The Hindu Business Line : Ministry pulled up for drop in inspections of cos

THE Ministry of Company Affairs (MCA) came in for criticism from a Parliamentary panel for its casual approach towards inspection of companies. The Standing Committee on Finance (2004-05) report, which was tabled in the Lok Sabha on Friday, noted with concern that the number of inspections were coming down year-after-year.

"The Government has accounted for less inspections during 2003-04 which is miniscule when compared to the number of companies as on date," it stated. At present, there are 6,52,000 companies operating in the country. "As such not even one per cent of the companies are being inspected," the Committee observed.

During the last three years there has been a constant decline in the number of inspections conducted. In 2001-02, the Government had conducted 244 inspections, 2002-03 saw the number dip to 150, and in 2003-04 the number further shrunk to 109.

It was of the view that such a casual approach of the Government towards inspections has made the mockery of the system. Besides, the Government in this regard has not taken the earlier recommendations of the Committee seriously, it said.

The Committee also observed that it was given to understand that the Government does not have adequate staff for inspection and a cadre review exercise is being carried out in the Ministry, which will, on implementation augment the staff of inspection wing.

It expressed satisfaction that the Shardul Shroff Committee on outsourcing the routine inspections under Section 209A of the Companies Act has finalised its report, which is yet to be submitted to the Government. Section 209A empowers the Registrar of Companies and other officers of the Union Government to inspect the books of accounts and other records of the companies.

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