This article has been written by Golock Chandra Sahoo, pursuing an Executive Certificate Course in Corporate Governance for Directors and CXOs from SkillArbitrage and edited by Shashwat Kaushik.
It has been published by Rachit Garg.
Table of Contents
Introduction
The concept of local self-government (LSG) first came during the time (1880-84) of Lord Ripon, the then viceroy of British-ruled India, in line with a resolved Magna-Carta. That was one of his acts of reform and so he was called the father of LSG. Independent India brought LSG into its ambit in a new version, so to speak. LSG covers both urban and rural organisations currently and the state has all exclusive roles on LSGs being covered in our Constitution under state subject. The Central Government has no role in the way these organisations run and function. For a long time, since 1947, the central government had direct control over LSGs and it was felt that the transfer of funds, function and functionaries directly to the LSGs would perhaps allow them to function transparently with independence and ease without any interference from the state government. The Constitution was thus amended for this purpose. Under the 73rd and 74th Constitutional Amendments, states are to take steps to organise village panchayats or urban bodies and endow them with such powers and authorities as may be necessary to enable them to function as units of self-government. In spite of these amendments, in most of the states, LSGs are not provided with the requisite power to function as independent bodies. They are facing a multiplicity of problems and factual analysis of the cause and effect appropriately by any facet of audit may rectify the difficulties and deficiencies as discussed below.
Fund crunch
LSGs need to manage their finances so that outside funds in the form of grants and assistance are needed the least. That was the motto of the 73rd and 74th Constitutional Amendments. The resource is thus to be generated. Sources of fund generation need to be tapped in time so that revenue from those sources may be generated.
In urban organisations such as Municipalities NACs, or commissionerate zones, the main problem is non-assessment of holdings, trades, etc. Statistics indicate that in more than 60 percent of cases, assessments have not been commenced. Internal or external audits in all such cases ponder over why the assessments have not been done and what the lacunae are. At times, internal audits never attempt to find the real fault with a real official who has neglected making an assessment. But an external audit examines all pros and cons to opine on a better option to proceed with the assessment. Cross-verification of the allotment of houses by various government agencies with the units assessed in the urban bodies can detect how many were left un-assessed. Other constructions directly undertaken by individuals may be monitored by agencies approving plan estimates for the construction of the houses. So auditing can better address the cause of the pendency of the assessments and with the rectification of all these issues, revenue in terms of holding tax with a larger number of fresh assessments will naturally increase. Therefore, the fund crunch may go away. But it may be noticed that the LSGs very much neglect this area. A good number of officials function in such a manner that assessment of fresh cases gets either delayed or not commenced.
Unplanned urbanisation
Rome is not built in a day. Urban development that was planned in 1950 is naturally far deficient compared with the needed development in 2023. So it can be termed unplanned now. Vision documents not prepared initially may be the cause. The audit on this front needs to check the available vision documents to suggest certain issues that need to be covered. A vision document should cover a minimum 20 years period. The document is definitely not rigid, as it needs revamping at every moment as per the need. The migration of rural masses to cities or towns to earn a livelihood is at its peak now, which was not so in 1950. With a heavily rising population, the government finds difficulty tackling unemployment. At the village level, no adequate provision of work is there for which people are being forced to migrate to cities. So there should be constant, flexible planning to avert such issues to the best possible extent. LSGs should see that sufficient scope is there for the local mass to get awareness timely to have employment and in this context, allotments given by the Government of India under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) are noteworthy. Unemployment allowance is there under the Act in case a job applicant with an assigned job card is not provided work in a specified time frame. Thus, awareness of government schemes for the rural or urban masses may partially succeed in curbing the migration of rural masses to urban areas.
Excessive state control
Under the 73rd and 74th Constitutional Amendments, states are to take steps to organise village panchayats or urban bodies and endow them with such powers and authorities as may be necessary to enable them to function as units of self-government. States are therefore mandated to transfer all controls to the LSGs. An audit in such matters is to see the way the administration is affected. In planning, organising, directing, staffing, co-ordinating, reporting and budgeting, audit has its own say. Any deficiency at any point will result in management failure. An audit is supposed to find remedies, not exclusively fault-finding modalities. Something is not happening; the why concept here is most important and that part should be scrutinised with sincerity in the audit. An audit is to see and analyse the effects and prescribe ways of combating the bad causes. This can be achieved if communications from all fronts are kept open at all times. That means the auditee should be open to auditors. A patient should talk openly with the physician to get the best diagnostic treatment. A meagre failure may cause excessive drug abuse through excessive control for which LSGs, of course, have no possible remedy from their side. It is only government machinery that can address the cause. In any case, balanced control should be there—no excess or no less.
Multiplicity of agencies
Multiple agencies are working under LSG. Drainage, sewerage and sanitation are the agencies to work together for the effective functioning of the LSG. These three are there to perform in a manner to combat the health hazards of the people. Any deficiency with any agency affects the other. Similarly, the finance wing is linked with taxation covering assessment, tax demand realisation, etc. To make all linked agencies function efficiently, audits must adhere to the requisite knowledge. Generally, comments on delayed tender, tender fixing, delayed execution, improper estimation, delayed execution and revision of estimation during execution, employing the right manpower for sanitation, taxation or alike, help LSGs find their weak zone to be checked in detail for taking adequate measures for protection/precaution. Various yojanas form the burning point in the workings of LSG. We can take the case of Pradan Mantri Awas Yojana (PMAY). Under PMAY, one has to locate the eligibility first and then, based on the eligibility factors, beneficiaries are to be identified. Any deficiency in identifying beneficiaries will result in the greatest failure of the scheme. Often, it is noticed that political people get weighted in getting identified for their own benefit. This is highly irregular and against the spirit of the scheme. These points are to be kept in consideration.
Substandard personnel
LSGs are manned by substandard people who are mostly computer illiterate. In the present context, it is almost impossible to do work without a computer and these computer illiterates who were there in regular service can’t just be fired out. That is the greatest hurdle. They have to be trained in the best interest of the LSGs to cope with the work as per the needs of the moment. The same applies to audit mass. Audit people also can’t work without knowing the computer. Therefore, strengthening the internal audit of LSGs needs to train audit people on computers to manage their audit work efficiently.
Low level of people’s participation
LSGs can function satisfactorily with people’s participation and that is the requirement. But due to a lack of awareness or illiteracy, people fear participating. We can take a small example. Under the flagship programme of MGNREGA, job holders get paid by direct bank transfer (DBT). One can fairly argue that because of DBT, the payment is transparent. But this is not the reality. Middlemen do everything on behalf of the jobholder. The pass books are kept with them from the date of account opening, as are the withdrawal forms. Money can be drawn at the sweet will of the middlemen without the knowledge of the job-holder. So, to conclude, transparency is a myth. Audit people must have a basic idea of field facts.
Lack of conceptual clarity
It is a sorry state of affairs in many offices under LSGs that officers posted there lack conceptual clarity. An audit may find that in the execution of a work, the estimated cost and quantity of items tally with the execution pie to pie, even with the same record in the measurement book. An audit of the check may not find a single line objection. But the fact is that such works are just executed on paper and the entire fund has been misappropriated. To comment on this type of work, audits need to apply some other bent of mind as to when tendered, when estimated and awarded, how executed and in what period. When the work was measured, whether the estimate has been made in duplicate, etc. By linking all these points, an audit may possibly find some deviation to comment that the work has not been actually executed. To comment on a case like this audit really needs certain expertise.
Unscientific distribution of function
It may be seen that duty assignments are not present in many offices. Someone is flooded with work and others are having idle times. The auditor should insist on the duty charts. This may locate some idle manpower and the audit may observe them utilising them in some other offices where their job can most profitably be utilised.
Conclusion
The success of LSGs’ functioning depends upon generating revenues at their level with the least dependence on grants and government assistance. They can function effectively with functionaries at their level with little or no intervention from government machinery. The government should not utilise the services of the LSG personnel for purposes other than those for which they are meant. To use the personnel in an election or enumeration, much of the manpower is there without any LSG function. This very much affects the management of the LSGs. Strengthening LSGs will lead to a flourishing economy since LSGs function at the grass root level.
References
- http://racolblegal.com/local-self-government-in-india-problems-and-prospects/#:~:text=1
- https://core.ac.uk/download/pdf/95545.pdf
- https://www.mdpi.com/1660-4601/18/2/574
- https://www.bankbazaar.com/home-loan/pradhan-mantri-awas-yojana.html
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