries, performance of relays, cause-wise analysis of feeder

breakdowns, etc;, were also not carried out by the Department or field units. Other major

observations made in the S/Ss are explained in the following paragraphs.

4.2.38A It was observed that since commissioning, the Department never

tested/calibrated any of the protective relays of the 220 KV TL from Kothalguri to

Deomali, the 220/132/33 KV S/S at Deomali and the 132 KV TL from Ziro to Aalo via

Daporijo, including the 132/33 KV S/S at Aalo, which resulted in frequent tripping,

closing spring, manual charging, etc;. Further, the Air-conditioning system of the

receiving end Control Room of these S/Ss did not function for more than four years,

which had adversely affected the functioning of the relays, PLCC and other equipment in

the Control Room.

Conclusions

The Department prepared Power Master Plan, 2006 and Perspective Action Plan,

2007-22 keeping in view of the requirements upto 2022for construction of total 28 EHT

lines including eighteen 132 KV lines to be constructed during 2007-12. Out of said 18

lines, 9 lines were carried forward for construction during 2012-17. No action was

taken to construct balance nine lines except issuing of NIT for one line till December

2012.

The execution of transmission projects by the Department suffered with several

deficiencies mainly relating to project planning and preliminary works causing

revisions of DPRs after award of work, excess time taken in finalisation of tenders,

deficiencies in monitoring of works, etc. As a result, against the capacity addition of

five substations (110 MVA) and TLs (334.74 ckm) pertaining to previous plans and

carried forward for completion during 2007-12, none of the projects was


136

completed during 2007-12 except one 14.87 ckm line projectThe transmission and

distribution (T&D) losses during 2007-12 showed increasing trend and the Department

could not achieve the CEA norms in any of the five years.

Monitoring of grid discipline by the Department was ineffective in absence of adequate

monitoring equipment in the State Load Despatch Centre (SLDC) as well as non-

connectivity of the substations with the SLDC.

No Disaster Management programme was in place thereby exposing the system against

the risk of black out situations in case of major break down.

The Energy accounting and audit system of the Department was not effective in the

absence of proper metering arrangements and authentic estimation of transmission

loss.

The Department sustained huge financial losses on sale of energy mainly due to high

T&D losses and significant increase in costs of energy transmitted. Though the State

Electricity Regulatory Commission (SERC) became functional in February 2011, the

Department had been increasing the tariff annually by five per cent without filing

Annual Revenue Return and without approval of the SERC.

No scientific system was in place for management of inventory. Monitoring mechanism

of the Department was weak due to non-maintenance of necessary records on

performance of the transmission system.

Recommendations

Department should strictly adhered to the capacity additions envisaged under

the Power Master Plan, 2006 while implementing the long term plans for

development of transmission infrastructure.

Department should overcome the deficiencies in completing the preparatory and

other pre-award activities by adhering to the recommendations of the Task

Force for speedy completion of works.

Department should identify the factors responsible for high T&D losses through

proper metering and effecting energy accounting and take necessary corrective

action to restrict the losses within CEA norms.

The SLDC of the Department should be connected with all substations and

should be equipped with adequate monitoring facilities so as to maintain

effective Grid discipline.


137

An effective Disaster Management System should be established for restoration

of the transmission system in least possible time in case of major break down.

An effective mechanism should be put in place for filing of ARR within due dates

for revision of tariff.

A scientific system of Inventory Management needs to be put in place for proper

accounting and upkeep of stores. Specific instructions should be issued to field

offices for maintenance of complete records on performance of transmission

system and regular submission of MIS reports to higher authorities for prompt

remedial action on the discrepancies noticed.

AUDIT OF TRANSACTIONS

DEPARTMENT OF POWER

5.3 Unfruitful investment

The investment of ₹ 6.04 crore in construction of Sub-stations at Sagalee and Yupia

remained unutilised due to non-completion of related transmission/ feeder lines

(i) As part of Accelerated Rural Electrification Programme, Department of Power

(Department), Government of Arunachal Pradesh had prepared (March 2004) a Detailed

Project Report (DPR) for construction of substation (2X1.6 MV A, 33 KV) in Sagalee,

Papumpare district, located in the hub of un-electrified and de-electrified villages. The

substation was completed and commissioned (April 2007) at a cost of ₹ 1.77 crore.

For construction of related 33 KV Express line from Nirjuli to Pakke-Kesang via Sagalee,

the Department submitted (July 2004) a DPR with estimated project cost ₹ 6.39 crore for

approval of North Eastern Council (NEC). The proposed DPR was, however, rejected

with observation that the estimated project cost was too high. The Department restricted

the transmission line project up to Sagalee only at revised estimated cost of₹ 4.99 crore

and submitted (October 2006) revised DPR to NEC for approval. The Department did not

pursue the issue further with NEC for approval of the revised DPR. It was observed that

the project had been included (July 2012) as one of the power projects for funding by

NEC under the 12th Plan. The project was, however, still pending for approval by NEC

(November 2012).


138

It may be noticed from the above that while the substation at Sagalee had already been

completed (April 2007) long back, the related 33 KV Express line was still pending for

completion. In absence of 33 KV line connectivity with the source of power (33/11 KV

Sub-Station at Niijuli), the substation at Sagalee was tested and commissioned (April

2007) by operating the power transformers in series by cascading, where one of the

transformers acted as a step-up and other as a step-down transformer. Thus, due to non-

synchronisation of planning relating to construction of substation and related transmission

line, the substation at Sagalee remained idle since its commissioning (April 2007)

rendering the investment of ₹ 1.77 crore unfruitful.

The Department stated (August 2012) that in respect of 2x1.6 MVA 33/11 KV Sub-

Station (Sagalee), both the transformers were put into effective service for the benefit of

public at Itanagar. The construction of a 33KV line from Yupia to Sagalee was enlisted

by the Government in the priority list of 2012-13.

The reply is not acceptable as the deployment of the transformers at different location

(viz. Itanagar) was a temporary arrangement without achieving the intended benefit of the

project. Department should have appropriately synchronized the planning and execution

of Sagalee substation and the related transmission line so as to achieve the intended

benefits of the project and avoid idling of the Sagalee substation constructed at a huge

cost.

(ii) A similar 33/11KV, 2X3.15 MVA substation was constructed (March 2009) at Yupia

by the Department under Accelerated Power Development and Reforms Programme

(APDRP) at cost of ₹ 3.91 crore. The related 33 KV line connectivity to the proposed

substation at Yupia was already constructed (2007) under APDRP at cost of ₹ 0.36 crore.

It was observed that both the projects viz. substation at Yupia and 33Kv line connectivity

to the substation remained idle from the year of completion of the projects (2009) due to

non-completion of 11KV feeder line to the substation, which was essential for evacuation

of power from the substation.

Thus, the investment of ₹ 4.27 crore on the projects, therefore, remained unutilised since

2009 due to non-construction of related feeder line, which was indicative of the deficient

planning of the Department.

The Department replied (September 2012) that due to the work of road formation, cutting

of Trans-Arunachal Highway at Yupia, the 33KV line had to be shutdown. The shutdown

of the 33KV line was further extended by the Harmuti-Naharlagun Railway Project work

which necessitated the elimination of the overhead line at the crossing segment.

Reply is not acceptable as hindrances on account of Highway and Railway projects were

subsequent developments, which could have been avoided by undertaking all the works

relating to the project including the construction of feeder line simultaneously.


139

DEPARTMENT OF HYDRO POWER DEVELOPMENT

(Hydro Power Development Corporation of Arunachal Pradesh Limited)

5.4 Loss of interest on mobilization advance

Failure of the Company to ensure the recovery of the mobilisation advance in a time

bound manner contrary to CVC guidelines resulted in loss of interest of ₹ 0.61 core.

The Central Vigilance Commission (CVC) suggested (April 2007) that provision for the

mobilization advance should essentially be need based. It was further suggested that the

recovery of mobilization advance should be time based without linking it with progress of

work and an appropriate enabling provision in this regard should be clearly stipulated in

the tender document. This would ensure by way that even if the contractor was not

executing the work or executing it at a slow pace, the recovery of advance could

commence and scope for misuse of such advance could be reduced. It was, further

suggested (April 2007) that there should be a clear stipulation regarding interest to be

charged from the contractor on delayed recoveries either due to late submission of bills

by the contractor or for any other reason.

Hydro Power Development Corporation of Arunachal Pradesh Limited (company)

entered into an agreement with Nortech Power Project (P) Limited, Kolkata (contractor)

for execution of Small Hydel Project (SHP) at Zeminthang at a cost of' 25.96 crore

(February 2009). It was observed that an amount of ' 7.51 crore was advanced to the

contractor as mobilization advance in three installments during the period March 2009 to

February 2010 without any specific clause in the agreement regarding time bound

recovery of the mobilization advance and interest thereon. Contrary to the

suggestions/guidelines of CVC, the work was awarded (January 2009) on turnkey basis

for execution of Civil works, Planning & Research and Mechanical works including

planning, design, supply, erection, testing and commissioning of the project. As per the

agreement the project was scheduled to be completed in all respect by February 2011.

The contractor commenced the work (July 2009) after five months of the award of the

work and the same was still pending for completion (December 2012).

It was further observed that, in the absence of an enabling Clause for recovery of the

mobilization advance, the Company adjusted part of the advance (i.e. ₹ 6.61 crore)

against the Running Accounts Bills submitted by the contractor during July 2010 to

March 2012 and the balance amount of ₹ 0.90 Crore remained unrecovered as on 31

March 2012.

Thus, failure of the Company to adhere to the CVC Guidelines regarding time bound

recovery of the mobilization advance along with interest thereon, resulted in loss of

interest to the tune of ₹ 0.61 crore on the advance of ₹ 7.51 crore for the blocked up


140

periods upto March 2012 besides non-recovery of the advance to the extent of ₹ 0.90

crore with the contractor.

The Company needs to discourage the practice of extending the mobilisation advance to

the contractors. In case, however, it is essentially needed to extend the mobilisation

advance, the Company should ensure its recovery in a time bound manner without linking

it with the progress of work by incorporating an appropriate clause in the work agreement

as per CVC guidelines.

In reply, the Company while admitting the facts stated (September, 2012) that the clause

for recovery of mobilization advance had been overlooked due to nonavailability of legal

and financial professionals at the time of signing of agreement.

The matter was reported (May, 2011) to the Government; their replies had not been

received.

CHAPTER - V

REVENUE SECTOR

141

CHAPTER V

REVENUE SECTOR

GENERAL

4.1 Trend of revenue receipts

4.1.1 The tax and non-tax revenue raised by the Government of Arunachal Pradesh during the

year 2011-12, the State’s share of net proceeds of divisible Union taxes and duties assigned to

the State and grants-in-aid received from the Government of India during the year and the

corresponding figures for the preceding four years are mentioned below:

Table-4.1

The above table indicates that during the year 2011-12 the revenue raised by the State

Government (₹ 678.36 crore) was 12.34 per cent of the total revenue receipts against 13.74 per

cent in the preceding year. The balance 87.66 per cent of receipts during 2011-12 was from the

Government of India.

4.1.2 The following table presents the details of tax revenue raised during the period 2007-08

to 2011-12:

(₹ in crore)

SI. No.

Particulars 2007-08 2008-09 2009-10 2010-11 2011-12

1. Revenue raised by the State Government • Tax revenue 98.09 136.22 173.44 214.99 317.65

• Non-tax revenue 656.92 772.01 511.25 530.14 360.71

Total 755.01 908.23 684.69 745.13 678.36 2. Receipts from the Government of India

• Share of net proceeds of divisible

Union taxes and duties

437.87 462.09 475.40 720.18 838.97

• Grants-in-aid 1810.13 2485.64 3134.78 3956.78 3981.73

Total 2248.00 2947.73 3610.18 4676.96 4820.70 3.

Total revenue receipts of the State Government (1 and2)

3003.01 3855.96 4294.87 5422.09 5499.06

4. Percentage of 1 to3 25 24 15.94 13.74 12.34

Chapter-V: Revenue Sector

142

Table-4.2

The reasons for variations were neither stated nor on records.

4.1.3 The following table presents the details of the non-tax revenue raised during the period

2007-08 to 2011-12:

Table-4.3

(₹ in crore)

SI. No.

Head of

Revenue 2007-08 2008-09 2009-10 2010-11 2011-12

Percentage of

increase (+)/(-)

decrease in

2011-12 over

2010-11

1. Tax on Sales Trade

etc.

77.06 105.67 130.23 168.24 216.36 (+) 28.60

2. State Excise 11.60 16.60 23.79 29.74 37.63 (+) 26.53 3. Stamp Duty and Registration Fees

Stamps - Judicial

0.86 1.25 1.88 1.86 2.24 (+) 20.43 Stamps - Non-

Judicial

Registration Fees 4. Taxes and Duties

on Electricity

0.000006

5.

Taxes on Vehicles 6.42 7.76 13.07 11.76 12.41 (+) 5.53

6. Land Revenue 2.12 4.90 4.43 3.37 3.85 (+) 14.24

7. Others 0.03 0.04 0.04 0.02 45.16 (+) 225700

Total 98.09 136.22 173.44 214.99 317.65 (+) 47.75

(₹ in crore)

SI. No.

Head of revenue 2007-08 2008-09 2009-10 2010-11 2011-12

Percentage of increase (+)/(-)

decrease in 2011-12 over

2010-11

1. Interest Receipts 29.10 34.80 40.02 111.35 48.71 (-) 56.26

2. Dairy Development

0.03 0.03 0.02 0.02 0.04 (+)100

3. Other Non-tax Revenue

62.01 42.75 51.30 69.11 35.44 (-) 48.72

4. Forestry and Wild Life 8.57 12.50 9.99 12.22 36.76 (+) 200.82

5. Mining Receipts Non-Ferrous Mining & Metallurgical Industries

45.82 42.95 57.56 37.27 74.91 (+) 100.99

6. Miscellaneous General services (Including Lotteries)

45.56 20.26 11.39 1.62 0.10 (-) 93.83

7. Power 458.06 609.74 329.27 282.18 145.04 (-) 48.60


143

4.1.4 Response of the Departments towards audit

On the basis of inspections conducted in various departments of the State Government by sending

audit parties from the office of the Accountant General each year, all the irregularities noticed

during conduct of audit are discussed on the last day of audit with the Head of Office. During

discussion objections are dropped where possible and the objections which are of serious nature are

incorporated in Inspection Report and forwarded to the concerned office with request to furnish

reply within a specific period, objections of very serious nature are developed into Draft Audit

Paras (DAP) and forwarded to the Secretary of the related Department requesting acceptance of the

facts and figures and comments, if any, to be communicated within six weeks. In case no reply is

received the DAPs are included in the report of the CAG as Audit Paras.

Experience has been that Departmental Heads of the Government seldom furnish replies to the

Audit findings.

4.1.5 Failure of Senior Officials to enforce accountability and protect the interest of the

State Government.

The Accountant General, Arunachal Pradesh conducts periodical inspection of the Government

departments to test check the transactions and verify the maintenance of the important accounts and

other records as prescribed in the rules and procedures. These inspections are followed up with the

inspection reports (IRs) incorporating irregularities detected during the inspection and not settled

on the spot, which are issued to the heads of the offices inspected with copies to the next higher

authorities for taking prompt corrective action. The heads of the offices/Govemment are required to

promptly comply with the observations contained in the IRs, rectify the defects and omissions and

report compliance through initial reply to the AG within one month from the date of issue of the

IRs. Serious financial irregularities are reported to the heads of the departments and the

Government.

SI. No.

Head of revenue 2007-08 2008-09 2009-10 2010-11 2011-12

Percentage of increase (+)/(-)

decrease in 2011-12 over

2010-11

8. Medical and Public Health

0.37 0.28 0.23 0.35 0.43 (+) 22.86

9. Co-operation 0.40 1.03 0.73 0.70 0.77 (+) io

10. Public Works 1.59 2.56 4.28 3.02 9.00 (+) 198.01

11. Police 1.22 1.97 1.13 3.12 2.82 (-) 9.62 12. Other

Administrative services

4.19 3.13 5.33 9.18 6.69 (-) 27.12

Total 656.92 772.01 511.25 530.14 360.71 (-) 31.96

The reasons for variations were neither stated nor on records.


144

Inspection reports issued upto March 2012 disclosed that 939 Paragraphs involving ₹ 475.89 crore

relating to 343 IRs remained outstanding at the end of June 2012 as mentioned below along with

the corresponding figures for the preceding two years.

Table-4.4

The department-wise details of the IRs and audit observations outstanding as on 31 June 2012 and

the amounts involved are mentioned in Table 4.5.

Table-4.5

Even the first replies required to be received from the heads of offices within one month from the

date of issue of the IRs were not received for 132 IRs issued upto December 2011. This large

pendency of the IRs due to non-receipt of the replies is indicative of the fact that the heads of

offices and heads of the departments failed to initiate action to rectify the defects, omissions and

irregularities pointed out by the AG in the IRs.

March 2010 March 2011 March 2012

Number of outstanding IRs 331 338 343

Number of outstanding audit observations. 771 901 939

Amount involved (Rupees in Crore) 292.58 463.34 475.89

(₹ in crore)

SI. No


Nature of receipts Number of

outstanding IRs

Number of outstanding

audit observation

Money value involved

1. Finance Taxes/VAT on Sales, trade etc.

71 298 43.12

Entry tax

Electricity duty

Entertainments tax,

luxury tax, etc.

2. Excise State excise 74 141 42.44

3. Revenue Land revenue 32 100 103.77 4. Transport Taxes on motor

vehicles

46 79 17.57

5. Stamps & Registration

Stamps & Registration fees

6. Mines & Geology

Non-ferrous mining

and Metallurgical

industries

20 43 138.28

7. Forest & Environment

Forest & Wild life 96 265 108.03

8. Water resources

Water rates

9. State Lotteries

4 13

22.68

Total 343 939 475.89


145

It is recommended that the Government takes suitable steps to install an effective procedure

for prompt and appropriate response to audit observations as well as taking action against

officials/officers who fail to send replies to the IRs/paragraphs as per the prescribed time

schedules and also fail to take action to recover loss/outstanding demand in a time bound

manner.

4.1.6 Departmental audit committee meetings

In order to expedite settlement of the outstanding audit observations contained in the IRs,

departmental audit committee is constituted by the Government. These committees are chaired by

the Secretaries and attended by the officers of the department concerned and Accountant General

Office.

In order to expedite clearance of the outstanding audit observations, it is necessary that the audit

committees meet regularly. During the year 2010-11 and 2011-12, no audit committee meeting was

held, despite being requested. Thus, the concerned departments failed to take advantage of the audit

committee mechanism set up.

4.1.7 Response of the departments to the draft audit paragraphs

The draft paragraphs are forwarded to the Secretaries of the concerned departments through demi

official letters drawing their attention to the audit findings and requesting them to send their reply

within six weeks. The fact that the replies from the departments had not been received is invariably

indicated at the end of each paragraph included in the Audit Report.

Twenty three paragraphs proposed for inclusion in the Report for 2011-12 were forwarded to the

Secretaries of the respective departments during August 2012 and September 2012. Besides, the

Chief Secretary to the State Government was also requested to arrange for discussion of the issues

raised in the draft audit paragraphs for inclusion of the views/comments of the Government in the

Audit Report. Despite these efforts, no response was received on these draft paragraphs and

consequently these had to be included in the Report without the response of the Government.

During the current year 23 paragraphs have already been taken up with the Govt. Replies are still

awaited (February 2013).

4.1.8 Follow up on Audit Reports - summarised position

With a view to ensure accountability of the executive in respect of all the issues dealt with in

various Audit Reports, the Shakhder Committee, appointed to review the response of the State

Government to Audit Reports, recommended (March 1993), inter alia, that the concerned

departments of the State Government should without waiting for the receipt of any notice or call

from the Public Accounts Committee (PAC), submit suo motu replies on all paragraphs and

performance audits featuring in the Audit Reports within three months, and submit the action taken

notes (ATN) in


146

respect of the recommendations of the PAC within the dates as stipulated by the PAC or within a

period of six months whichever is earlier.

While accepting the recommendation (1996), the Government specified the time frame of three

months for submission of suo motu replies by the concerned departments. The PAC specified the

time frame for submission of ATN on their recommendations as one month up to 51st Report.

Reviews of the outstanding explanatory notes on the paragraphs included in the Report of the

Comptroller and Auditor General of India for the years from 1990-91 to 2010-11 revealed that the

concerned administrative departments were not complying with these instructions. The paras

outstanding up to the year 2007-08 of the audit report have been transferred to the State

Government for necessary action as per the decision taken in the ‘National Seminar on Legislative

Audit Interface’ held in July 2010. As of November 2012, suo motu explanatory notes on 58

paragraphs of these audit reports were outstanding from various departments.

Review of five reports of the PAC containing recommendations on 19 paragraphs in respect of

Forest, Finance and Excise Departments presented to the Legislature between September 2001 and

March 2006 revealed that the concerned departments had failed to submit ATN on the

recommendations made by the PAC as mentioned below:

Thus, due to the failure of the departments to comply with the instructions of the PAC, the

objective of ensuring accountability remained unfulfilled.

The Government may consider taking effective steps against the defaulting departments

including fixing responsibility to ensure accountability of the executive.

Table-4.6

Year of the

Audit Report

Paragraph numbers on which

recommendations were made

by the PAC but ATNs are

awaited

Number of PAC

report on which

recommendations

were made

Date of presentation of

the report of the PAC

to the State Legislature

1986-87 6.4, 6.6, 6.7 and 6.8 49th Report 3 March 2003

1991-92 6.4, 6.5 and 6.6 44th Report 21 September 2001

1994-95 6.4 44th Report 21 September 2001

1995-96 6.4, 6.5 and 6.6 46th Report 19 March 2002

6.7, 6.8 and 6.10 48th Report -do-

1996-97 6.7 46th Report -do

1997-98 6.3, 6.5 (i), (ii) 51st Report 21 March 2006

1998-99 6.3.6 (a) and 6.5 51st Report -do-


147

4.1.9 Position of the audit paragraphs raised by audit

The following is the position of paragraphs included in the ‘Revenue Receipts’ Chapter of the

Audit Reports relating to the Government of Arunachal Pradesh for last ten years in respect of the

State Excise Department:

Table-4.7

The summarised position of inspection reports issued during the last 10 years, paragraphs included

in these reports and their status as on March 2012 are given in the following table:

(₹in lakh)

SI. No. Year of Audit

Report

Paragraph No.

Caption of the paragraph Amount

1. 2001-2002 5.11 Misclassification of IMFL 162.16

2. -Do- 5.12 Evasion of excise duty 1.56

3. -Do- 5.13 Licence fee and penalty not levied 14.12 4. 2002-2003

6.12 Misclassification of IMFL due to delay in circulating

orders

90.54

5. -Do- 6.13 Loss of revenue due to sedimentation of IMFL in two

closed bonded warehouses

4.63

6. -Do- 6.14 Short-levy of licence fee and non-levy of penalty 4.09

7. 2003-04 5.11 Misclassification of IMFL 95.55

8. -Do- 5.12 Short-levy of penalty 5.20

9. 2004-05 5.12 Non- realisation of licence 37.44

10. 2005-06 6.6 Non- realisation of security deposit 8.25

11. -Do- 6.7 Loss of revenue 8.45

12. 2006-07 6.4 Non- realisation of security deposit 26.80

13. -Do- 6.5 Non- realisation of renewal fee and penalty 3.17

14. 2007-08 6.8 Non- realisation of renewal fee and penalty 10.04

15. -Do- 6.9 Non- realisation of security deposit 4.75

16. -Do- 6.10 Non-levy of penalty 4.40

17. 2008-09 4.2 Non-realisation of establishment charges 15.52

18. -Do- 4.3 Non-realisation of renewal fee and penalty 4.45


20. 2009-10 4.2 Non-realisation of renewal fee and penalty 27.17

21. -Do- 4.3 Non-realisation of establishment charges 11.28

22. -Do- 4.4 Non-realisation of renewal fee and penalty 8.87


24. -Do- 4.6 Short realisation of excise duty 5.35

25. 2010-11 4.2.16 Non-realisation of renewal fees an d penalty 12.27

26. -Do- 4.2.17 Non-realisation of security deposit 5.50

27. -Do- 4.2.18 Non-realisation of establishment charges 10.67

Total 594.83


148

Table-4.8

4.1.10 Recovery of accepted cases

Position of recovery of accepted cases is as under:

Table-4.9

Total recovery made as at the end of 2011-12 is not even one per cent of the accepted

money value.

It is recommended that the Government may consider prescribing more stringent

measures, including fixing of responsibility for recovery of dues in the accepted

cases in the interest of revenue.

(₹ in crore)

Year

Opening balance Addition during the

year

Clearance during the

year

Closing balance

during the year

IRs Para-

graphs Money Value

IRs Para-

graphs Money Value

IRs Para-

graphs Money Value

IRs Para-

graphs Money Value

2000-01 52 126 2.3 22 44 3.22 5 7 0.56 69 163 4.96

2001-02 69 163 4.96 28 46 10.27 4 8 0.65 93 201 14.58

2002-03 93 201 14.58 27 73 42.51 4 10 0.73 116 264 56.36

2003-04 116 264 56.36 27 91 16.44 6 13 0.32 137 342 72.48

2004-05 137 342 72.48 31 62 33.27 5 8 1.02 163 396 104.73

2005-06 163 396 104.73 33 63 45.3 2 3 1.1 194 456 148.93

2006-07 194 456 148.93 27 85 31.6 0 4 0.34 221 537 180.19

2007-08 221 537 180.19 25 63 39.1 0 1 0.2 246 599 219.09

2008-09 246 599 219.09 34 97 32.46 0 0 0 280 696 251.55

2009-10 280 696 251.55 33 75 41.03 0 0 0 313 771 292.58

2010-11 313 771 292.58 25 133 170.99 0 3 0.23 338 901 463.34

2011-12 338 901 463.34 7 44 12.60 2 6 0.05 343 939 475.89

No Audit Committee meetings were held during 2010-11 and 2011-12.

(₹ in crore)

Year of Audit Report Total money value

Accepted money

value Recovery made

2004-05 5.43 1.90 -

2005-06 8.69 6.91 0.06

2006-07 31.53 6.60 - 2007-08 112.38 51.25 -

2008-09 31.87 - - 2009-10 49.27 0.42 0.34

2010-11 10.56 0.53 0.10 Total 249.73 67.61 0.50


149

4.1.11 Action taken on the recommendations accepted by the departments/Government

The draft Performance Audit Reports conducted by the AG are forwarded to the

concerned departments/Government for their information with a request to furnish

replies. Such Performance Audit Reports are also discussed in an exit conference and

the Department’s/Govemment’s views are included while finalising them for the Audit

Reports.

The following table indicates the issues highlighted in the performance audits on the

Transport, Land Management and Environment & Forest Departments featured

in the last 10 Audit Reports including the recommendations and action taken by the

department on the recommendations accepted by it as well as the Government.

Table-4.10

During the period for 1999-2000, 2001-02 & 2003-04 three performance audits

pertaining to Motor Vehicles, Land Management and Environment & Forest

Departments were conducted which contained 7 recommendations. Out of 7

recommendations 2 were accepted. Position of the balance 5 recommendations is not

available.

It is recommended that the Government may put in place a monitoring

mechanism to watch and ensure timely action on the recommendations accepted

by the concerned departments in the best interest of the revenue of the State.

4.1.12 Audit planning

The unit offices under various departments are categorised into high, medium and low

risk units according to their revenue position, past trends of audit observations and

other paramete₹ The annual audit plan is prepared on the basis of risk analysis which

inter-alia include critical issues in Government revenues and tax administration i.e.

budget speech, white paper on State Finances, reports of the Finance Commission

(State and Central), recommendations of the tax reforms committee; statistical analysis

of the revenue earnings during the past 5 years, features of the tax administration,

audit coverage and its impact during past 5 years, etc.

Year of Audit

Report

Name of the Performance

Audit Report

No. of

Recommendations

No of the

recommendations

accepted

Status

1999-2000 Receipts under Taxes on

Motor Vehicle Nil Nil -

2001-2002 Assessment, levy and

collection of land revenue 2 2 -

2003-2004 Collection of forest receipts

in Arunachal Pradesh 5 Nil -

Total 7 2 -


150

During the year 2011-12, the audit universe comprised 133 auditable units, of which

16 units were planned and 13 were audited during the year 2011-12 which is 9.77 per

cent of the total auditable units.

Besides the compliance audit mentioned above, no performance audit was also taken

up to examine the efficacy of the tax administration of these receipts.

4.1.13 Position of local audit conducted during the year

Test check of the records of 13 units of Commercial Tax, State Excise, Motor

Vehicles, Forest and other departmental offices conducted during the year 2011-12

revealed under assessments/short levy/loss of revenue aggregating ₹ 11.69crore in 66

cases. The departments collected 0.004 crore in 1 case during 2011-12.

4.1.14 Results of Audit

Test check of the records of Sales Tax, Land Revenue, State Excise, Motor Vehicles

Tax, Forest and Other receipts conducted during 2011-12 revealed under assessment,

non/short levy, loss of revenue etc. of₹ 7.99 crore in 23 paragraphs. Replies in all the

cases had not been received (February 2013). These are discussed in succeeding

paragraphs from 4.2.1 to 4.2.23.

REVENUE RECEPIET

TAXATION DEPARTMENT

4.2.1 Concealment of Purchase

Failure of the Assessing Officer to detect import of taxable goods of ₹ 20.87 crore

led to evasion of tax of ₹ 64.07 lakh; besides, interest of ₹ 38.96 lakh and penalty

of ₹ 64.07 lakh was also leviable

Under the APGT Act, 2005, if a dealer has, in any way, evaded the liability to pay tax,

he is liable to pay penalty of a sum of ₹ 1 lakh or the amount of tax evaded, whichever

is greater, in addition to the tax payable by him.

Test check of the records of the Superintendent of Taxes (ST), Changlang, in May

2012 revealed that two registered dealers1 disclosed taxable purchase of₹ 4.85 crore

between April 2008 and March 2010 in the course of inter-State trade.

Cross verification of the assessment records of a dealer registered in Dimapur

(Nagaland), however, revealed that the dealer purchased Indian Made Foreign Liquor

(IMFL) and General Stores valued at ₹ 20.87 crore during the aforesaid period. These

1 25 Assam Rifles, Jairampur and 18 Assam Rifles, Jairampur


151

dealers filed self-assessed returns for 2008-09 and 2009-10, which were accepted by

the Department. Thus, the dealers concealed taxable purchase of ₹ 16.02 crore and

evaded the liability to pay tax of ₹ 64.07 lakh. Besides, interest of ₹ 38.96 lakh and

penalty of ₹ 64.07 lakh was also leviable.

The cases were reported to the Department/Govemment in August 2012; replies are

still awaited (March 2013).

4.2.2 Loss of revenue due to non-deduction of tax at source

A dealer concealed turnover of ₹ 29.92 lakh and evaded tax of ₹ 3.74 lakh as the

Purchasing Government Department failed to deduct tax at source, on which

interest of ₹ 3.44 lakh and penalty of ₹ 7.48 lakh was also leviable

The Government of Arunachal Pradesh, vide its Notification in April 2007, instructed

all Purchasing Government Departments to deduct tax at source at the time of making

payments to the suppliers. If any Government Department fails to deduct tax at source,

the Drawing and Disbursing Officer (DDO) is liable to pay a penalty not exceeding

twice the amount of tax deductible.

Test check of records of the Superintendent of Taxes, Pasighat, in March 2012

revealed that a registered dealer2 neither submitted any return nor paid any tax from

April 2005 till date. The Superintendent of Taxes did not issue any notice to the dealer

for submission of returns along with payment of admitted tax and the case records

were left unattended.

Cross verification of the Mission Director, National Rural Health Mission (NRHM),

Naharlagun, however, revealed that the dealer supplied medical equipment and other

taxable goods valued at ₹ 29.92 lakh to the Directorate, but the Purchasing

Government Department failed to deduct tax at source at the time of making payment

to the dealer. The Superintendent of Taxes also failed to detect the aforesaid supply of

taxable goods. Thus, due to non-deduction of tax at source, the dealer concealed the

entire turnover and evaded tax of ₹ 3.74 lakh. Besides, Interest of ₹ 3.44 lakh was also

payable by the dealer. The Department was also liable to pay a penalty of ₹ 7.48 lakh

due to failure to deduct tax.

The case was reported to the Department/Govemment in May 2012; reply is still

awaited (March 2013).

2M/s Mumme Enterprises, Pasighat


152

4.2.3 Non-registration of a dealer

A dealer registered under Section 7(2) of the CST Act, 1956 imported goods

valued at ₹ 21.77 lakh for resale, but did not pay revenue of ₹ 9.25 lakh as he was

not registered under the APGT Act, 2005

A dealer shall be registered under Section 7(2) of the CST Act, 1956, if he is liable to

pay tax under the Sales Tax laws of the State. As such, when a dealer is registered

under Section 7(2) of the CST Act, he shall also be registered under the Arunachal

Pradesh Goods Tax (APGT) Act, 2005 to enable him to pay tax on sale of taxable

goods imported from outside the State.

Scrutiny of assessment records of the Superintendent of Taxes, Aalo, in April 2012 •3

revealed that a dealer3 was registered under Section 7(2) of the CST Act to enable the

dealer to purchase taxable goods from outside the State for resale within the State. But

the dealer neither applied for registration under the APGT Act nor was he registered

compulsorily by the Superintendent of Taxes. The dealer imported taxable goods

valued at ₹ 21.77 lakh during 2005-06 from outside the State for resale within the

State. Since the dealer was not registered under the APGT Act, he did not pay any tax

on resale of the goods imported. Thus, failure on the part of the Superintendent of

Taxes to register the dealer under the APGT Act led to evasion of tax of ₹ 2.72 lakh by

the dealer. The dealer was also liable to pay Interest of ₹ 3.81 lakh and penalty of ₹

2.72 lakh for non-registration under the APGT Act, 2005.



4.2.4 Concealment of sale of cement

A dealer evaded revenue of ₹ 8.85 lakh due to concealment of sales turnover of

cement of ₹ 17.51 lakh, which he imported from outside the State at concessional

rates

Under Section 94 of the APGT Act, 2005, if any dealer deliberately furnishes a false

return, the Commissioner may accept from such person charged with such offence by

way of composition of offence, a sum not exceeding ₹ 5000 or double the amount of

tax, whichever is greater.

Test check of the assessment records of the Superintendent of Taxes, Naharlagun, in

September 2011 revealed that a dealer4 disclosed purchase of taxable goods of ₹ 13.95

lakh, procured locally between October and December 2006, in his quarterly return

3 Including private generation. 4M/s Liyum techno Traders, Naharlagur


153

submitted for the said period. However, the dealer did not disclose any inter-State

purchase of cement therein during the said period.

Cross verification of the assessment records of a dealer registered in the

Superintendent of Taxes, Jowai (Meghalaya), however, revealed that the dealer

purchased cement valued at ₹ 17.51 lakh during the aforesaid quarter by utilising one

declaration in Form ‘C’, which escaped notice of the Superintendent of Taxes. Thus,

the dealer, at the least, concealed turnover of sales of ₹ 17.51 lakh and evaded tax of ₹

2.19 lakh. Besides, Interest of ₹ 2.28 lakh and penalty of ₹ 4.38 lakh was also leviable.

The case was reported to the Department/Govemment in February 2012; reply is still


4.2.5 Non-levy of penalty due to non-submission of reports of audit of accounts

Penalty of ₹ 3.40 lakh was not imposed on nine dealers who failed to furnish

reports of audit of accounts

Section 50 of the Arunachal Pradesh Goods Tax (APGT) Act, 2005, states that if, in

respect of any particular year, the gross turnover of a dealer exceeds ₹ 50 lakh, such

dealer shall get his accounts in respect of such year audited by an Accountant within

six months from the end of that year, and obtain within that period, a report of such

audit in the prescribed form duly signed and verified by such Accountant and setting

forth such particulars as may be prescribed. A true copy of such report shall be

furnished by such dealer to the Commissioner within the date prescribed. Section

87(18) further states that if any such dealer fails to furnish a true copy of such report

within the time prescribed, the person shall be liable to pay by way of penalty an

amount equal to ₹ 10 thousand.

Test check of records of the Superintendent of Taxes, Tezu, in February 2012 revealed

that the gross turnover of nine dealers exceeded ₹ 50 lakh for the period from 2005-06

to 2010-11 and, therefore, they were required to submit 34 reports of audit of accounts

year-wise, within six months from the end of the respective year. It was, however,

noticed that none of the dealers submitted any report on audit of accounts till date of

audit. The Superintendent of Taxes also did not issue notices to the dealers to furnish

the reports. For non-submission of reports, a penalty of ₹ 10,000 for each year was

leviable but was not levied, which led to non-levy of penalty of ₹ 3.40 lakh.




154

4.2.6 Loss of revenue due to non-initiation of system of physical verification of

Declaration Forms

Two unregistered dealers imported goods valued at ₹72.78 lakh by utilising four

‘C’ Forms which were lost from the office of the Superintendent of Taxes, Tezu,

leading to loss of revenue of ₹ 23.37 lakh

The receipt and issue of ‘C’ Forms are accounted for in the Stock Register of the

Superintendent of Taxes in-charge of unit offices, showing opening balance, receipt,

issue and closing balance of the forms. The closing balance of ‘C’ Forms shall be

physically verified periodically by the Superintendent of Taxes. Further, the Central

Sales Tax (Arunachal Pradesh) Rules, 2005 provide that the Commissioner shall from

time to time publish in the Official Gazette, the particulars of the Declaration Forms in

respect of which a report of loss is received. The Commissioner may also, by

Notification, declare that Declaration Forms of a particular series, design or colour

shall be deemed as obsolete and invalid with effect from such date as may be specified

in the Notification. This provision is made to prevent misuse of ‘C’ Forms by

unscrupulous dealers.

Test check of records of the Superintendent of Taxes, Tezu, in February 2012 revealed

that 100 ‘C’ Forms5 were issued to the Superintendent of Taxes on 27 November 1996

by the Commissioner of Taxes, Itanagar. These forms were duly received by the

Superintendent of Taxes and accounted for in the Stock Register. During scrutiny of

the Receipt and Issue Register of ‘C’ Forms, the Superintendent of Taxes was

requested in February 2012 to furnish the whereabouts of the aforesaid forms. He

informed that the forms could not be traced and were missing from the office. Since

the physical verification of stock of forms was never carried out, the missing forms

could not be traced.

It was, however, noticed that two unregistered dealers6 utilised four of the aforesaid

missing forms and imported cement valued at ₹ 72.78 lakh between 2008-09 and

2009-10 from two dealers registered in Assam and concealed the entire turnover of

sale. This led to loss of₹ 23.37 lakh in the form of tax, interest and penalty. The loss

could have been avoided had the ST detected the missing forms earlier and cause the

Commissioner of Taxes to declare the forms obsolete.



5GG 161501 to GG 16160 61. M/s A.R. Enterprise, Tezu

2. M/s N.M. Traders, Namsai


155

4.2.7 Loss of revenue due to import of taxable goods by one unregistered dealer

One unregistered dealer fraudulently procured four ‘C’ Forms and concealed

purchase of taxable goods valued at ₹ 47.48 lakh to evade revenue of ₹ 14.84 lakh,

including penalty

Under Section 7 of the Central Sales Tax Act, 1956, any dealer liable to pay tax under

the Sales Tax Laws of the appropriate State shall possess a Certificate of Registration

granted by the Competent Authority. Further, Rule 12(6) of the CST (Return and

Turnover) Rules, 1957 states that Form ‘C’ shall be obtained by the purchasing dealer

in the State in which he is registered. The Assessing Authority is responsible for

proper custody and accountal of declaration forms. The Act further provides that

whoever falsely represents when purchasing goods in the course of Inter-State trade or

commerce that he is a registered dealer, shall be liable to pay penalty not exceeding

one and half times the tax due.

Cross verification of the assessment records of a dealer7 registered in Jorhat (Assam)

revealed that the dealer sold soft drinks valued at ₹ 47.48 lakh to a dealer registered

with the office of Superintendent of Taxes, Changlang, during 2009-10 against four

declarations in Form ‘C’, vide nos GG157421 to GG157423 and GG157425.

Test check of records of the Superintendent of Taxes, Changlang, in May 2012,

however, revealed that the dealer was neither registered nor were any of the aforesaid

forms issued to him. Further scrutiny revealed that the aforesaid ‘C’ Forms were

actually issued to the Superintendent of Taxes, Lohit District, Tezu, by the

Commissioner of Taxes, Arunachal Pradesh, in November 1996. The unregistered

dealer thereby procured the forms fraudulently and purchased taxable goods from

outside the State with the sole intention to evade tax. Thus, lapses of the Department

regarding proper custody and accountal of declaration forms led to loss of revenue of ₹

14.84 lakh including penalty.

The case was reported to the Department/Govemment in August 2012; reply is still


4.2.8 Evasion of tax by fraudulent means

A dealer concealed turnover of ₹ 1.17 crore and evaded tax of ₹ 14.59 lakh due to

non-surrender of four ‘C’ Forms at the time of cancellation of Registration

Certificate, for which interest of₹ 13.42 lakh and penalty of ₹ 14.59 lakh was also

payable

Under the Central Sales Tax (Arunachal Pradesh) Rules 2005, a registered dealer who

wishes to purchase goods from another registered dealer in the course of inter-State

trade at concessional rates shall issue a declaration in Form ‘C\ The purchasing

7M/s B.G. Enterprises, Changlang


156

dealer shall retain the counterfoil of the forms and the other two portions marked

‘Original’ and ‘Duplicate’ shall be handed over to the selling dealer of the other State.

Test check of assessment records of the Superintendent of Taxes, Aalo, in April 2012

revealed that a dealer8 disclosed taxable turnover of ₹ 5.16 lakh between April 2006

and September 2006 and paid the admitted tax. The dealer furnished counterfoils of all

the ‘C’ Forms issued to him, showing the amount of purchase made during 2005-06

and 2006-07 (upto September 2006). The Superintendent of Taxes accepted the

turnover disclosed and assessed the dealer accordingly. Thereafter, the dealer neither

submitted any return nor paid any tax. The area Inspector of Taxes was instructed in

April 2007 to inspect the business premises of the dealer and submit a report. The

Inspector of Taxes informed that the dealer had closed down his business and the

Superintendent of Taxes accordingly cancelled the Registration Certificate under both

the APGT and CST Acts with effect from October 2006. It was, however, noticed that

the dealer imported ‘detergent’ valued at ₹ 1.17 crore during 2007-08 from a

Guwahati-based dealer by utilising the four aforesaid ‘C’ Forms in respect of which

the counterfoil portion was furnished to the Superintendent of Taxes, showing the

purchase made during 2005-06 and 2006-07. Thus, the dealer furnished counterfoils of

‘C’ Forms showing incorrect particulars of purchases and retained the portion marked

‘Original’ and ‘Duplicate’, which could not be detected by the Superintendent of

Taxes at the time of cancellation of the Registration Certificate. The dealer

subsequently utilised the forms after cancellation of the Registration Certificate and

wilfully evaded tax of ₹ 14.59 lakh by fraudulent means. Besides, interest of ₹ 13.42

lakh and penalty of ₹ 14.59 lakh was also leviable for fraudulent use of ‘C’Forms.

Since the dealer had already closed down the business, the possibility of recovery of

the amount is remote.



4.2.9 Evasion of tax by Government Department

Turnover of at least ₹ 2.14 crore was concealed by a dealer when he imported

goods from outside the State at concessional rates for resale, resulting in evasion

of ₹ 56.85 lakh in the form of tax, interest and penalty

Under Section 8 (2) (b) (3) of the Central Sales Tax (CST) Act, 1956 a declaration in

Form ‘C’ can be utilised for purchase of goods in course of inter-State trade for:

i. resale;

ii. use in manufacture or processing of goods for resale;

iii. use in mining;

8M/s Durga stores, Along


157

iv. use in the generation or distribution of electricity or any other form of

power; and

v. use in the packing of goods for sale/resale.

Section 34 of the Arunachal Pradesh Goods Tax (APGT) Act, 2005, stipulates that if

any person has not furnished returns required under this Act by the prescribed date, the

Commissioner may assess to the best of his judgement.

Also, under Section 44(2) of the APGT Act, if a dealer defaults in making payment of

tax, he is liable to pay interest ranging between 12 to 24 per cent per annum for the

period of default on the amount of tax short-paid. In addition, the dealer is also liable

to pay penalty equal to the amount of the remaining unpaid tax.

Test check of the assessment records of the Superintendent of Taxes, Pasighat, in

March 2012 revealed that the Executive Engineer, Public Works Division, Pasighat

was registered under the CST Act with effect from 14 August 2008. The Division was

issued declaration Forms ‘C’ to purchase taxable goods like Cement, Iron and Steel,

Explosives, etc. from outside the State at concessional rates for resale within the State.

During the period from November 2007 to December 2009, the Division imported

taxable goods like Explosives, Bitumen, Bailey Bridges, etc; valued at ₹ 2.14 crore but

the dealer neither submitted any return showing the turnover of taxable goods nor paid

any tax during the aforesaid period. The Superintendent of Taxes also did not initiate

any action to assess the dealer on the ‘best judgement’ basis and recover the assessed

tax. Due to inaction of the Superintendent of Taxes, the Division concealed a turnover

of at least ₹ 2.14 crore and evaded tax of ₹ 22.62 lakh. Besides, interest of ₹ 11.61 lakh

and penalty of ₹ 22.62 lakh was also leviable but not levied.



4.2.10 Loss of revenue due to non-accountal and improper custody of

Declaration Forms

One unregistered dealer illegally procured six ‘C’ Forms from the Department

and utilised them in purchase of goods valued at ₹ 1.28 crore, which remained

undetected, resulting in loss of revenue of ₹ 40.08 lakh

Under the Central Sales Tax (Arunachal Pradesh) Rules, 2005, a registered dealer who

wishes to purchase goods from another registered dealer in the course of inter-State

trade shall obtain a blank declaration in Form ‘C’. The Form ‘C’ cannot be issued to

unregistered dealers. The Superintendent of Taxes is responsible for proper custody

and accountal of declaration forms.


158

Cross verification of records of a dealer registered in the Superintendent of Taxes,

Nongpoh (Meghalaya) revealed that a Naharlagun (Arunachal Pradesh) based

dealer9purchased generator sets valued at ₹ 1.28 crore during 2006-07 from the

Meghalaya based dealer and furnished six declarations in Form ‘C\ The

Superintendent of Taxes, Naharlagun, however, stated during test check of records of

his office in September 2011 that the dealer was not registered in his office. It was

further seen that out of the six ‘C’ Forms, one form vide No. GG111447 was issued on

August 1991 and Nos. GG115643, GG115649 and GG115650 were issued in February

1992 to the Superintendent of Taxes, Naharlagun, by the Commissioner of Taxes,

Itanagar. However, the Superintendent of Taxes failed to identify the dealer to whom

the forms were issued. Issues of the remaining two forms vide Nos. GG234452 and

GG234453 could not be ascertained from the Commissioner of Taxes as the Issue

Registers regarding issue of forms could not be made available. Thus, an unregistered

dealer irregularly obtained six ‘C’ Forms from the Department and purchased taxable

goods at concessional rates and concealed the entire purchase. Thus, due to non-

maintenance of records of receipt and issue of ‘C’ Forms there was loss of revenue of₹

40.08 lakh, including penalty.



4.2.11 Loss of revenue due to non-registration of Government Department as

dealer

Non-registration of a State Government Department resulted in non-realisation

of revenue of ₹ 16.81 lakh and penalty of ₹ one lakh on sale of sand and stone

Section 2 (1) (ii) read with Section 19 (i) of the Arunachal Pradesh Goods Tax

(APGT) Act, 2005 provides that any Government Department, if it sells, supplies or

distributes goods in the course of specified activities, falls within the definition of a

dealer and is required to be registered under the Act. As per Section 87 (4), if any

dealer fails to register himself, he is liable to pay a penalty of₹ 1,000 per day, subject

to a maximum of ₹ one lakh. In Arunachal Pradesh, sand and stone are taxable at the

rate of 12.5 per cent.

Test check of Permit Books for sale of sand and stone of the Assistant Mineral

Development Officer (AMDO), Changlang, in May 2012, revealed that the Mineral

Department sold sand and stone valued at ₹ 1.34 crore to 92 dealers within the State

between January 2009 and December 2011.

On cross verification with the records of the Taxation Department, Changlang, it was

found that neither the AMDO nor the purchasing dealers were registered. The

Assessing Officer (AO) also had not taken any action for their non-registration, as

9M/s Rajdhani Trading Agency, Naharlagun


159

required under the Act, which resulted in non-realisation of revenue of₹ 16.81 lakh

and penalty of₹ one lakh.

The case was reported to the Department/Govemment in August 2012; reply is still


4.2.12 Non-levy of penalty

Penalty of ₹ 4.80 lakh was not levied and realised from 14 dealers who did not

furnish returns within due date

Under the APGT Act, if a registered dealer fails to furnish any return by the due date,

he is liable to pay penalty of ₹ 100 per day of default subject to a maximum of ₹

10,000.

Scrutiny of records of the Superintendent of Taxes, Zone-I, Naharlagun, in August-

September 2011 revealed that 14 dealers did not furnish their returns for periods

between 2005-06 and 2010-11. For non-submission of the returns, the dealers were

liable to pay a penalty of ₹ 4.80 lakh. But the Assessing Officer did not take any action

to levy and realise the penalty. Failure of the Department to monitor such cases

resulted in non-levy of penalty of₹ 4.80 lakh.



4.2.13 Non-realisation of Entry Tax

A dealer imported taxable goods valued at ₹ 3.06 crore on which Entry Tax of ₹

38.20 lakh was leviable which was not levied and recovered

Section 3 (2) (b) of the APGT Act, 2005 states that every person who is an importer

shall be liable to pay tax on every entry effected by or for him on goods for

consumption, use or sale in local areas of Arunachal Pradesh, other than a non-taxable

import.

While auditing the records of the Superintendent of Taxes, Pasighat, in March 2012, it

was noticed that one importer11 imported taxable goods valued at ₹ 3.06 crore between

June 2009 and November 2011 from outside the State. The officer-in-charge of the

Border Facilitation Counter (BFC), however, allowed the goods to enter the State

without collecting Entry Tax at prescribed rates. On scrutiny of records of dealers

available with the Department, it was noticed that the dealer neither submitted any tax

return nor paid the due tax. Thus, import of goods without payment of Entry Tax led to

non-realisation of revenue of ₹ 38.20 lakh.

11GREF, Pasighat


160



STATE EXCISE DEPARTMENT

4.2.14 Non-realisation of Establishment Charges

Establishment charges of ₹ 13.84 lakh in respect of Excise officials posted in different

Bonded Warehouses were not realised

Rule 74 (a) of the Arunachal Pradesh Excise Rules, 1994 lays down that the Collector shall

employ such officers and establishment, as the Excise Commissioner may direct, to the charge

of a private warehouse. The licensee of the warehouse shall pay to the Government, in

advance, a fee in cash equivalent to the establishment cost of such officers for three months, as

the Excise Commissioner may fix. The cost of the establishment shall include pay and

allowances as well as leave salary and pension contributions.

Test check of the Register of Establishment Cost of the Superintendent of Excise, Tezu, in

February 2012, revealed that three Excise officials were posted in three different private

warehouses at Namsai and Mahadevpur. Establishment Charges for these three officials for the

period from June 2010 to December 2011 were ₹ 13.84 lakh. However, the Department neither

worked out the Establishment Charges nor raised any demand for payment of the same. The

private warehouses also did not make any payment towards Establishment Charges for the

aforesaid period. Failure of the Department to raise the demand led to non-realisation of

establishment charges of ₹ 13.84 lakh.

The case was reported to the Department/Govemment in May 2012; reply is still awaited

(March 2013).

4.2.15 Non-realisation of Renewal Fees and Penalty

Failure of the Department to initiate action against 7 Retail Licensees for nonrenewal of

licences led to non-realisation of Renewal Fees of ₹ 3.20 lakh and penalty of₹ 0.44 lakh

Under the provisions of the Arunachal Pradesh Excise Rules, 1994, a licence granted to a retail

vendor of IMFL shall expire after one year from the date of issue. Further, the Excise

Department had instructed in March 1996, that if a retail vendor fails to renew the licence on

payment of a Renewal Fee of₹ 40,000 within the stipulated date, he shall be liable to pay, in

addition to the Renewal Fee, a penalty of ₹ 50 per day for the period of default. In order to

monitor prompt payment of Licence Fees a register shall be maintained by the Superintendent

of Excise. The Superintendent of Excise


161

shall review the register periodically and issue notices to defaulters to pay the prescribed fee

and penalty.

Test check of records of the Superintendent of Excise, Tezu, in February 2012 revealed that

seven retail licences were to be renewed in the period between January 2011 and January

2012.

The licensees, however, did not renew their licences, as required under the Rules. The

Superintendent of Excise also did not take any action either to review the register or detect the

defaulters and realise the prescribed Renewal Fee of ₹ 3.20 lakh and penalty of₹ 0.44 lakh.

This resulted in non-realisation of revenue of ₹ 3.64 lakh.

The cases were reported to the Department/Govemment in May 2012; reply is still awaited

(March 2013).

4.2.16 Evasion of Tax

A dealer imported cement valued at ₹ 66.43 lakh by unauthorisedly utilising declaration

forms not issued to him and evaded Tax, Interest and Penalty of ₹ 26.57 lakh

Under Section 34 of the APGT Act, 2005, if a registered dealer fails to furnish returns within

the prescribed date, the Commissioner may assess the dealer to the best of his judgment.

Further, under Section 90(7) of the APGT Act, if a person wilfully attempts to evade payment

of tax, he is liable for rigorous imprisonment for a term of not less than six months but not

exceeding three years and with a fine. The Commissioner, under Section 94(1), may accept by

way of composition of offence, a sum not exceeding ₹ 5,000 or double the amount of tax

evaded, whichever is greater. In addition, the dealer, under Section 44(2), is liable to pay

interest upto 24 per cent per annum on the amount that remained unpaid for the entire period

of default.

Test check of records of the Superintendent of Taxes (ST), Zone-II, Itanagar, in May 2012,

revealed that a dealer11 neither submitted any return nor paid any tax since April 2005 till date.

The Superintendent of Taxes also did not ask the dealer to submit the returns and pay the

admitted tax.

Scrutiny of records of the Commissioner of Taxes (COT), Arunachal Pradesh, however,

revealed that the dealer purchased cement valued at ₹ 66.43 lakh from a Guwahati (Assam)

based dealer between April 2006 and March 2007, as communicated by the Commissioner of

Taxes, Assam, on 2nd June 2011. The dealer purchased the goods by utilising three Declaration

Forms12, which were issued to the

11 M/s Subansiri Trade & Agency, Itanagar 12 Form Nos: GG 175856, GG 175857 and GG 175871


162

Superintendent of Taxes, Papumpare District, in May 1993 by the Commissioner of Taxes,

Arunachal Pradesh. The COT, Arunachal Pradesh, accordingly asked the ST, Zone-II,

Itanagar, (formerly known as Superintendent of Taxes, Papumpare District) to verify the

purchase of cement by the dealer. The ST, Zone-II, Itanagar, on the contrary, informed the

COT, Arunachal Pradesh in August 2011 that the forms were neither received by his office nor

issued to the dealer and the case records were left unattended.

From the above, it is evident that the dealer unauthorisedly procured the forms issued to the

Superintendent of Taxes, Papumpare District, by the Commissioner of Taxes, Arunachal

Pradesh, and imported taxable goods to evade payment of tax, which escaped notice of the ST.

Since the dealer did not submit any return, the ST should have completed the assessment on

best-judgement basis and recover the tax on purchase of cement for ₹ 66.43 lakh. Thus, failure

on the part of the ST to complete the assessment as per provisions of the Act, led to evasion of

tax of ₹ 8.30 lakh. Besides, interest of₹ 9.96 lakh and penalty of₹ 8.30 lakh were also leviable.

The case was reported to the Department/Government in September 2012; reply is still

awaited. (March 2013).

4.2.17 Unchecked misuse of Declaration Forms by fraudulent dealer

A dealer imported taxable goods of ₹ 63.95 lakh and fraudulently evaded tax of at least ₹

10.75 lakh (including Interest and Penalty)

Under Section 90(7) of the APGT Act, 2005, if a person wilfully attempts to evade payment of

tax, he is liable for rigorous imprisonment for a term of not less than six months but not

exceeding three years and with a fine. The Commissioner, under Section 94(1), may accept by

way of composition of offence, a sum not exceeding ₹ 5,000 or double the amount of tax

evaded, whichever is greater.

Test check of records of the Superintendent of Taxes, Zone-II, Itanagar, in May 2012, 1 1

revealed that a dealer13 was registered under both the APGT and CST Acts and ‘F’ Forms

were issued to the dealer for import of goods into the State. The dealer had not furnished

Utilisation Statements of the forms till date (October 2012).

On cross verification of records of the aforesaid dealer with one Assam-based dealer, it was

found that the ‘F’ Forms issued to him were utilised in the name of an unregistered dealer and

taxable goods valued at ₹ 63.95 lakh were imported between April 2006 and March 2007. In

order to evade the liability to pay tax, the dealer imported the goods in the name of an

unregistered dealer and concealed the entire turnover of₹ 63.95 lakh. Such mis-utilisation of

‘F’ Forms resulted in evasion of tax

13 M/s S.K. Enterprise, Itanagar


163

of at least ₹ 2.56 lakh. Besides, interest of₹ 3.07 lakh and penalty of₹ 5.12 lakh by way of

composition of offence was also leviable.

The case was reported to the Department/Government in September 2012; reply is still

awaited. (March 2013).

4.2.18 Non-realisation of tax due to evasion by unregistered dealers and non-

deduction of tax at source by Government Departments

Non-registration of seven dealers by the Assessing Officer led to evasion of tax of ₹ 19.90

lakh and penalty of ₹ 7 lakh

Under Section 19 of the APGT Act, 2005, a dealer who is liable to pay tax shall not carry on

business unless he has been registered and possesses a Certificate of Registration. As per

Section 47(A) (2) of the APGT Act, deduction of tax at source (TDS) was required to be done

for sale or supply of taxable goods to the Government, failing which penalty not exceeding

twice the tax deductible was to be paid. Further, under Section 87(4) of the Act ibid, if any

unregistered dealer carries on business of taxable goods, he is liable to pay penalty not

exceeding ₹ one lakh.

On cross verification of registration records of the Superintendent of Taxes, Zone-II, Itanagar,

with those of two Departments14 of the State Government in May 2012, it was noticed that

seven unregistered dealers15 sold taxable goods valued at ₹ 1.65 crore between August 2007

and August 2008.

The dealers had neither applied for registration nor were they registered by the Assessing

Officer. Tax was also not deducted by the Purchasing Government Department at the time of

making payment. This resulted in evasion of tax of ₹ 19.90 lakh. Besides, penalty of ₹ 7 lakh

was also leviable.

The Departments were also liable to pay upto ₹ 39.80 lakh towards penalty for nondeduction

of tax at source as provided in the Act.

The cases were reported to the Department/Govemment in September 2012; replies are


4.2.19 Non-realisation of Security Deposit

Security deposit of ₹ 3.25 lakh was not realised from 13 retail licensees

The Excise Department, in its Notification of 23 March 2004, fixed with immediate effect, a

Security Deposit of ₹ 25,000 for retail licenses of Indian Made Foreign

14Mission Director (NRHM), Director of health Services, naharlagun and Executive Engineer, PWD, Capital Division-A 151.M/s Haniya Enterprise, 2. Gourichem Enterprises, 3. M/s India Earthmovers 7 trading Company, 4. M/s P.Y. Agency 5. M/s P.T. Traders, 6. M/s P.A. Agency, 7. M/s Popu Enterprise,


164

Liquor (IMFL). Accordingly, in June 2004, the Commissioner of Excise instructed all Deputy

Commissioners in the State to realise the prescribed Security Deposit at the time of renewal of

licenses.

Test check of records of the Superintendent of Excise, Daporijo, in September 2012, revealed

that 13 retail license holders who were issued licenses prior to the Notification, had not

deposited the Security Deposit at the time of renewal of their licenses. No action was initiated

by the Department despite specific instructions of the Commissioner of Excise. This resulted

in non-realisation of Security Deposit of ₹ 3.25 lakh.

The cases were reported to the Department/Government in October 2012; replies are still


4.2.20 Loss of Revenue

Failure of the Department to realise Licence Fee and Penalty before cancellation of three

licences led to loss of revenue of ₹ 4.16 lakh

Under the Arunachal Pradesh Excise Act, 1993, and Rules made there under, a license granted

for dealing in Indian Made Foreign Liquor (IMFL) shall remain valid for one year from the

date of issue. On expiry of its validity period, the licensee shall either return the license or get

it renewed on payment of the prescribed annual fee in advance. If he fails to get the license

renewed before the expiry of the validity period of the license, he shall be liable to pay penalty

in addition to the fee, at the rate of ₹ 50 per day for the period of default in payment of the fee.

Test check of records of the Superintendent of Excise, Tezu, in February 2012 revealed that

the licenses of three retail vendors of IMFL were valid up to different dates between August

2004 and December 2005. On expiry of the validity periods of the licenses, the proprietors

neither got their licenses renewed nor returned the same to the issuing authority. The

Department did not initiate any action either to realise the prescribed fee and penalty for delay

in renewal of the license or to take over the stock of IMFL for recovery of the dues. All the

three licenses were, however, cancelled between February 2007 and February 2008 without

realising the Government revenue though the Security Deposits of ₹ 0.75 lakh16 involved in

the cases were forfeited. This resulted in loss of revenue of ₹ 4.16 lakh.

16Unrealised renewal fee and fine :₹ 4.91 lakh

Less: Security deposit forfeited

in respect of three retail vendors

at the rate of ₹ 0.25 lakh in each case :₹ 0.75 lakh

Loss of Revenue : ₹ 4.16 lakh


165

The case was reported to the Department/Govemment in May 2012; reply is still awaited

(March 2013).

4.2.21 Non-realisation of Import Fee

Non-realisation of Import Fee of ₹ 12.94 lakh on import of ₹ 6.47 lakh LPL(London

Proof Litre) of spirit by a Bottling Plant

In November 1997, the Government of Arunachal Pradesh Taxation and Excise Department

notified that Import Fee (IF) at the rate of ₹ 2 per LPL is leviable on spirit imported into the

State. The State Government, however, exempted Distilleries/Bottling Plants from payment

ofthe Import Fee on import of spirit for manufacture of IMFL for a period of three years with

effect from 1st May 2001 to 30th April 2004.

During test check of records of the Commissioner of Excise (COE) in July 2012, it

was noticed that a bottling plant17 imported 6.47 lakh LPL of spirit from outside the State

between August 2011 and May 2012 for manufacture of IMFL. The bottling plant was liable

to pay Import Fee of ₹ 12.94 lakh, as the import of spirit was made after the expiry of

exempted period. But the COE failed to recover the Import Fee from the plant. This led to

non-realisation of Import Fee of ₹ 12.94 lakh.

The case was reported to the Department/Govemment in November 2012; reply is still awaited

(March 2013).

4.2.22 Short/non-realisation of initial Licence Fee and Security Deposit

Realisation of initial Licence Fee of ₹ 1.50 lakh instead of ₹ 5 lakh and nonrealisation of

Security Deposit of ₹ 0.75 lakh led to Government revenue of ₹4.25 lakh not being

realised

In its Notification of December 2009, the Government of Arunachal Pradesh Taxation and

Excise Department revised the initial License Fee of Bonded Warehouses from ₹ 1.50 lakh to

₹ 5 lakh with effect from 30th December 2009. Bonded Warehouses were further required to

deposit a security of ₹ 0.75 lakh as notified by the State Government in March 2004.

Scrutiny of records of the Commissioner of Excise (COE), Arunachal Pradesh, in July 2012

revealed that a Bonded Warehouse paid the initial License Fee of ₹ 1.50 lakh instead of the

revised rate of ₹ 5 lakh for the year 2011-12. In addition, Security Deposit of ₹ 0.75 lakh was

also not deposited by the Bonded Warehouse. The COE did not initiate any effective steps to

realise the balance amount of initial License Fee

17 M/s Dekrom Beverages, Holongi


166

of ₹ 3.50 lakh and Security Deposit of ₹ 0.75 lakh. Thus, laxity on the part of the COE led to

non-realisation of revenue of ₹ 4.25 lakh.

The case was reported to the Department/Govemment in November 2012; reply is still awaited

(March 2013).

LAND MANAGEMENT DEPARTMENT

4.2.23 Non-realisation of Land Revenue

Failure of the Department to assess and levy lease rent led to non-realisation of revenue

of ₹ 2.51 crore on 33,14, 644 sq. m. of land allotted to two companies

The Arunachal Pradesh Allotment of Government Land Rules, 1988 stipulate that the allottee

or lessee shall pay lease money annually at the rates fixed by the Government from time to

time. The Government of Arunachal Pradesh, vide Notification dated 10.02.2010, revised the

rates of annual lease rent for Public Sector Undertakings in the Capital Complex at ₹ 10 per

sq. m. Any allottee or lessee not paying any instalment of Land Revenue or part thereof within

the due date shall become a defaulter and interest at the rate of 15 percent per annum shall be

charged from the commercial allotment on unpaid amount of lease rent. Further, the

Government of Arunachal Pradesh, in its Notification of December 2005, fixed the annual

lease rent for businesses like Shopping Complexes, Hotels, Industries, etc. located in

District/Sub-divisional Headquarters at ₹ 3 per sq. m.

4.2.23.1 Test check of records of the Director of Land Management, Itanagar, in July

2011 revealed that an area of 16,95,844 sq. m of land located in Doimukh Circle under

Papumpare District (within Capital Complex) was handed over to M/s NEEPCO Ltd. in

November 2009 by the Deputy Commissioner, Papumpare District. Since NEEPCO is a Public

Sector Undertaking, they are liable to pay annual lease rent at the rate of ₹ 10 per sq. m.

However, the lease rent was neither assessed nor was any demand notice issued to the

Undertaking to pay the same. Delay on the part of the Department to assess lease rent led to

non-realisation of revenue of ₹ 1.70 crore calculated at the rate of ₹ 10 on 16, 95, 844 sq. m.

from November 2009 to October 2010. Besides, Interest of ₹ 25.44 lakh was also leviable for

non-payment of lease rent.

4.2.23.2 Test check of records of the Director of Land Management, Itanagar, in July

2011 revealed that 16,18,800 sq. m. of land under Nafra Administration Circle of West

Kameng District was handed over to M/s KSK Electricity Financing, Pvt. Ltd., Hyderabad, in

August 2010 by the District Administration. Further scrutiny revealed that the annual lease

rent as receivable from the above commercial


167

organisation was neither assessed nor was any demand notice issued by the Department. As a

result, lease rent of ₹ 48.56 lakh for the period from August 2010 to July 2011 remained

unrealised. Besides, Interest of ₹ 7.28 lakh was also leviable for non-payment of lease rent.

The case was reported the Department/Govemment in September 2011; reply is still awaited

(March 2013).

Itanagar (S.A.Bathew) The 29 April 2013 Accountant General, Arunachal Pradesh

Countersinged

New Delhi (Vinod Rai)

The 30 April 2013 Comptroller and Auditor General of India

APPENDICES

169

Appendix-2.2.1 (Reference: Paragraph 2.2.5.2 Page 45)

Details of Sample Districts, Blocks and GPs selected for test-check

Name of

District

Blocks GPs

Number of

Blocks of the

District

Name of the

selected Block

Number of

GPs under

the Block

Name of GPs selected

Total number

of selected

GPs An jaw 4

Hawai- Walong

13 Lautul, Mechong, Walong 3

Hayuliang 12

Amliang, Braigong, Suplang

GPC

3

Lower

Dibang

Valley

3 Roing- Koronu

34 Baek, Bolung II, Bolung III,

Intaya, Jia I, Jia III, Mayu II,

Meka I & Porbuk

9

Hunli-Desali 3 Elope, Hunli 2

Papumpare 5 Doimukh 19 Banderdewa, Bat, Ganga &

Karsangsa

4

Sagalee 26 Bobia, Bokoriang II, Kheel,

Kigi, Langpung & Rachtabio

6

West Siang 11 Aalo East 22 Doji Jelley, Kombo Pomte,

Logum Jini Lower, Logum Jini

Upper, Pakam I, Tarsu Mobuk

I

6

Basar 28 Dali, Disi, Galu/Sibe, Gori I,

Jime/Zirdo, Padi I,

Pegi/Komdak/Everest

7

Liromoba 10 Essi Goup, Pokto/Ligo/ Bopu,

Rise/Dordi/Leggi/ Bopu

3

Upper Subansiri

8 Baririjo 14 Koloriko, Labri-Laigi, Haji,

Romte-Gego

4

Daporijo 27

Sigin 11(G), Chikom V, Sigin

11(B), Bajia I, Kamte Baja,

Sigin 11(C) & Sigin 11(D)

7

Changlang 7 Naampong 12 Kobin, Rima, Pudak 3

Changlang 17 New Changlang, Thamyang,

Kangkho, Datkan, Longran,

Rangkatu

6

Appendices

170

Appendix - 2.2.2

(Ref: Para 2.2.6.6 Page49)

Statement showing Training imparted by SIRD to stake holders during 2008-09 to 2011-12 to all

Districts (state) and sample Districts:

Block level (Accountant, Engineers/Technical Assistants (TA), Programme Officer, and Computer

Assistants)

GP level (Gram Rojgar Sahayak) State/sample

districts 2008-09 2009-2010 2010-11 2011-12

Target actual Target Actual Target Actual Target Actual State 26 4 165 108 39 2 79 42 An jaw 4 4 19 2 39 2 39 2

Lower Dibag valley 0 0 0 0 0 0 0 0

Papumpare 0 0 0 0 0 0 0 0 West siang 0 0 0 0 0 0 0 0 Upper Subansiri 0 0 0 0 0 0 0 0 Changlang 0 0 0 0 0 0 0 0

State/sample

districts 2008-09 2009-2010 2010-11 2011-12

Target actual Target Actual Target Actual Target Actual

State

Accountants 12 22 15 8 7 2 11 5

Engineers/TA 20 30 17 16 8 3 11 7

Programme Officer 18 30 16 16 9 3 10 6

Computer Assistants 15 8 18 14 8 2 8 2 Anjaw

aw Accountants 2 2 2 2 2 2 2 2

Engineers/TA 3 3 3 3 3 3 1 3


Computer Assistants 2 2 2 2 2 2 2 2

Lower Dibag valley

Accountants 0 0 3 0 0 0 0 0

Engineers/TA 0 0 3 3 0 0 0 0



Papumpare


Engineers/TA 0 0 0 0 0 0 0 0



West siang

Accountants 0 12 0 0 0 0 0 0

Engineers/TA 0 12 0 0 0 0 0 0



Appendices

171

District Level — Works Managers & Technical Assistant (TA), IT Managers & Computer Assistant,

Accounts Manager, Training Coordinator, and coordinator for Social Audit and Grievance Redressal

State/sample

districts 2008-09 2009-2010 2010-11 2011-12

Target actual Target Actual Target Actual Target Actual

Upper Subansiri


Engineers/TA 0 0 0 0 0 0 0 0



Changlang


Engineers/TA 7 7 0 0 0 0 0 0



State/sample districts 2008-09 2009-2010 2010-11 2011-12

Target Actual Target Actual Target Actual Target Actual

State

Works Manager & Technical Assistant 2 4

2 1 2 0 2 0

IT Manager & Computer Assistant 4 4 1 0 1 0 1 0

Accounts Manager 4 5 2 1 1 1 0 1

Training Coordinator 3 4 5 1 4 0 4 0

Coordinator for Social Audit &

Grievance redressal 11 11

4 0

4 0

4 0

Anjaw

Works Manager & Technical Assistant 2 2 1 0 1 0 1 0

IT Manager & Computer Assistant 2 2 1 0 1 0 i 0




Grievance redressal

4 4 4 0

4 0

4 0

Lower DibangValley






Grievance redressal 0 0 0 0 0 0 0 0

Appendices

172



Papumpare







West Siang







Upper Subansiri







Changlang







PRI Functionaries



State 108 1167 672 172 1285 500 1285 500

Anjaw 82 82 500 0 1000 500 1000 500


Papumpare 0 0 0 0 0 0 0 0

West siang 0 1059 0 02 0 0 0 0

Upper Subansiri 0 0 0 0 0 0 0 0

Changlang 25 25 0 0 0 0 0 0

Appendices

173

Vigilance and Monitoring State/sample districts 2008-09 2009-2010 2010-11 2011-12


State 41 41 420 320 658 29 658 29

Anjaw 15 15 100 0 100 29 100 29


Papumpare 0 0 0 0 0 0 0 0

West siang 0 0 0 0 0 0 0 0

Upper Subansiri 0 0 0 0 0 0 0 0

Changlang 25 25 0 0 0 0 0 0 (Source: Data uploaded by SIRD)

Appendices

174

Appendix-2.2.3

(Ref: Paragraph 2.2.8.6; Page 57)

Delay in release of fund: (Amount: Rs in lakh)

Papum Pare:

Year Received from Gol Released to blocks

Date of

sanction Date of

receipt Amount Date of

release Amount Delay in

release* 2008-09 01.04.08 17.09.08 32.16 17.10.08 25.87 25 days

04.03.09 19.03.09 250.00 26.03.08 144.01 2 days 2009-10 22.09.09 28.10.09 68.37 04.11.09 64.27 2 days

19.02.10 13.03.10 451.00 17.03.10 430.52 No delay 2010-11

16.04.10 21.05.10 20.75 05.07.10 19.55 40 days

01.12.10 16.12.10 52.15 16.12.10 49.02 No delay

22.02.11 08.03.11 74.60 08.03.11 70.12 No delay

16.03.11 28.03.11 47.41 28.03.11 34.35 No delay 2011-12 01.04.11 19.04.11 698.28 19.04.11 654.50 No delay

30.01.12 22.02.12 635.39 29.02.12 425.54 2 days

29.03.12 31.03.12 135.00 31.03.12 135.00 No delay * In excess offive days from date of release by Government ofIndia

Delay in receipt of released fund from District by blocks as given below:

Year

Doimukh block Sagalee block

Date of

release by

District

Date of

receipt by

block

Amount Delay* Date of

release by

District

Date of

receipt by

block

Amount Delay*

2008-09 17.10.08 03.11.08 7.39 12 days 17.10.08 06.11.08 6.53 15 days

26.03.08 28.03.09 39.06 No delay 26.03.08 30.03.09 39.82 No delay

2009-10 04.11.09 10.11.09 18.37 2 days 04.11.09 04.11.09 16.23 No delay

17.03.10 18.03.10 100.00 No delay 17.03.10 20.03.10 100.00 No delay

2010-11 05.07.10 14.07.10 4.50 4 days 05.07.10 28.08.10 4.50 49 days

16.12.10 27.12.10 13.00 6 days 16.12.10 20.12.10 11.00 No delay

08.03.11 18.03.11 17.00 5 days 08.03.11 16.03.11 15.00 3 days

28.03.11 30.03.10 9.50 No delay 28.03.11 30.3.11 8.00 No delay

2011-12 19.04.11 06.05.11 193.17 12 days 19.04.11 13.05.11 175.40 19 days

29.02.12 22.03.12 106.60 18 days 29.02.12 20.03.12 91.08 15 days * In excess offive days from date of release by district authorities.

Appendices

175

Lower Dibang Valley:


Date of

sanction Date of



release*

2009-10 22.09.2009 02.12.2009 25.00 02.12.2009 23.49 No delay

12.03.2010 19.03.2010 180.00 19.03.2010 169.20 No delay

2010-11 16.04.2010 08.06.2010 5.28 10.07.2010 4.96 27 days

03.02.2011 21.02.2011 64.14 22.02.2011 60.29 No delay

09.03.2011 3.84 11 days

05.10.2010 2.16 221 days

2011-12 28.03.2011 04.04.2011 23.46 05.04.2011 23.46 No delay

03.08.2011 24.08.2011 145.21 20.10.2011 87.13 52 days

26.12.2011 29.38 119 days

22.03.2012 60.75 206 days

01.03.2012 22.03.2012 23.02 25.03.2012 14.97 No delay

30.03.2012 4.76 3 days * In excess offive days from date of release by Government ofIndia

Anjaw


Date of

sanction Date of



release*

2009-10 31.03.10 18.04.11 100.00 20.04.11 29.26 No delay

22.04.11 22.78 No delay

2010-11 20.01.11 05.02.11 110.33 22.02.11 11.58 12 days

18.02.11 14.86 08 days

2011-12 30.01.12 10.02.12 175.87 28.02.12

03.03.12

* In excess offive days from date of release by Government ofIndia

Appendices

176

West Siang


Date of

sanction Date of



release*

2009-10 22.09.09 04.11.09 54.03 06.11.09 39.02 No delay

21.12.09 1.30 42 days

19.03.10 8.48 130 days

2010-11 31.03.10 20.04.10 100.00 23.04.10 87.00 No delay

11.06.10 13.00 47 days

01.12.10 09.02.11 90.54 10.02.11 51.00 No delay

08.03.11 3.40 22 days

2011-12 26.03.11 12.05.11 32.46 13.05.11 18.27 No delay

24.05.11 1.21 7 days

02.08.11 7.94 77 days

30.08.11 1.58 105 days

28.07.11 29.09.11 94.41 30.09.11 53.21 No delay

12.10.11 3.54 8 days

06.01.12 3.27 94 days

06.02.12 6.60 125 days

23.01.12 10.02.12 49.25 13.02.12 27.80 No delay

28.02.12 1.85 13 days


Upper Subansari


Date of

sanction Date of



release*

2009-10 31.08.09 09.11.09 672.38 11.11.09 25.25 No delay

07.01.10 595.79 54 days

08.01.10 0.36 55 days

18.02.10 0.90 96 days

2010-11 12.03.10 27.04.10 142 28.04.10 94.17 No delay

01.12.10 10.02.11 225.41 15.03.11 236.24 28 days

2011-12 28.03.11 07.06.11 35 26.08.11 22.89 75 days

03.08.11 20.09.11 42.55 22.11.11 52.52 58 days

09.01.12 28.01.12 113.73 30.01.12 106.89 No delay

30.01.12 3.98 No delay

24.02.12 23.03.12 89.62 26.03.12 84.19 No delay

26.03.12 3.82 No delay

* In excess offive days from date of release by Government ofIndia

Appendices

111

Changlang

Year Received from GoI Released to blocks

Date of

sanction Date of


release Amount Delay in release*

2007-08 28.03.07 22.06.07 100.00 02.11.07 83.90 128 days

07.06.07 06.07.07 47.39

2008-09 04.04.08 23.05.08 288.33 21.08.08 166.07 85 days

05.01.09 12.03.09 68.95 13.03.09 39.72 No delay

2009-10 20.03.09 14.07.09 100.00 24.12.09 83.35 158 days

02.02.10 17.12 198 days

2010-11 16.04.10 03.08.10 21.37 NA 0.05

19.08.10 6.90 11 days

22.09.10 9.59 14 days

25.09.10 10.26 17 days

01.12.10 14.12.10 481.22 31.12.10 85.07 12 days

11.01.11 298.82 23 days

03.02.11 67.03 46 days

08.02.11 0.32 51 days

30.03.11 9.23 99 days

2011-12 13.04.11 09.05.11 91.73 1.06.11 3.24 18 days

NA 40.62

19.08.11 17.13 97 days

09.09.11 33.62 118 days

28.07.11 18.08.11 211.32 03.10.11 56.24 41 days

17.11.11 57.42 86 days

18.11.11 59.14 87 days

22.11.11 4.52 91 days

20.12.11 4.00 119 days

17.01.12 24.02.12 345.69 22.03.12 63.21 22 days


Appendices

178

Appendix—2.2.4

(Reference: Para 2.211.3 Page 64)

Year-wise physical and financial target and achievement attained during 2008-09 to 2011-12 in execution of component-wise works /activities under

the scheme in the State and Six test checked Districts

Year State/Selected Districts

Nature of completed activites and amount (₹ in lakh in bracket)

Rural connectivity

Flood

Control &

Protection

Water

Conservatio

n & Water

Harvesting

Drought Proofing

Micro Irrigation

Works

Irrigation

facility to Land

Owned by

SC/ST/BPL

Renovation of

Traditional Water bodies

Land Development

Any Other

activity

Approved by

MRD

Bharat Nirman Rajeev Gandhi

Sewa Kendra

2008-09 State 227

(565.90)

101

(387.43)

44

(95.36)

52

(167.32)

71

(154.59)

0(0) 26

(58.59)

18

(32.4)

13

(10.47)

0(0)

Anjaw 11

(NA)

0(0) 0(0) 0(0) 0(0) 0(0) 0(0) 0(0) 0(0) 0(0)

Lower Dibang Valley 22

(27.42) 6

(14.67)

0(0) 0(0) 6

(4.02)

0(0) 0(0) 0(0) 0(0) 0(0)

Papumpare 0(0) 0(0) 0(0) 0(0) 0(0) 0(0) 0(0) 0(0) 0(0) 0(0)

West Siang 6

(NA) 8

(NA) 11

(NA)

0(0) 0(0) 0(0) 0(0) 0(0) 3 (NA)

0(0)

Upper Subansiri 0(0) 0(0) 0(0) 0(0) 0(0) 0(0) 0(0) 0(0) 0(0) 0(0)

Changlang 70

(152.48) 18

(31.70) 19

(23.17) 40

(44.77) 13

(68.59)

0(0) 6

(3.99) 11

(22.10)

0(0) 0(0)

2009-10 State 340

(40349)

162

(196.86)

21

(23.36)

6

(11.76)

65

(67.85)

0(0) 3

(3.72)

21

(18.78)

53

(31.30)

0(0)

Anjaw 51

(14.34)

0(0) 0(0) 0(0) 0(0) 0(0) 0(0) 0(0) 0(0) 0(0)

Lower Dibang Valley 15

(1.96)

0(0) 3

(0.47)

0(0) 4

(0.06)

0(0) 0(0) 0(0) 0(0) 0(0)

Papumpare 0(0) 0(0) 0(0) 0(0) 0(0) 0(0) 0(0) 0(0) 0(0) 0(0)

West Siang 56

(76.15)

NA NA NA NA NA NA NA NA NA

Upper Subansiri NA NA NA NA NA NA NA NA NA NA

Appendices

179

Source: Departmental records.

Year

State/Selected Districts

Nature of completed activites and amount (₹ in lakh in bracket)

Rural connectivity

Flood

Control &

Protection

Water

Conservatio

n & Water

Harvesting

Drought Proofing

Micro Irrigation

Works

Irrigation

facility to Land

Owned by

SC/ST/BPL

Renovation of

Traditional Water bodies

Land Development

Any Other

activity

Approved by

MRD

Bharat Nirman Rajeev Gandhi

Sewa Kendra

Changlang 15

(34.48)

0(0) 0(0) 6

(11.76)

8

(17.69)

0(0) 1

(1.92)

4

(6.98)

0(0) 0(0)

2010-11 State 431

(301.31) 140

(111.07) 48

(15.26) 26

(17.04) 157

(47.33)

0(0) 15

(NA) 796

(23.99) 13

(NA)

0(0)

Anjaw 0(0) 0(0) 0(0) 0(0) 0(0) 0(0) 0(0) 0(0) 0(0) 0(0) Lower Dibang Valley

28 (49.27)

1 (3.29)

1 (7.15)

4 (17.04)

12 (16.10)

0(0) 0(0) 3 (2.9)

0(0) 0(0)

Papumpare 0(0) 0(0) 0(0) 0(0) 0(0) 0(0) 3 (NA)

0(0) 0(0) 0(0)

West Siang 2

(NA) 3

(NA) 5

(NA) 0(0) 0(0) 0(0)

2 (NA)

2 (NA)

0(0) 0(0)

Upper Subansiri 0(0) 0(0) 0(0) 0(0) 0(0) 0(0) 0(0) 0(0) 0(0) 0(0) Changlang 90

(NA) 15

(NA) 18

(NA) 22

(NA) 73

(NA) 0(0)

1 (NA)

22 (NA)

0(0) 0(0)

2011-12 State 750

(1300.43) 285

(514) 57

(105.5) 45

(80.69) 219

(379.92)

0(0) 2

(3.97) 130

(82.14) 88

(46.30)

0(0)

Anjaw 0(0) 0(0) 0(0) 0(0) 0(0) 0(0) 0(0) 0(0) 0(0) 0(0) Lower Dibang Valley

16 (NA)

2 (NA)

0(0) 4 (0)

3 (NA)

0(0) 0(0) 0(0) 0(0) 0(0)

Papumpare 60

(NA) 17

(NA) 5

(NA) 0(0) 29

(NA) 0(0) 0(0)

10 (NA)

2 (NA)

0(0)

West Siang 60

(NA) 7

(NA) 0(0) 0(0)

22 (NA)

0(0) 0(0) 33 (NA)

40 (NA)

0(0)

Upper Subansiri 0(0) 0(0) 0(0) 0(0) 0(0) 0(0) 0(0) 0(0) 0(0) 0(0) Changlang 84

(21642) 8

(16.34) 29

(69.38) 36

(80.17) 33

(62.83) 0(0) 0(0) 15

(35.34) 0(0) 0(0)

Appendices

180

Appendix - 3.1

(Ref: Para 3.2 Page 89)

Statement showing total amount of medical claim admitted vis-a-vis actual payment due and excess amount claimed and admitted.

Sl. No.

Name and designation of

the Claimants Voucher No and date

Total amount of

medical claim

admitted

Total amount

due for

payment

Excess amount

claimed and

admitted

Remarks

1 Smt. J.Chisi, Assistant 56 dt 05/03/2009 2,74,606 14,606 2,60,000 Cost of medicine claimed/admitted in excess

of actual cost of medicine

2 Shri M.Bam, Driver 57 dt 05/03/2009 3,08,504 16,504 2,92,000 Cost of medicine claimed/admitted in excess


3 Shri K.B.Chetry, Driver 58 dt 05/03/2009 and

1052 dt 31/03/2009

5,78,087 19,369 5,58,718 • Cost of medicine claimed/admitted in

excess of actual cost of medicine.

• Cost of medicine claimed/admitted but not prescribed by the doctor

• Laboratory charges not supported by cash

memo and doctor’s prescription

4 Smt. A. Yaying, LDC 64 dt 06/03/2009; 475

dt 26/03/09;

648 dt 27/03/2009 &

1053 dt 31/03/2009




memo and doctor’s prescription

• Claims not supported by cash memo.

5 Smt. J.Amo, Peon 65 dt 06/03/2009 1,80,469 7,869 1,72,600 Cost of medicine claimed/admitted in excess


6 Smt. A.Amo, Peon 476 dt 26/03/2009 2,75,490 11,127 2,64,363 • Cost of medicine claimed/admitted in



Appendices

181

SI. No.

Name and designation of

the Claimants Voucher No and date

Total amount of

medical claim

admitted

Total amount

due for

payment

Excess amount

claimed and

admitted

Remarks

7. Smt M. Buchi, UDC 552 dt 26/03/2009 &

685 dt 28/03/2009



• Cost of medicine claimed/admitted but not

prescribed by the doctor

• Claims not supported by cash memo


memo and doctor’s prescription.

8. Shri H. Bam, Peon 553 dt 26/03/2009 2,78,945 8,945 2,70,000 Cost of medicine claimed/admitted in excess

of actual cost of medicine.

9. Shri. H.C.Doimari, Driver 686 dt. 28/03/2009 3,16,555 10,555 3,06,000 • Cost of medicine claimed/admitted in




10. Shri D.Baniya, Driver 687 dt 28/03/2009 3,23,209 10,386 3,12,823 • Cost of medicine claimed/admitted in



11. Shri. B.Tanti, Peon 941 dt 31/03/2009 2,77,081 3,680 2,73,401 • Cost of medicine claimed/admitted in


• Cost of medicine claimed/admitted but not

prescribed by the doctor



Total 44,30,685 1,59,024 42,72,111

Appendices

182

APPENDIX -4.1

Statement showing particulars of up to date paid-up capital, loans outstanding and manpower as on 31 March 2012 in respect of Government

Companies(Referred to in paragraph 4.1.6, page No. 96.) (Figures in column 5 (a) to 6 (c) are Rupees in crore)

Paid-up-capital includes Share application money also.

* Loans outstanding at the close of 2011-12 represents long-term loan

only. Note: Figures are provisional as given by the Companies _______

SI.

No.

Sector & Name of the Company Name of the

Department Month and

year of incorpo

ration

Paid-up Capital* Loans outstanding* at the close of 2011-12 Debt equity

ratio for 2011-

12(Prev ious

year)

Manpower

(No. of

employees)

(as on

31.3.2012)

State Govern

ment

Central Govern

ment

Others Total State

Govern ment

Central Govern

ment

Others Total

(1) (2) (3) (4) 5(a) 5(b) 5(c) 5(d) 5(e) 6(a) 6(b) 6(c) (7) (8)

A. Working Government Companies

FINANCING

1. Arunachal Pradesh Industrial Development and Financial Corporation Limited

Industries Aug/78 2.15 2.15 7.24 1.45 8.69 4.04:1

(4.17:1) 20

Total of the Sector 2.15 - - 2.15 7.24 " 1.45 8.69

4.04:1 (4.17 :1) 20

MINING

2 Arunachal Pradesh Mineral Development and Trading Corporation Limited Geology and Mining

Mar/91 2.48 - - 2.48 - - - -

_

78

Total of the Sector 2.48 - - 2.48 - - - - - 78

FOREST 3. Arunachal Pradesh Forest Corporation Limited Forest Mar/77 4.50 - - 4.50 - - -

68

Total of the Sector 4.50 - - 4.50 - 68

POLICE 4. Arunachal Police Housing and Welfare

Corporation Limited Police Nov/05

0.02 - -

0.02 - - - -

- 30

Total of the Sector

0.02 - - 0.02 - -

- - 30

Appendices

183

SI.

No.

Sector & Name of the Company Name of the

Department Month and

year of incorpo

ration

Paid-up Capital* Loans outstanding* at the close of 2011-12 Debt equity

ratio for 2011-

12(Prev ious

year)

Manpower

(No. of

employees)

(as on

31.3.2012)

State Govern

ment

Central Govern

ment

Others Total State

Govern ment

Central Govern

ment

Others Total

(1) (2) (3) (4) 5(a) 5(b) 5(c) 5(d) 5(e) 6(a) 6(b) 6(c) (7) (8)

POWER 5

Hydro Power Development Corporation of Arunachal Pradesh Limited

Power Dec/06 10.00

2.45 12.45 " " "

6

Total of the Sector

10.00 - 2.45 12.45 - " - -

6

Total of A 19.15 " 2.45 21.60

7.24 " 1.45 8.69 0.40:1

(0.47:1) 204

B. Non-Working Government Companies

CEMENT

6. Parasuram Cements Limited Industries Jun/84 0.24 0.24 " 1.37 1.37

5.71:1

(9.79:1)

"

Total of the Sector 0.24 0.24 1.37 1.37 5.71:1

(9.79:1)

-

FRUIT PROCESSING 7. Arunachal Horticultural Processing Industries

Limited Industries May/82 0.19 - - 0.19 - - 1.36 1.36 7..15:1

(7.15:1)

0.19 - - 0.19 - - 1.36 1.36 7.15:1 (7.15:1)

-

Total of B 0.43 - - 0.43 - - 2.73 2.73 6.35:1 (8.27:1)

-

Grand Total (A+B) 19.58 " 2.45 22.03 7.24 4.18 11.42 0.52:1

(0.60:1)

204

Appendices

184

APPENDIX - 4.2

Summarised financial results of Government companies for the latest year for which their accounts were finalised as on 30 September 2012(Referred

to in paragraph4.1.14, page 99) (Figures in column 5 (a) to (6) and (8) to (10) are Rupees in crore)

Capital employed represents net fixed assets (including capital work-in-progress) plus working capital. For calculating total return on capital employed, interest on borrowed fund is added to net profit/ subtracted from the loss as disclosed in Profit and Loss account.

SI.

No

Sector &Name of the

Company Period of

Accounts Year in

which

finalised

Net Profit (+)/ Loss (-) Turnover Impact of

Accounts

Comments

Paid up

Capital Accumulated

Profit (+)/ Loss (-)

Capital employed

Return on

capital

employed

Percentage

return on

capital

employed Net Profit/ Loss

before Interest

& Depreciation

Interest Deprecia tion

Net Profit/ Loss

(1) (2) (3) (4) 5(a) 5(b) 5(c) 5(d) (6) (7) (8) (9) (10) (11) (12)

A. Working Government Companies

FINANCING 1. Arunachal Pradesh Industrial

Development and Financial

Corporation Limited 2010-11 2011-12 (-) 1.59 - 0.06 (-)1.65 3.57 - 2.15 (-) 15.05 13.11 (-) 1.65 -

Total of the Sector

(-) 1.59 - 0.06 (-) 1.65 3.57 - 2.15 (-) 15.05 13.11 (-) 1.65 -

MINING

2 Arunachal Pradesh Mineral

Development and Trading

Corporation Limited 1996-97 2012-13 (-) 0.20 - 0.03 (-) 0.23 0.07 - 1.73 (-) 0.89 0.83 (-) 0.23 -

Total of the Sector

(-) 0.20 - 0.03 (-) 0.23 0.07 - 1.73 (-) 0.89 0.83 (-) 0.23 -

FOREST

3. Arunachal Pradesh Forest

Corporation Limited 2002-03

2011-12 (04.78 0.15 0.27 (-)5.20 1.31 - 4.50 (-) 1.41 6..50 05.05 -

Total of the Sector

(-)04.78 0.15 0.27 (-) 5.20 1.31 - 4.50 (-) 1.41 6.50 o 5.05 -

POLICE 4.

Arunachal Police Housing and

Welfare Corporation Limited 2010-11 2012-13 1.48 - 0.15 1.33 0.87 - 0.02 4.73 4.90 1.33 27.14

Total of the Sector

1.48 - 0.15 1.33 0.87 - 0.02 4.73 4.90 1.33 27.14

POWER 5 Hydro Power Development

Corporation of Arunachal Pradesh

Ltd. 2009-10 2012-13 (-)0.12 - 0.05 (-)00.17 - - 5.00 (-) 0.16 27.67 (-) 0.17 -

Total of the Sector

(-)00.12 - 0.05 (-)00.17 - - 5.00 (-) 0.16 27.67 (-) 0.17 -

Appendices

185

SI.

No

Sector & Name of the

Company Period of

Accounts Year in

which

finalised

Net Profit (+)/ Loss (-) Turnover Impact of

Accounts

Comments*

Paid up

Capital Accumulated

Profit (+)/ Loss

(-)

Capital employed

Return on

capital

employed

Percentage

return on

capital

employed Net Profit/ Loss

before Interest

& Depreciation

Interest Deprecia tion

Net Profit/ Loss

(1) (2) (3) (4) 5(a) 5(b) 5(c) 5(d) (6) (7) (8) (9) (10) (11) (12)

Total of A

(-) 5.21 0.15 0.56 (-) 5.92 5.82 - 13.40 (-) 12.78 53.01 (-) 5.77 -

B. Non-Working Government Companies

CEMENT

6. Parasuram Cements Limited 1999-00 2012-13 (-)O.Ol - - (-)0.01 - - 0.24 (-) 2.64 0.75 00.01 -

Total of the Sector

(-) 0.01 - - (-) 0.01 - - 0.24 02.64 0.75 O0.oi -

FRUIT PROCESSING 7. Arunachal Horticultural

Processing Industries Limited

1997-98 2012-13 (-)O.ll - - (-)O.ll - - 0.19 (-) 0.88 (-) 0.55 (-)O.ll -

Total of the Sector

(-)O.ll - - (-)O.ll - - 0.19 (-) 0.88 (-) 0.55 (-)O.ll -

Total of B

(-) 0.12 - - (-) 0.12 - - 0.43 (-) 3.52 0.20 (-) 0.12 -

Grand Total (A+B)

(-) 5.33 0.15 0.56 (-) 6.04 5.82 - 13.83 (-) 16.30 53.21 (-) 5.89 -

Appendices

186

*

APPENDIX-4.3

Statement showing equity/loans, received out of budget, grants and subsidy received/receivable, guarantees received, waiver of dues, loans written off andLoans

converted into equity during the year and guarantee commitment at the end of March 2012

(Referred to in paragraph 4.1.9, page 97) (Figures in column 3 (a) to 6 (d) are Rupees in crore)

*Figure indicate guarantees outstanding at the end of the year

SI. No.

Sector &

Name of the

Company

Equity/ loa

out of bud

the'

ns received

»et during

rear

Grants and subsidy received during the year Guarantees received during the

year and commitment at the

end of the year"

Waiver of dues during the year

Equity Loans Central Government

State Government

Others Total Received Commitment* Loans

repayment

written off

Loans

converted

into equity Interest/ penal

interest waived

Total

(1) (2) 3(a) 3(b) 4(a) 4(b) 4(c) 4(d) 5(a) 5(b) 6(a) 6(b) 6(c) 6(d) A. Working Government Companies FINANCING

1. Arunachal Pradesh Industrial Development and Financial Corporation Limited

2.00

Total of the Sector - - - - - - 2.00 - - - -

Grand Total - - - - - - - 2.00 - - - -

Appendices

187

APPENDIX-4.4

Statement showing investments made by the State Government in the State Government companies by way of equity, loans, grants and others during the period which the accounts have not been finalized as on 30 September 2012.

(Reference: Paragraph 4.1.24, page 102) (Rupees in crore)

SI Name of the PSU Year upto which Paid up capital as per Investment made by State Government during the years for which accounts are No. Accounts finalized latest finalized in arrears

accounts Year Equity Loans

Grants Others (for repayment

of loan) A. Working Companies/Corporation

1. Sector : Mining 1996-97 1.73 1997-98 0.12 — — — Arunachal Pradesh Mineral 1998-99 0.10 — — —

Development and Trading 1999-00 0.18 - - -

Corporation Limited 2000-01 0.20 -- -- - 2002-03 0.05 -- -- -- 2005-06 — — 1.15 — 2006-07 -- 0.15 -- — 2007-08 -- -- -- -- 2008-09 0.05 -- -- --

Sector: Forest 2002-03 4.50 2003-04 -- -- -- 3.72 2. Arunachal Pradesh Forest 2004-05 -- -- -- 3.41

Corporation Limited 2005-06 - - 5.00 3.07 2006-07 — -- -- 2.73

2007-08 -- -- 0.85 2.40 3. Sector: Power 2009-10 2009-10 2.50 20.37 -- --

Hydro Power Development

5.00 2010-11 - -- 2.45 - Corporation of Arunachal Pradesh - Limited - Total of A

13.38 3.20 20.52 9.45 15.33

B. Non-Working Companies/Corporation 4. Sector: Cement Parasuram

Cements Limited 1999-00 0.24 2007-08 -- 1.36 -- --

Total of B 0.24

— 1.36 — -- Grand Total (A+B)

13.62 3.20 21.88 9.45 15.33

Appendices

188

Appendix - 4.5

(Reference: Paragraph 4.2.9, Page 111)

Details of 132/220/400 KV Transmission Lines proposed to be constructed during

2007-22

SI. No.

During 2007-12

(132 KV lines)

During 2012-17

(132 KV lines)

During 2012-22)

(220 KV lines)

1. Khuppi to Seppa Roing to Anini 1. KHEP to Itanagar

2. Along to Yingkiong Pasighat to Roing 2. Itanagar to SLHEP

3. Deomali to Khonsa Likhabali to Gerukamukh 3. SLHEP to Pasighat

4. Naharlagun to Seppa Pasighat to Niglok 4. Pasighat to Along

5. Tezu to Roing Khuppi to Tawang 5. Pasighat to Namsai

6. Namsai to Tezu Khonsa to Namsai 6. Deomali to Namsai

7. Nirjuli to Banderdewa Itanagar to Balipara (400 KV Lines)

8. Ziro to Sangram Niglok to Likhabali

9. Along to Reying Itanagar to Gohpur 1. KHEP to Kimin

10. Roing to Anini

2. Kimin to SLHEP

11. Pasighat to Roing

3. SLHEP to Pasighat

12. Likhabali to Gerukamukh

4. Pasighat to Namsai

13. Pasighat to Niglok

14. Khuppi to Tawang

15. Khonsa to Namsai

16. Itanagar to Balipara

17. Niglok to Likhabali

18. Itanagar to Gohpur

Appendices

189

Appendix - 4.6 (Reference: Paragraph 4.2.10, Page 113)

Statement showing voltage-wise capacity additions planned, actual additions and

shortfall from 2007-08 to 2011-12

SI. No. Description 2007-08 2008-09 2009-10 2010-11 2011-12

(A) Number of 220 KV Sub-Stations

i At the beginning of the year 1 1 1 1 1

ii Additions planned for the year - - - - -

iii Additions made during the year - - - - -

iv At the end of the year 1 1 1 1 1

V Shortage in addition (ii - iii) - - - - -

(B) 220 KV Transformers Capacity (MVA)

i At the beginning of the year 132.30 132.30 132.30 132.30 132.30



iv At the end of the year 132.30 132.30 132.30 132.30 132.30


€ 220 KV Lines (ckms)




iv At the end of the year 18.928 18.928 18.928 18.928 18.928


(D) Number of 132 KV Sub-Stations


ii Additions planned for the year 3 5 5 5 5



V Shortage in addition (ii - iii) 3 5 5 5 5

€ 132 KV Transformers Capacity (MVA)


ii Additions planned for the year* 60 110 110 110 110



V Shortage in addition (ii - iii) 60 110 110 110 110

(F) 132 KV Lines (CKMs)


ii Additions planned for the year** 185.74 334.74 319.87 319.87 319.87

iii Additions made during the year - 14.87 - - -

iv At the end of the year 168.90 183.77 183.77 183.77 183.77 V Shortage in addition (ii - iii) 185.74 319.87 319.87 319.87 319.87

includes spill over works of previous years **details of nine lines planned for construction during 2007-12 under Perspective Action Plan 2007-22 not available.

Hence, these figures as provided by the Department and included in the table are considered to be the additions planned

in previous live yearplans.

Appendices

190

Appendix-4.7

(Reference: Paragraph 4.2.12.2 , Page 118)

Details of LOAs issued in connection with construction of 132 KV Transmission Line from Aalo to Pasighat i/c 2 x 5 MV A S/S at Pasighat and Bay Extension at Aalo

SI. No.

Details of LOA Name of the

Contractor Name of the Work

Contract

Price

(₹ in lakh)

Scheduled

date of

completion

1. No. SE€II/NLCPR-4(A)/ 2006-

07/3301-304, dt. 21.03.07

Huma Enterprises &

Consultants Pvt. Ltd.

Supply & Erection of

Towers from AP 01-26 398.57 21.03.2008

2.

No. SE€II/NLCPR-4(A)/ 2007-

08/3732-36, dt. 25.03.08 Huma Enterprises &



Towers 199.28 21.03.2008

3.

No. SEEII/NLCPR-4 (P

ART)/2009-10/2098-102 dt.

05.10.09

Huma Enterprises &



109 Towers from AP

01-10, 50-147 & 171 2362.12 31.10.2010

4.

No. SE€II/NLCPR-4(A)/ 2006-

07/3297-300 dt. 21.03.07 M/s Trade &

Technology


Towers from AP 170-

147 368.92 21.03.2008

5. No. SEEII/NLCPR-10/ 2011-

12/2279-84 Dt. 30.11.11

M/s Trade &

Technology Projects

Ltd.

Stringing of 132 KV

ACSR Conductor &

Earth Wire( from Aalo

to Pasighat)

259.91 30.05.2012

6.

No. SE€II/NLCPR-10/ 2011-

12/1664-68 dt. 19.08.11 M/s Everest Infra

Energy Ltd.

Supply of Line

Materials 156.47 19.11.2011

8.

No. SE€II/NLCPR-10/ 2011-

12/1664-68 dt. 19.08.11 M/s Everest Infra

Energy Ltd.

Bay Extension at Aalo

S/S 156.47 19.11.2011

9.

No. SE€II/NLCPR-07/ 2009-10/

1491-95 dt. 18.08.09

M/s North East Cables

& Conductors, Pvt. Ltd.

c/o 132/33 KV, lx 5

MVA S/S at Pasighat 1185.41 18.04.2010

10. No. SE€II/NLCPR-4(B)/ 2007-

08/3516-19 dt. 15.03.08 M/s B. K. Enterprises

Supply of Line

Materials 99.98 15.09.08

11.

No. SE(E )II/NLCPR-10/

2010-11/2420-24

dt. 16.11.10


& Conductors, Pvt. Ltd.

Supply of ACSR

Conductor & GI Wire 73.89 16.02.2011

12.

No. SE(E )II/NLCPR-10/

2010-11/3094-98

dt. 07.02.11


& Conductors, Pvt. Ltd. Supply of Hardware

Fittings 10.49 07.05.2011

13

No. SE(E )II/NLCPR-04©/

2007-08/3664-67

dt. 20.03.08

M/s Nabum Tullon,

Niijuli

Supply of line

materials 99.84 20.09.2008

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