The CAG report has taken a critical view of Narendra Modi government's financial accountability and budget management for non-spending and non-utilisation of allocated funds
The Comptroller and Auditor General (CAG) of India has criticised Gujarat Government for raising excess market borrowings than required for financing its deficit.
Highlighting lack of prudent fiscal management, the CAG, in its report for the year ended March 2012, tabled in the state Assembly, also revealed that Gujarat government had in its budget allocations, earmarked more funds for various departments and projects, which, however, it could not spend due to several reasons.
The report points out that Narendra Modi government's expenditure for 2011-12 stood at Rs80,222.83 crore against the approval of Rs85,743.21 crore, resulting in non-utilisation of funds worth Rs5,520.38 crore.
The CAG report stated that during 2011-12, the government raised excess market loans than required for financing its deficit, showing non-application of prudent fiscal management.
"As a result, the cash balance of the state as on March 2012 stood at Rs18,632 crore, about 24% higher than that of previous year. The cost of holding surplus cash balances is high. Since maintaining huge idle cash balance is not prudent cash management, appropriate steps should be taken for spending on capital projects for creation of assets," it said in the report.
It has also highlighted the steady increase of the outstanding fiscal liabilities.
"The outstanding fiscal liabilities have shown steady increase over the years, from Rs96,452 crore at the end of 2007-08 to Rs1.51 lakh crore at the end of 2011-12," the CAG report said.
The report has also taken a critical view of government's financial accountability and budget management for non-spending and non-utilisation of allocated funds.
Pointing out the savings in grant amount of Rs501.70 crore pertaining to non-residential buildings of roads and buildings department, the report says, "it was on account of higher provision for new works, time consuming tender procedures, delay in preparation of estimates and non-allotment of land."
This is the second of a four-part series on the difficulties of an doing business in India and how India loses out by forcing small businesses to pay bribes, causing them to lose out to multinationals. PS Deodhar talks about the evolution of his company and how his honest and upright approach affected the company
My product development range covered a wide spectrum of industrial products. The only exception for designing and producing a consumer product was the 14" black and white television for rural India, when I was the Chairman of ET&T, and it was a great success. In 1986, ET&T constituted to around 40% of 14" black & white TV market in the country.
After a gap of several years in Delhi, I was again on the shop floor adding further products to our basket. APLAB therefore grew horizontally rather than vertically. These wide range of products resulted in APLAB having five product divisions, each controlled by a production head and his team. The divisions were: DC power sources, test and measurement equipment, high power UPS systems, banking transaction automation and retail fuel dispensers. A big chunk of profits went into new product development. During all these years of technological excitement, I had many colleagues. But there is one who has been with me all along these five decades—Liladhar Sannabhadti—whose deep insight into the physics of power conversion has added technological innovations. When formally I retired from APLAB in 2009, we had over 800 standard products developed collectively in all the segments. Indeed APLAB's potential for a few thousand crore is not just a fantasy! Each vertical essentially had a potential to grow many times in size.
The story of developing solid state ringers and tone for the Indian Telephone Industries for telephone exchanges, signal generators and microwave frequency counters for the military and Department of Telecommunications (DoT) was very similar—develop, get approved and supply.
APLAB had almost no competition in India. In 1975, we supported all of DoT's Satellite Earth Stations with several High Power UPS Systems in each location. For years, these systems fed a continuous supply of power without a single failure reported. The story with DoT's Telecom Research Centre (TRC) was no different. All the DC power modules for India's first digital exchange developed by the TRC were delivered by APLAB.
Exporting to Europe was not just a business, but a continuous challenge to make good looking rugged products that deliver stringent performance and at same time meet European safety and environmental regulatory specifications. The two of the German companies we first met continue to be our customers even today!
Once APLAB had scaled several technological thresholds, we were ready to offer products to international customers. So we displayed our products at the Hannover Fair in Germany, in 1972. We were probably the first company to do so. Europeans who passed by threw curious glances at me. In the end, we did find a German buyer. Our first supply turned out to be a disaster! The buyer said that our products were technically sound but they couldn’t be marketed. So, together, we redid the packaging and underwent compliance tests according to our suppliers’ specifications.
However, the best thing that happened in Hannover that the beginning a long and close comradeship with Peter Vizenetz from Putzbrunn near Munich. For four decades, we shared mutual trust and friendship like no one else. Today, our friendship is an integral part of our extended families in India and Germany. Our mindsets are alike and together we have shared some great excitements. And as one might guess, almost all our ventures have been commercial failures! However, we believed that they were good experiments to learn from and worth the price and effort.
Even today, I develop products for the German and US markets in my private R&D lab located in SEEPZ, Mumbai.
APLAB had a steady profitable organic growth. Young men, engineers and workers together inculcated a work culture that delivered the top quality products to our customers. Often, customers waited with patience and we were indeed being indulged. All was good until I left APLAB to work for the government. I was away from APLAB for over eight years. I hindered APLAB’s growth by advising Subhash and his sales team not to participate in any government business, in which I was even remotely involved. This was how my sound ethics were stunting the company’s development.
It all started in when I was sucked away from APLAB by Rajiv Gandhi, who had been a close friend since 1975. His brother, Sanjay, had died in an air crash in 1980, and I found myself spending more time in New Delhi. In 1984, I left the management of APLAB in the able hands of Subhash Joshi, who was well-groomed within the management ranks.
However, APLAB's growth was greatly hurt, but I had no option. I had decided to work for the government, but had pledged to myself that I would not indulge in any unethical actions. No hospitality from anyone who gained out of my position in the government. I even refused government salary by accepting a token that I had to. It gave me a nice feeling. I was free to call a spade a spade.
In the third part of the series, he will write about how corruption affects small and medium enterprises. Stay tuned.
Read the first part of the series
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