The Hindu Business Line : Kerala: Hefty price to do away with Vote on Account

THE State Government has decided to pay heed, notwithstanding a "princely consultancy fee" demanded, to multilateral lender Asian Development Bank (ADB) and do away with the Vote on Account system with effect from the State Budget 2004-05.

The decision has not come a day too soon, according to public finance experts here, who maintain that this is in fact a `vote for countless' number of representations to this effect internally made earlier by them free of cost, but not acted upon.

The decision is expected to do away with a familiar chore in which the State Government begins spending money on major items in the Budget only at the end of March each year. Spending in such hurry to avoid lapse of the Budget provision has often resulted in fraud and wastage of precious money amounting to hundreds of crores of rupees.

"This happens because the Budget is passed only months after the financial year begins. Kerala takes much longer than other State Governments to pass the Budget. All this is easily avoidable," says Mr K.P. Joseph, former accountant- general.

The Budget needs to be approved before the financial year begins and the departmental officers informed what amounts are available for them. Failure on this front would lead to delay in tendering, awarding contracts and procurement of supplies.

The ADB has now advised the State Government to get the Budget passed before the financial year begins in April. "It is the standard international practice and is certainly a good thing to do and will improve financial control. But what fails to jell is the paradox of the State Government having to spend crores to admittedly be told to do so, when there is an old file in the Finance Department containing exactly the same decision made some years back by the then government," Mr Joseph said. Only, this decision could not be implemented since political uncertainties intervened, leading to a change in Government.

The Indian Constitution does not either specify by what date the Central and State Governments should present the Annual Budget to the Legislature nor does fix a timeframe within which the latter should approve the same.

During the period of the British rule, the Budget always got approved before the financial year started, i.e., the first day of April. The 1919 and the 1935 Government of India Acts specifically provided for the approval of the Budget before the financial year began. This is the practice in all countries, except in Britain and a few countries of the Commonwealth.

According to experts, in a country like India where the monsoon starts two months after the financial year begins, it is not possible to take up construction work until after the rains dissipate - almost six months into the new financial year.

But the Constituent Assembly, in its wisdom, chose merely to copy the British parliamentary procedures, and adopted the practice of approving the Budget after the start of the financial year and provided for it in the Constitution. Till the time such Budget was approved, various departments in the Government were given advances to carry on their work. This procedure was called Vote on Account in Britain.

India copied it, but with disastrous consequences for financial management. The Constitution is silent about the period for which the Vote on Account should be obtained. In practice, it is two months in the Central Government and four months or more in some State Governments.

This delay in getting the Budget finally approved leads to heavy rush of expenditure in Government.

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