Financial Mismanagement and Lack of Development in Assam

Foreword 3
The Wonder that was Vishnu Chanakya Kautilya 5
About us 6
Overview of Economic, Social & Fiscal Progression 26
Quality of life indicators 31
Budget Management: Receipts 32
Budget Management: Expenditure 39
Delay in submission of accounts 53
Autonomous Councils 55
Accuracy of accounts 57
Outstanding suspense balance 59
Outstanding Advanced Contingent Bills 61
Treasury inspection 63
Utilization of grants 64
Diversion of Funds 65
Carbon Footprint 66
Presentation 67
List of Slides 68

2012-13 marked the centennial of this office. It also
marked the early years of the second millennium of
Kautilya’s Arthaśāstra, the ancient Mauryan treatise on
statecraft, economic policy and military strategy.
Kautilya devoted a large part of Book-II of the
Arthaśāstra to financial administration of the Mauryan
Empire. In the process, he also laid the foundation of
many fundamental facets of accounts, audit,
governance, accountability and vigilance. Two millennia
later, financial administration in India owes much to the
Mauryan statesman, at least in spirit and principle.
In our 101st year, as successor office to the erstwhile and
venerable Comptroller of Assam (est. 1912-13) and
drawing inspiration from the Arthaśāstra’s leit motif of
the import of accounts, this monograph is our maiden
effort in creating an empirical semi-longitudinal macro-
level decadal (2002-03 to 2011-12) study of the finances
of the Govt. of Assam. Originating in a sketchy
slideshow prepared for the then Dy. Comptroller &
Auditor General (Govt. Accounts) in Jul-Aug, 2012, the
enclosed presentation went through several hundred
additions and modifications before its presentation.
However, upon an informal request received from the
Govt. of Assam, the scope of this presentation was
widened further and finally presented to the Hon’ble
Chief & Finance Minister of Assam, Shri Tarun Gogoi,
Shri PP Verma, then Chief Secretary, and about fifty
other senior officers, of the rank of Addl. Chief
Secretary/Pr. Secretary/Secretary at the State’s Dispur
HQ on 31st Jul, 2013, in pursuance of Dy. CAG (GA)’s
directive to hold exit/entry conferences with the
respective state governments upon their annual
accounts. Subsequently, in Sep-Oct, 2013, we added a
brief companion write-up, a few additional introductory
slides about ourselves and some additional trends data
for the uninitiated such as new recruits to the IA&AD.
However, as of now, we do not propose to make this
presentation an annual feature and would confine in
future to 3-5 years only.
3

We have also included, in this centennial publication,
some plates of vintage records that we have recently
located in our archives and some vignettes from the
Arthaśāstra, that, in many ways, prove that fundamental
accounting principles played a singularly significant role
in the preservation and prosperity of the Mauryan Empire,
even as they do today, without much radical change,
indeed represent a continuum for us in A&E offices.
As this monograph shows, the link between financing for
development and the percolation of benefits to beneficiary
populations remains as tenuous as ever with critical
planning, delivery, monitoring and evaluation
mechanisms remaining the weakest spokes in the wheel of
accountable development. However, neither does this
monograph seek to supplement/substitute for the
Comptroller & Auditor General of India’s Report on State
Finances and/or other financial reports of the State/Govt.
of India, nor has this been prepared as purely economic
and/or accounting document. Our limited objective was to
recreate the fiscal profile of a State more as an easy-to-
comprehend ready reckoner that may be appropriately re-
created by other State Accountants General for their
respective States. This monograph is, with the exception
of the Arthaśāstra references, entirely based upon
Finance and Appropriation Accounts and Accounts at a
Glance placed in the Assam State Assembly and other
published official documents available in the public
domain, sourced from the Central and State Finance
Commissions, Planning Commission, Controller General
of Accounts, Economic Survey of Assam, et al. Needless to
add, the accuracy of this monograph depends on the
accuracy of the above source material.
We hope you would find the contents useful for
application in your respective spheres of professional
work.
Guwahati (SHANTANU BASU)
Date: Jan 1, 2014 Pr. Accountant General
(A&E), Assam
4

5
Kautilya did not see the need for separating accounting from economics; explanation and prediction lay
within the rightful domain of accounting
Believed that any demarcation of the boundary between them would be arbitrary
Considered accounting an integral part of economics
By contrast, explicitly treated Political Science and Philosophy as separate disciplines
Considered accounting to be embedded in economic policy
Argued that corruption retarded economic growth by siphoning-off resources and by adversely affecting law
and order
Listed corruption and greed among the causes of loss in tax revenue, implying a lower provision of public
infrastructure, which was essential to economic growth
Perceived 'explanation and prediction' as the true objectives of a scientific inquiry and applied these to
analyze the impact of various policies on the creation of wealth
Applied these objectives, both explicitly and implicitly, to inquiries relating to accounting
Jawaharlal Nehru on Kautilya
“He sat with the reins of empire in his hands and looked upon the emperor more as a loved pupil than
as a master. Simple and austere in his life, uninterested in the pomp and pageantry of high position.”
Source: Sihag, Balbir: Kautilya on Administration of Justice during the fourth century BC. Journal of the
History of Economic Thought, Volume 29, Number 3, September 2007, pp. 359-77. Routledge & Francis

6PRINCIPAL ACCOUNTANT GENERAL (A&E), ASSAM

•Ruled by the Danavas & Narakasc. 1500 BCE- c. 500 AD
•Kamrup Kingdomc. 500-1200 AD
•Local dynasties like Bhuyan, Ahoms and Kacharisc. 1200-1824
•Burma cedes Assam to British after Anglo-Burmese War1824
•Part of Bengal Presidency1826-73
•Chief Commissioner’s Province with Sylhet (East Bengal)1874-1905
•Lt. Governor’s East Bengal & Assam Province1906-12
•Assam Legislative Council (Indian Councils Act, 1909)1912-20
•Chief Commissioner's Province with Legislative Council (Government Of India
(GOI) Act, 1919)
1921-37
•Assam Legislative Assembly under GOI Act, 19351937-47
•State of Assam under the Constitution of India1948-date

Milestone Geographical Jurisdiction
1912 Comptroller of Assam
1952 Accountant General, Assam
1963 Accountant General, Assam and Nagaland
1970 Accountant General, Assam, Meghalaya & Nagaland
1972 Accountant General, Assam, Meghalaya, Nagaland, Manipur, Tripura, Mizoram
& Arunachal Pradesh
1974 Accountant General, Assam, Meghalaya, Mizoram & Arunachal Pradesh
1980 Accountant General, Assam
1984 Accountant General (A&E), Assam
2010 Principal Accountant General (A&E), Assam
Seventy five incumbent Principal Accountants General/Accountants General/Comptrollers
have served one of the oldest A&E offices of the IA&AD in the last century

Name From To
L. Worgan 1912 1913
W.A.T. Carnduff 1913 1916
P.G. Jacob 1916 1920
T.H. Worgan 1920 1920
R. Waterfield 1920 1920
L.B. Ward 1921 1921
H.B. Rau 1921 1921
P.G. Jacob 1921 1923
C.A.G. Rivaz 1923 1925
Jagat Prasad 1925 1925
A.J. Currie 1925 1926
L.B. Ward 1926 1927
D.B.U.L. Banerjee 1927 1927
O.A. Travers 1927 1928
A.J. Carrie 1928 1929
Name From To
E.L. Gavaghan 1931 1933
B.A. Harris 1933 1933
B.K. Chatterjee 1933 1935
S.C. Gupta 1935 1935
B.K. Chatterjee 1935 1936
S.C. Gupta 1936 1939
G.W. Glass 1939 1942
K.R. Ramaiyer 1942 1944
B.C. Banerjee 1944 1945
P.C. Dasgupta 1945 1947
S. Gupta 1947 1949
S.M. Banerjee 1949 1951
K.K. Iyengar 1951 1952

Accountant General, Assam
K.K. Iyengar 1952 1953
A.K. Mukherji 1953 1955
V.N. Singh 1955 1956
P.D. Seth 1956 1958
S. Sundararaman 1958 1959
P. Krishnamurti 1959 1962
S. Vasudevan 1962 1963
Accountant General, Assam & Nagaland
A.C. Bhatla 1963 1964
Bishan Chand 1964 1965
M.P. Gupta 1965 1966
G.B. Singh 1966 1968
K.P. Joseph 1968 1969
R.K.A. Subrahmanya 1969 1970
Accountant General, Assam, Meghalaya & Nagaland
R.K.A. Subrahmanya 1970 1971
R.S. Maunder 1971 1972

Accountant General, Assam, Meghalaya, Nagaland, Manipur,
Tripura, Mizoram & Arunachal Pradesh
R.S. Maunder 1972 1973
R.C. Suri 1973 1974
Accountant General, Assam, Meghalaya, Mizoram &
Arunachal Pradesh
R.C. Suri 1974 1976
D. Jerath 1976 1978
G.M. Mani 1978 1978
A. Krishnan 1978 1979
M. Prem Kumar 1979 1980
A.K. Menon 1980 1982
S. Sampathnarayanan 1982 1984

Accountant General (A&E), Assam
S. Sampathnarayanan 1984 1984
D. Sivaramakrishnan 1984 1987
J.K. Sarma 1987 1987
K. Muthu Kumar 1987 1989
U. Bhattacharya 1989 1989
K.N. Khandelwal 1989 1991
Shailendra Pandey 1991 1992
S.K.F. Kujur 1992 1995
R Saiawi 1995 1995
M.M Arya 1995 1997
S.K. Bahri 1997 1998
D.J. Bhadra 1998 2002
Rajib Sharma 2002 2004
Bhajan Singh 2004 2006
P. Basumatary 2006 2009
Ajaib Singh 2009 2009
Ms. Y. Ray Chaudhuri 2009 2010
Principal Accountant General (A&E), Assam
Mohinder Singh 2010 2012
Shantanu Basu 2012 date

Art.151ofConstitution
S. 10 , 11, 12 & 18 of CAG’s (DPC) Act, 1971
State Gubernatorial Entrustment for entitlements
State Financial Manual, Treasury & Other Rules
GFR, 2005
R&P Rules, 1983, etc.
Other GOI Rules/Entrustment
GOI & RBI Directives

B Doley
IA&AS (2004)
Sr. DAG (Accounts, VLC &GE)
B Basumatary
IA&AS (2008)
DAG (Admn)
L Pegu
IA&AS (2008)
DAG (Pen & PF)
Shantanu Basu, IA&AS (1984)
PAG (A&E)

Works AHCsTreasury RBI
PAG (A&E)
Treasury Works AC Deposit
Book
Monthly Accounts
F & A Accounts Report on State Finances
State AssemblyDebate/PAC /ATNs
Forest
Forest
CA Pen & Ln A/c Book

We have raised our Rajbhasha correspondence to 78% in Assam that is a part ‘C’ state as per classification of
Official Language Act. Since 2008-09 we have compiled 38.23 lakh treasury vouchers and paid over 2 lakh
Pension & PF claims.

Districts 27 Forest Divisions 146
Autonomous Councils 3 Irrigation Divisions 67
Treasuries 26 PHE & Water Resources Divisions 80
Sub-treasuries 36 Chief Controlling Officer (CCO/HoD) 59
PWD Divisions 116 Drawing & Disbursing Officer (DDO) 7300
Kautilya’s Bases of the Mauryan
State
According to the Arthaśāstra, economic wealth is
the cornerstone of a successful state. Ensuring that
the resources are adequate, safe and available
requires measurement and control achieved by
clear exposition of concepts and principles of
accounting and control. It is the first and foremost
obligation of the ruler to deliver stability and order
so that commerce, trade and industry can flourish
and the population can be protected from anti-
social elements like deceitful traders or robbers
and the effects of natural disasters like drought or
flood. Careful specification of accounting
principles and rules, in addition to the
requirement of integrity—reinforced by a system of
penalties and incentives—in individuals holding
responsible positions are keys to maintaining the
treasury.

1.1 Since the late 1960s Assam has benefitted from
liberal Central govt. funding for its Plan and non-Plan
needs by the Planning Commission’s Gadgil formula as
amended from time to time. This formula was made for
three Special Category States (SCS), viz. Assam, J&K
and Punjab - in the late-1960s primarily to develop
them for they had borders each with a neighboring
nation. This formula, with several permutations and
combinations, continues to date, with Assam receiving
90% of Central assistance as non-interest bearing
grants-in-aid and 10% as loan. Although the quality of
life of Assamese has improved substantially in the post-
2003-04 years, yet this State remains one of the poorest
in India with the Planning Commission’s 2011-12
poverty estimates showing 32% of the population of
Assam below the poverty line. The State’s GSDP has
risen from 3.7% in the VII Plan from 1985-90 to 6.5% in
2007-12 in the XI Plan against the national median of
5-7-9.1% in the same period. The State’s tax revenues
too have grown on a year-to-year basis by about 9-11%
while the major sources of revenue remain those from
commodities (mainly tea & petroleum) and a buoyant
services sector (that grew from an annual 4.5% to 8%
against the national median of 7.7-9% in the same Plan
periods) and rising share of income tax from the Govt.
of India. Yet the overall contribution of SCS to GDP,
including that of Assam, remains at a minuscule of
0.78% to 1.78% in 2011-12.

1.2 Although Assam’s GSDP increased by 12.7% in
2011-12, that of other Special Category States, like
Uttarakhand and Sikkim, fared much better with
24.7% and 19.24% respectively. Such tiny share of
GDP could not have owed singly to the marginal
decline of 1.88% in absolute terms from the IVth to
XIIth FC by way of Central assistance to Assam since
GOI grants have also risen by about 50% in absolute
terms in the last decennial. Yet direct transfers for
flagship Central schemes may be a major factor for
such decline but improved the quality of life of
Assamese people. Notwithstanding a rise in absolute
terms in taxation and Central assistance, Assam’s
gross revenue has constituted about 18-23% of GSDP
per annum in the last decennial while gross
expenditure has ranged between 21-25% thus leaving
relatively small budget deficits.
1.3 Net borrowings are on a declining trend although
old interest liability runs relatively high, but not
worrisome by the standards of many other larger
States. In fact, Assam’s debt stock at 21.3% of GSDP
among SCS is perhaps the lowest when compared to
Sikkim’s 68.9% and Uttarakhand’s 87.5%. Naturally,
this reflects positively on Assam’s declining debts &
liabilities from 37.65% to 27.29% of GSDP in the last
decennial. A vastly improved cash balance has enabled
the State to steer clear of any advances and/or
overdrafts from the Reserve Bank of India since 2005-
06. The position would have been certainly better were
it not for a minuscule 1.04% return on the State’s PSU
investment in 2011-12.

1.4 Owing mainly to relatively high inflation and
rising wages of government employees,
expenditure on revenue account has risen by an
annual average of 18-24% while that on capital by
only 2-3% in the last decennial. Obviously, the
accretion of benefit-yielding capital expenditure
has been thwarted by rising operating costs of
government. After several years of revenue
deficits, in 2009-10, Assam returned a small
revenue surplus in 2010-11, a trend that continued
in 2011-12. Such surpluses mainly owe to the
Financial Responsibility & Budget Management
(FRBM) Act, 2005 that, inter alia, prescribed
maxima of 3% of GSDP as revenue deficit.
However, the above statistics do not necessarily
imply that fiscal and administrative governance
synergize each other as the succeeding paragraphs
would bear out.
Kautilya: The Precursor to Modern Accounting?
Arthaśāstra’s description of accounting concepts in many cases
parallels their modern accounting use. There is evidence of periodic
budgets for revenues and expenditures, fixed and variable costs,
manufacturing accounts, non-financial information of work-in-
process and finished goods and inventories.

2.1 While 40% of Assam’s highways are
macadamized & 93% roads remain single-laned, and
71% fields have markets more than 5km from the
nearest field. Moreover, the average operational land
holding size is only 1.15 ha that may account for the
State having a low deposit: credit ratio of
commercial banks of only 35.6% against 75.1%
nationally. The State is yet to reach self-sufficiency
in productivity as well as minimum nutrition.
Industry is mainly small scale, and the State suffers
from an over 50% shortage of energy. In fact, the
overall registration of educated job seekers as per
record of Employment Exchanges increased by
17.25% in 2010. The PDS Outlet: Population Ratio is
adverse at 1:898 and the State has 14 lakh
unemployed registered in employment exchanges
with about 75% of all job-seekers being educated.
Assam also ranks 26th among all States in literacy
rates with 79% for males & 67% for females, 70.44%
rural and 88.88% urban literacy.
Kautilya: The Virtues of Good Financial Reporting
Arthaśāstra suggests that good financial reports must be prepared for the
arrangement of subject matter, connection or relevance, completeness,
sweetness, exaltedness and lucidity. It recognizes the centrality of treasury to the
state and recommends that it be the first concern of the king.

2.2. The sex ratio of the State is heavily skewed at
1000:957 while the State has India’s highest
maternal mortality ratio of 390. The labor force is
equally skewed with 53% marginal female workers
against 15% male. Birth rate of 23.6 per mille
against the national median of national 22.5 per
mille and infant mortality of 58 per mille are higher
than the national average of 47 per mille. The State
also has a relatively high birth rate of 23.2 and death
rate of 8.2 per mille. Yet Assam’s below the poverty
population at 19.70% (Lakdawala) or 34.40%
(Tendulkar) is relatively lower when compared to
national averages of 27.5% and 37.20% respectively.
Assam’s net per capita income growth of 11.50% is
also higher than the national average of 6.50%. In
sum, while incomes have grown and quality of life
improved in the State, the State still lacks in basic
infrastructure and development of basic quality of
life parameters such as energy, roads & bridges,
hospitals and primary health care, communications
and roads and bridges, etc. Assam also suffers 16%
power shortage aggravated by 26% T&D losses.
Notwithstanding large infusions of Central
assistance over the last several decades, often to the
exclusion of equally and more needy states, Assam
remains on the fringe of assuring a minimally
acceptable quality of life for its inhabitants.

Tax and non-tax revenues rose 4.5 and 4 folds
respectively but were adversely affected by inflation
ranging from 2-17% per annum during this decennial,
particularly from 2009-10. While tax revenue rose
partly in tandem with GSDP, non-tax revenue fell
substantially short of GSDP growth rate primarily
owing to PSU/AB losses. The State also remained
below the national average GDP growth rate except in
2009-10 with the services sector expanding by 8.76%
in 2010-11. The rise in taxes on income and
expenditure owes mainly to a corresponding nine-fold
rise in the share of net proceeds of Union taxes and
duties assigned to the State from 2002-03 to 2011-12.
Supported by increasing Central grants-in-aid, the
State’s revenue and expenditure as percentage of
GSDP have broadly kept pace with each other, except
in 2009-10 owing to arrear payments and salary
increases recommended by the 6th State Pay
Commission. Percentage of State’s own revenue to
GSDP ranged from 4.62% to 6.62% from 2007-08 to
2011-12.
However, the State’s record in collecting taxes on
commodities and services with a tax efficiency ratio
ranging from 0.82%-1.33% in the same period is
praiseworthy. In the same period percentage of State’s
share of Union taxes declined from 59.42% to 54.86%.
While taxes on income & expenditure have risen,
grants-in-aid & contributions have declined compared
with revenue receipts. However, in absolute value,
grants-in-aid increased from Rs. 2351.50 crore in
2002-03 to Rs. 7666.87 crore in 2011-12, i.e. over a
three-fold rise in the decennial, showing continuing
dependence on central grants. Receipts from Govt. of
India increased over 2010-11 by Rs. 2248.64 crore to
Rs. 16950.40 crore against gross budget
appropriation of Rs. 39,482.69 crore, i.e. 43% in
2011-12.

RN Das, Esq., PWD Minister
Capt. Williamson Sangma, Esq., Minister

Although the state registered a fiscal surplus
from 2005-06 to 2008-09, 6th Pay Commission
payments forced it back into a deficit in 2009-10.
While interest payments remained largely static
until 2008-09, these rose substantially from 2009-
10 owing to more payments under internal debt,
Small Savings and PF, etc. While total internal debt
and other liabilities show a rising trend, L&A from
GOI shows a declining trend, all without adjusting
for inflation. Declining L&A from Ministries, other
than Finance, write-off of loans by 12thFinance
Commission plus Assam’s special category eligibility
for 90% grants and 10% loan, has caused a balance
to emerge between GSDP, debt and other liabilities.
With relatively liberal funding from the GOI,
Assam’s debt stock at 21.30% of GSDP is the lowest
among all SCS and barely a fourth of Uttarakhand.
In fact, the State’s debts and liabilities have declined
by about a third to 27.29% in 2011-12 from 2002-
03. Regrettably, the return on the State’s investment
on its public sector enterprises has contributed only
0.5-1% per annum in the last decennial, making
these a major drain on the State’s economy. With its
improved liquidity the State has also not taken any
ways and means advances since 2004-05.

4.1 Expenditure on revenue account (18-24% of
GSDP) has risen appreciably faster than on capital
account (2-3% of GSDP) that has stagnated with few
new capital assets being added without adjusting for
inflation. Declining borrowings by 90% SCS grants,
write-off of loans by 13th Finance Commission and
extra budgetary transfers for flagship schemes and
reducing pensions with introduction of New Pension
Scheme, have helped raise expenditure on social
services without adjusting for inflation. Although
pensions have remained largely static as a percentage
of total revenue expenditure, in absolute terms they
have risen by approx. 300% in the last decennial,
without adjusting for inflation.
4.2 However, surprisingly, economic services
accounted for 87% of total capital expenditure while
social services, where the State’s many beneficiaries
lie, accounted for only 11%. Even within social
services, health, education and social welfare
accounted for relatively small percentages. Although
the State shows erratic fiscal health up to 2009-10,
large budget surrenders/undrawn balances every
year by key infrastructure and social welfare
departments shows that the state is unable to apply
such funds even when human development indices
are among the lowest in India. This also points to
ineffective schematic monitoring and evaluation both
by the State and GOI. Barely a quarter of its total
expenditure is ever reconciled by the State’s accounts
rendering units (ARU).

4.3 While there are large budget surrenders every
year, large investments are made in short-term
investments in Govt. of India Treasury Bills owing
to unutilized cash balances of the State with RBI. If
current bank account balances are factored, the
State is not short of funds even if Central Plan
grants were temporarily reduced. In fact, the 2011-
12 Annual Plan’s outlay almost equals gross budget
surrenders/undrawn balances in the same year. The
State’s receipts, its own and from GOI, are received
regularly through the year but about a quarter to a
third of the state’s budget is expended in March
alone. As a logical corollary, the State’s accounts
invariably show a large revenue surplus till March
every year. While, on the one hand, the State was
unable to utilize approx. Rs. 86,000 crore of its
budget allotments in the past decade, even
substantial parts of the moneys that it drew in
March found their way either into current bank
accounts outside the government account or were
transferred, in an unauthorized manner, to revenue
deposits, even as these remained public moneys and
not moneys held in trust by govt. under Art. 284 (a)
of the Constitution.
Kautilya: The Functions of the
Records-cum-Audit Office
The records-cum-audit office maintains
comprehensive records from each department as
well as ongoing projects, informs the work officers
of various departments and undertakings about the
specified dates when they must submit the
accounts and balances for audit, and ensures the
integrity of the records and information provided
by the work officers of the operating departments
and their accounts officers. It must check each
entry of receipt for the time, place, amount, source,
name of recorder, and recipient, and similarly the
expense and balance entries must be checked. All
such appointments are made by a royal order.
41

4.4 In his Budget Speech 2011-12, CM Shri Tarun
Gogoi, proposed several new, and some ambitious,
schemes for improving the quality of life of
Assamese people. These included the establishment
of a new Employment Generation Corporation and
a Skill Development Authority, fresh recruitment of
88,920 civilian State employees, improvement of
court infrastructure, new initiatives for
disadvantaged castes/classes/minorities/tea tribes,
social welfare, water resources, public works,
power, industries & commerce, large increase in
school/university and teaching infrastructure, art &
culture, health and family welfare, etc. Although the
CM estimated the revenue deficit for 2011-12 at Rs.
2962.55 crore that eventually was reduced, on
actual, to a surplus of Rs. 926.85 crore. Most
proposals were never implemented.
Kautilya: Building Accountability in
Governance
Arthaśāstra sets out a framework based on clear
definition of accounting concepts, and uniform
standards but recognizes that the framework is
not sufficient to prevent wrongdoing. The proper
implementation of rules by the responsible
officers who are above favoritism or
vindictiveness creates faith in the system. Officers
should be carefully selected for their knowledge,
expertise and character, given the importance of
the treasury. Even when people are carefully
selected, their actions should be constantly
reviewed, departments should have many heads,
and they should not be given permanent tenure.
It defines penalties and fines for preventing
various kinds of wrongdoing that shortchange the
treasury. Finally, Arthaśāstra suggests an
intelligence network to watch over the activities
of the departments and ascertain whether
officials are living beyond their means. It lists
forty ways in which government officers can be
derelict in their duties which cause the depletion
of the treasury.

4.5 Assam receives substantial grants (90% as grant
and 10% as loan, being a Special Category State) from
the GOI. However, the State’s Appropriation Accounts
for 2011-12 show that Assam had an unspent balance
of Rs. 10,128.67 crore against total appropriation of
Rs. 39,482.69 crore, i.e. 25.65%. Such large unspent
balances caused a revenue surplus of Rs. 926.85 crore
and artificially lowered the fiscal deficit to Rs.
1,646.05 crore, i.e. 1.43% of GSDP (of Rs. 1,15,409.64
crore), less than half the maxima set by the FRBM Act
ibid. If transfers to DDOs’ current bank accounts (ref.
para 12 infra) are not included as expenditure in the
Appropriation Accounts, Assam’s fiscal deficit to
GSDP ratio would decline further and substantially,
although this may detract from avowed State policy to
improve the quality of life for its citizens for which
such large funds are made available to Assam at the
expense of needier States.
4.6 Future years’ schemes and their budget
allocations are decided by the Planning Commission,
partly on the basis of the achievements of the state
govt. in the preceding year. When the figures of
expenditure depicted in the Appropriation Accounts
are of doubtful integrity, it is entirely likely that
additional Plan moneys are being released to Assam
on such doubtful figures, even when previous years’
allocations have not been used or partially used. In
effect, such savings and transfers subvert Govt. of
India’s Plan budget that finds itself short of resources
for more deserving states and artificially inflates both
revenue and fiscal deficits of the Centre.
Kautilya: Need to protect whistleblowers
Kautilya made explicit provision for informers (whistleblowers) and their protection and rewards to secretly bring the actions
to defraud the treasury to the attention of the king. Whistleblowers were guaranteed protection against reprisals by the officers,
were to be rewarded with a part of the amount involved if the matter were proved, and punished for false accusations or for
failure to appear to prove the charges

4.7 Section 4 (3) (v) of the State’s Fiscal
Responsibility and Budget Management (FRBM) Act
states that the fiscal deficit is required to be
restricted to no more than 3% of the estimated Gross
State Domestic Product within a period of five
financial years beginning on the 1st April, 2005, and
ending on 31st March, 2010. However, the State’s
Appropriation Accounts for 2011-12 show that
Assam showed unspent balance of Rs. 10128.67 crore
against a total appropriation of Rs. 39,482.69 crore,
i.e. 25.65%. From 2009-10 to 2011-12, the State
surrendered/did not draw 23-37% of its gross budget
allocation approved by the State Assembly. Key
infrastructure and social welfare departments have
showed abnormally high surrenders in areas such as
Social Service (68-90%), Water Resources (57-68%),
Social Security, Welfare & Nutrition (27-57%), Urban
Development (57-67%) and Roads & Bridges (35-
38%), Power (55-57%) etc. Within such large overall
savings are large capital fund surrenders, e.g. Water
Resources (Rs. 1891.45 crore), Roads & Bridges (Rs.
1292.02 crore) and Power (Rs. 916.88 crore) from
2009-10 to 2011-12. Cumulative surrenders over
2009-10 and 2010-11 in 14 major budget heads alone
were Rs. 11716.40 crore. In fact, in 2011-12, except
for 2-3 budget heads where there was excess
spending, in all other budget heads there were
savings and/or unspent balances - a most unusual
trend in an era of major budgetary cutbacks country
and world wide. Such savings also carry with it the
distinct possibility of needier States being
underfunded while the revenue deficit of the Centre
artificially mounts.

4.8 Of the total Plan schematic surrenders of Rs.
16,951.84 crore from 2009-10 to 2011-12, Rs. 9163.28
crore were on account of major schemes with 75%
savings in about a dozen, 50-74% in 18 and 20-49% in
another 19, affecting diverse budget heads such as,
but not limited to, Water Resources, Hill Areas, Social
Security/Services, Urban Development, Water Supply
& Sanitation, Roads & Buildings, Rural Development,
Medical & Public Health and others.
4.9 Even externally funded schemes like those of the
North Eastern Council (NEC) showed savings of Rs.
1,426.72 crore from 2009-10 to 2011-12. Some
schemes that showed large savings include flood
control of Brahmaputra and Barak rivers, medical
colleges and rural family welfare sub-centers, water
supply, child services, mid-day meals for school
children, flow irrigation, grants for backward regions
and hill areas, both State and Central, Plan and non-
Plan.
4.10 In addition, there were large surrenders of
revenue allocations, many of which sub serve Plan
schematic expenditure such as Rs. 1,117.36 crore in
Medical & Public Health, Rs.1,730.05 crore in Social
Security, Welfare & Nutrition, Rs. 574.16 crore in
Welfare of SC/ST/OBC and Rs. 1,602.27 crore in
Social Service from 2009-10 to 2011-12. These include
unfilled posts of doctors, teachers, repairs and
maintenance of existent capital projects, etc.
Kautilya: Roles of Public and Private
Sector
It is incumbent on the ruler to create wealth. Arthaśāstra
envisages the creation of both the private and public
sectors. Arthaśāstra describes the means of enriching the
treasury. Prosperousness of economic activities,
cherishing of customs that improve division of labor
while minimizing conflict, luxuriance of crops,
abundance of commodities, maintenance of law and
order, reduction in exemptions and cash presents are
mentioned. The ruler should cause irrigation works,
canals, tanks and reservoirs to be built. If communities
pool their resources to build such irrigation works, the
king should help them with road access, land, tools and
the like.

4.11 Such large surrenders caused an artificial revenue
surplus of Rs. 926.85 crore and artificially lowered the
fiscal deficit to Rs. 1,646.05 crore, in 2011-12, i.e. 1.43% of
GSDP (of Rs. 1,15,409.64 crore), less than half the maxima
set by the FRBM Act ibid. However, if 80% of capital
allocations were expended, there ought to have been a
fiscal deficit of Rs. 8822 crore in 2011. This, in turn, would
have raised the fiscal deficit to 7.64% of GSDP. Likewise, if
80% of revenue budget allocations were expended, there
ought to have been a revenue deficit of Rs. 4829 crore in
2011-12. Although the State’s departments report large
surrenders and/or unspent balances every year that
invariably leads to an accretion in the cash balance of the
State held by the Reserve Bank of India, the State invested
Rs. 5146-8858 crore per annum in short-term Govt. of
India Treasury Bills and earned interest thereon, ranging
from Rs. 231-481 crore per annum from 2007-08 to 2011-
12. In fine, the FRBM Act has not only failed to achieve its
desired objective but, paradoxically, has become an
instrumentality for subversion of prudent financial
practices and accountability. Further, even public moneys
claimed to have been spent by the State of Assam during a
fiscal year are not entirely accurate and timely as the
succeeding paragraphs would bear out.
Kautilya: Public-Private
Partnership in Mining?
Royal permission would be necessary for mining;
burdensome and expensive mines would be
leased or let on a part-share basis to individuals,
while the lighter mines would be run directly by
the department of mines. Thus from the mines
the ruler should collect the price, the share, the
surcharge, the monopoly tax, penalty, duty,
compensation, fine, inspection fee, and
manufacturing charges as well as the twelve kinds
of metals and commodities made from them.

5.1 There are widespread delays in submission of
accounts to PAG (A&E), Assam, not only by some
treasuries but also by about 400 cheque drawing public
works and equivalent divisions. In 2011-12, 5-20 treasury
accounts were excluded from the State’s monthly
accounts while 32-50 treasury accounts were delayed.
Similarly, the range of excluded accounts for PWD
divisions was 5-20 while that of delayed accounts 32-59.
Likewise, 31-146 Forest Dept. accounts were excluded
from the month of their expenditure while 67-103 were
delayed. The position is no better in 2012-13 either.
Since cheque drawing divisions account for a large share
of government spending on infrastructure,
exclusion/delays in accounts, skews the overall fiscal
position of the State and militates against sound
financial management. Our efforts to remedy this
situation have not met with resounding success.
Kautilya: Short and Long-term benefits
Arthaśāstra recognizes the difference between short
term and long term benefits. Improvement of
productivity of land requires costly inputs.
Exemptions and tax waivers would mean lower taxes
in the short run but can provide incentives that would
benefit the individual farmers as well as the Treasury
in the long run. Kautilya differs from the prevailing
puritanical wisdom and states that the indulgences by
the common masses renews their will to work hard
whereas kings who are given to pleasures, become
arbitrary, seize the property and productive lands of
the subjects and encourage similar destructive
behavior by their courtiers.

6.1. Under the Sixth Schedule of the Indian
Constitution, three autonomous councils have been
established in Assam, viz. Bodoland, NC Hills and
Karbi Anglong. However, the quality of accounts
submitted by these councils to this office mainly do
not conform to the legal and accounting
requirements laid down by the Govt. of India and
CAG of India respectively. They are also mostly never
submitted in time. This is when these Councils
received Rs. 6682.08 crore as financial assistance,
Central and State, from 2009-10 to 2011-12. Our
efforts to remedy this situation have not met with
resounding success.
Kautilya: Classification of Revenue
The categories under which income is
classified consist of the following—price,
share, surcharge imposed by treasury on
transactions in order to make up for the
shortfall resulting from measuring or
weighing; monopoly tax that guarantees
that the technical production has been
supervised by the state; fixed tax paid
collectively by the village; manufacturing
charge and penalties and fines imposed
for violations of state regulations.

7.1 Accounts that are submitted to this office are
seldom reconciled. From 2009-10 to 2011-12, only 20-
29% of gross government expenditure was reconciled
by the State’s 59 Chief Controlling Officers (CCO) and
7300 Drawing & Disbursing Officers (DDO). It would
be appreciated that the absence of reconciliation not
only militates against accountability and reliability of
accounts but also carries with it relatively high risks of
theft, fraud and negligence. There is negligible
improvement upon our intervention with the State.
Kautilya: Classification of
Expenditure
The corpus of expenditure consists of
the following expenses—the worship
of gods and ancestors and charitable
causes; gifts given for receiving
benedictions; maintenance of the
royal palace and the kitchen; the
employment of envoys; maintenance
of the armory and warehouses for
forest produce, output of factories
and workmen; maintenance of foot
soldiers, horses, chariots and
elephants; herds of cattle; enclosures
for beasts, deer, birds and wild
animals, and warehouses for storage
of fuel and straw.

8.1 An amount of Rs. 699.56 crore as on 31st Mar,
2012, placed in Objection Book Suspense awaits
clearance with many of these figures being legacy
ones, stretching back more than a decade. Our
efforts to clear these balances have not met with
resounding success since basic documentation
required from CCOs/DDOs is not forthcoming. In
many cases, there are pending investigations by the
Central Bureau of Investigation, Director of
Vigilance (Assam), Assam Police and even the
National Investigation Agency. Such suspense
balances that cannot be booked to the respective
budget heads skews the trend of expenditure and,
by virtue of its unclassifiable nature, may also hide
cases of theft, fraud and negligence.
Notwithstanding our repeated request for
documents and information, virtually no
cooperation is forthcoming from the State.
Kautilya: Accounting Cycles
For purposes of account keeping and
budgeting the following time divisions are
used—the commencement and end of the
King’s regnal year; the month, the fortnight
and the day. There are three quarters, the
rainy season, winter and summer-- in each
the 3rd and 7th fortnight have 14 days and the
rest have 15 days, and a separate intercalary
month (added to keep the calendar year
concurrent with solar years).

9.1 As on 31st Dec, 2012, 5094 advance contingent bills for Rs. 1097.29 crore are awaiting adjustment in this office,
primarily for want of supporting documentation from CCOs/DDOs. It would be appreciated that, such accumulation
skews the trend of expenditure and, by virtue of its unaccountable nature, may also hide cases of theft, fraud and
negligence. We expect more concrete improvement upon intervention by the State’s Finance Dept.
Kautilya: Karaniyam siddham sesham aaya
vyayau nivi cha
 Items in accounting are the revenue estimate,
accrued revenue, outstanding revenue, income,
expenses and balance.
 Karaniyam implies the situation or the place
(for which the budget is made); the sphere of
activity, the corpus of income, receipts, the total of
all items of revenue and the grand total.
 Siddham implies the deliveries into the treasury,
what is taken by the king and the expenses of the
city as paid in, what is carried forward from the
preceding year, what is released by a decree and
what is ordered by word of mouth, as not to be
remitted, this is accrued revenue.
 Sesham are receipts from a partially completed
undertaking (are not immediately available; they
will become available only when the undertaking is
completed.) the fines, taxes which have yet to be
recovered, that what has been withheld by force and
what has been used by officers and what remains to
be recovered, this is outstanding revenue. It does
not contain goods of high value or if it does, they are
few.

10.1 Our treasury inspection wing annually
inspects most treasuries and sub-treasuries in
Assam. Here too the response of CCOs/DDOs is
not encouraging with 378 inspection reports
containing 2941 paragraphs and stretching back as
far as 2002-03 remaining outstanding for
compliance as on 31st Dec, 2012. Similarly, this
office issues a department wise summary of
lacunae in cheque drawing divisions where too the
response is even more disappointing when one
considers that treasuries and cheque-drawing
divisions are key spokes in the State’s fiscal wheel.
Kautilya: Deduct Recoveries?
Balance due to disbanding the army or from
undertakings that are given up due to illness or
epidemics etc are returns from expenditures.
Deductions from anticipated expenditure are
to be treated as income: savings due to
demobilization of a part of the army, works
abandoned before completion due to illness
and epidemics and economies made in actual
investment as against the planned budget.

11.1 Notwithstanding, large budget surrenders
every year, Govt. of India grants to Assam have
risen in absolute terms by over 50% in the last
decade. Despite such incremental rise in Central
grants, utilization certificates are not submitted
to PAG (A&E), Assam, in time, with an
accumulation of 18,202 utilization certificates for
Rs. 9943.42 crore as on 31st Mar, 2012. Here too,
the response of CCOs/DDOs is mainly indifferent.
Even where utilization certificates have been
submitted by departments to us, these most
exactly match the grant received to expenditure
incurred, without item-wise break-up of such
grants that do not, therefore, conform to the basic
tenets of transparency and accountability. PAG
(A&E), Assam, is also not aware of the
antecedents of Chartered Accountants appointed
by several recipients of such grants nor is any
master list of such bodies sent to us by the State
with such recipients’ individual Memorandum of
Articles and Association, Annual Report and
Accounts, appointment of auditors, minutes of
annual general meetings, etc.
Kautilya: Location of the Accounts Record Office
The superintendent should cause the Records Office to be built facing
the east or the north, with separate halls as a place for record books.

12.1 Even of the non-surrendered component of the
budget approved by the State Assembly that is
purportedly expended during a fiscal year, the Govt.
of Assam parks substantial portions in
current/savings bank accounts outside the
government’s accounts even though these moneys are
drawn by State departments through State Treasuries
from the Consolidated Fund of the State Large sums
are also parked in a budget head (8443-Civil
Deposits) meant to hold moneys in trust such as
earnest money deposits, judicial deposits, etc. that are
not part of government funds and can therefore be
held for three years beyond 31st March of a fiscal year
before lapsing, shown as refunded in the following FY
and payments made without legislative and/or
administrative sanction without lawful
revalidation/appropriation.
Kautilya: Nityo nityotpadikyo laabho
laabhotpadik iti vyayah
Expenditures are to be shown under four headings:
budgeted day to day expenditure; unbudgeted day-to-day
expenditure; foreseen periodic expenditure (fortnightly,
monthly or annual) and unforeseen periodic expenditure.
There are four categories of expenditures: current or daily
expenditure; that which arises out of current or daily
expenditure, lump some payments at fixed intervals of time,
and that arising out of such lump some payments.
 Net revenue is to be calculated after deducting
expenditures from income taking into account the actuals as
well as deferred amounts. What is left over after calculation
of receipts and expenditure from the entire total of revenue
sources is the balance received and carried forward.
 Thus the wise administrator should fix the revenue and
show an increase in income and decrease in expenditure
and should work to remedy the reverse of these.

13.1 In 2011-12 we received 756 treasury accounts,
5568 works & forest accounts, compiled 743865
vouchers and generated 13 monthly civil accounts.
Although State treasuries render part of their accounts
on electronic media via CTMIS to this office, vouchers
remain entirely manual and not environment-friendly,
causing severe attendant problems of secured storage
space, archiving and retrieval. Since Assam has not
made much headway in electronic transmission of
data, the State govt.’s carbon footprint remains among
the largest in India, apart from the risks, costs and
inconvenience involved in bulk storage and retrieval.
Kautilya: Inescapable entries
In Books of Accounts
 Listing of all the departments, the activities or sections
under each department, and the total income from all the
activities of each department;
 In connection with factories the information must
record-- the increase or loss of weight or volume to raw
materials in the manufacturing process, additional
expenses due to extensions to the factory or other such
reasons, surcharge, place of employment or work, wages
and salaries, and the number of workers;
 In connection with jewels, articles of high value and
low value and forest produce, the information must
record-- the price, the quality, the weight, the measure
the height, the depth and the specifications of the
containers as applicable;
 Laws, transactions such as agreements or contracts
between parties, customs and norms and established
edicts pertaining to marriage, inheritance etc in various
regions, villages, castes, families, and craft guilds and
corporations;
Receipt of jewels and land and special allowances and
payments for remedial measures against sudden
calamities granted by the king his queens and sons and
Grants and receipts from allies and enemies in
connection with peace and war.
66

Assam: Some introductory Statistics 73
Key Economic Data 74
Demographic Profile 75
Human development Indices-I 76
Human development Indices-II 77
Assam’s GSDP growth rate across Plans VII-XI 78
Assam’s agricultural growth rate across Plans VII-XI 79
Assam’s industrial growth rate across Plans VII-XI 80
Assam’s services growth across Plans VII-XI 81
Assam’s sectoral priorities 82
Inflation: 2002-03 to 2011-12 83
Assam’s GSDP among Special Category states 2010-11 84
Projected growth of GSDP: Tax Ratio 2010-15 85
Stagnant Transfer of Funds from Centre to States: 1984-2010 86
Finance Commission Transfers to Assam 87

Central Budgetary Transfers to Assam: Declining Percentage 88
Overview of tax and non-tax revenue: 2007-08 to 2011-12 89
Disposition of Revenue Sources: 2002-03 to 2011-12 90
Gross revenue/expenditure as percentage of GSDP: 2002-03 to 2011-12 91
State’s own & share of Central taxes: 2002-03 to 2011-12 92
Share profile of revenue sources: 2002-03 to 2011-12 93
Profile of Receipts from Govt. of India: 2011-12 94
Overview of net borrowings & gross interest: 2002-03 to 2011-12 95
Overview of Debt & Liabilities: 2002-03 to 2011-12 96
Debt stock of special category states as on 31 Mar, 2010 97
Overview of debt & liabilities to GSDP: 2002-03 to 2011-12 98
Overview of investment & return on PSUs: 2002-03 to 2011-12 99
Ways & means advances: 2002-03 to 2011-12 100
Capital & revenue expenditure: 2002-03 to 2011-12 101
Cumulative distribution of capital expenditure: 2010-11 to 2011-12 102
Cumulative distribution of capital expenditure on social services: 2010-11 to 2011-12 103

Cumulative distribution of capital expenditure on economic services: 2010-11 to 2011-12 104
Quality of revenue expenditure: 2002-03 to 2011-12 105
Revenue & fiscal deficits/surpluses: 2003-04 to 2012-13 106
Quality of accounts: Delayed receipt of Treasury Accounts - 2011-12 107
Quality of accounts: Delayed receipt of Forest Accounts - 2011-12 108
Quality of accounts: Delayed receipt of Works Accounts - 2011-12 109
Quality of accounts: Delayed receipt of Autonomous Council deposit Accounts - 2011-12 110
Quality of accounts: Reconciliation of State accounts: 2009-10 to 2011-12 111
The magnitude of budget unspent balances – I 112
The magnitude of budget unspent balances – II 113
The magnitude of budget unspent balances – III 114
The magnitude of budget unspent balances – IV 115
The magnitude of budget unspent balances – V 116
The magnitude of budget unspent balances – VI 117
Unspent balances & market loans: 2002-03 to 2011-12 118
Short-term investment in Govt. of Indian treasury bills 119

How unspent balances understate FRBMA targets 121
Unaudited monthly trend of tax revenue for 2012-13 122
Unaudited monthly trend of non-tax revenue for 2012-13 123
Unaudited monthly trend of grants-in-aid & contributions for 2012-13 124
Unaudited monthly trend of total receipts for 2012-13 125
Unaudited monthly trend of non-Plan expenditure on revenue account for 2012-13 126
Unaudited monthly trend of non-Plan expenditure on capital account for 2012-13 127
Unaudited monthly trend of non-Plan expenditure on interest payment for 2012-13 128
Unaudited monthly trend of Plan expenditure on revenue account for 2012-13 129
Unaudited monthly trend of Plan expenditure on capital account for 2012-13 130
Monthly trend of total expenditure for 2012-13 131
Unaudited monthly trend of revenue expenditure for 2012-13 132
Unaudited monthly trend of capital expenditure for 2012-13 133
Monthly trend of total receipts & expenditure for 2012-13 up to Feb, 2013 134
Monthly trend of fiscal & revenue surplus for 2012-13 up to Feb, 2013 135
Unaudited funds available for expenditure in Mar, 2013 136

The paradox of rising receipts and diminishing expenditure 137
Current bank accounts: Samples of what we have so far found -I 138
Current bank accounts: Samples of what we have so far found -II 139
Current bank accounts: Sample amounts transferred in Mar, 2012 140
Current bank accounts: Sample of closing cash balances 141
Current bank accounts: Samples of AG (Audit), Assam's findings 142
Current bank accounts: Probable statewide magnitude of funds in current bank accounts 143
Current bank accounts: The potpourri of current accounts 144
Sample unspent balances in major Plan schemes: 2009-10 to 2011-12 145
The unspent Plan balances analysis 146
The big unspent balances in 2011-12 > Rs. 100 crore 147
Direct funding by Govt. of India: 2008-09 to 2011-12 148
Abstract Contingent Bills & their adjustment: 2007-08 to 2011-12 149
Our suspense accounts management 150
Vignettes from the Past 151

 Decadal population growth of 16.93% against national average of 17.64%
 GSDP growth in 2011-12 est. at 8.42%
 NSDP growth in 2011-12 est. at 8.42%
 Primarily agricultural economy with paddy covering 91% of cultivated land and employing 52% of work force
 Manufacturing only 7% of GSDP
Source: Economic Survey of Assam, 2011-12
 Borders 7 states and 2 countries
 Area of 78,438 sq. km
 Has 48 major and 128 minor rivers
 Population of 31.17 million in 2011
 27 districts + 4 under Bodoland TC
 2.4% of India’s area home to 2.57% of its population

Source: Economic Survey of Assam, 2011-12
 Services sector growth in 2011-12 est. at highest among all
sectors at 9.74%
 Est. 10.73% growth in tax income of State
 Per capita indebtedness of Rs. 8677 in 2010-11
 20000 population covered by a bank branch against
national average of 14000
 Rice production up by 14% in 2010-11
 7% of land area eroded by major rivers since 1954
 Yet to reach self-sufficiency in productivity as well as
minimum nutrition
 >10 million heads of livestock
 Industry mainly small scale
 No improvement in power availability
 PDS Outlet : Population Ration = 1:898
 14 lakh registered unemployed in employment exchanges
 Tea industry of 332000 ha. major source of economic and
social sustenance
 Except natural gas, Coal, Petroleum(Crude) and Limestone
production declined
 Tele-density of 35.18% below national average of 66.17%

 Growth of population during 1971-2011 is 113.12 % against the national growth rate of 120.77%
 14th in size of population in India
 15th in density
 15th in sex-ratio
 26th in literacy
64.89
30.92
3.7
0.08
0.19
0.09
0.09
0.04
Hindu Muslim Christian Sikh Buddhist Jains Other Not Stated
Source: Economic Survey of Assam 2011-12

 Literacy rate 79% for males & 67% for females
 70.44% rural and 88.88% urban literacy
 Child sex ratio M: F = 1000:957
 53% marginal female workers against 15% male
 Birth rate of 23.6 per mille against national 22.5 per mille
 Infant mortality 58 per mille against national average of 47 per mille
 Birth rate 23.2 and death rate 8.2 per mille
 BPL population 19.70% (Lakdawala) or 34.40% (Tendulkar) against national averages of 27.5%
and 37.20% respectively
 GSDP growth rate of 7.34% against national average of 8.5%

 Net per capita income growth of 11.50% against national average of 6.50%
 Average operational land holding size is only 1.15 ha
 71% fields have markets more than 5 km from nearest field
 16% power shortage aggravated by 26% T&D losses
 40% macadamized highways & roads of which 93% single-laned
 Deposit : Credit ratio of commercial banks 35.6% against 75.1% nationally
 Percentage of educated job seekers about 75% of all job-seekers
 Overall registration of educated job seekers as per record of Employment Exchanges increased by 17.25% in 2010
 Highest maternal mortality ratio of 390

1985-90 1992-97 1997-2002 2002-07 2007-12
Assam 3.7 2.8 1.8 5.3 6.5
Median for all States 5.7 5.8 4.9 8.4 9.1
0
1
2
3
4
5
6
7
8
9
10
PerCent
Figures In Per cent
Assam’s growth rate of GSDP is substantially below the national median
78
http://planningcommission.nic.in/plans/mta/11th_mta/chapterwise/Comp_mta11th.pdf p. 34
PRINCIPAL ACCOUNTANT GENERAL (A&E), ASSAM

1985-90 1992-97 1997-2002 2002-07 2007-12
Assam 1.9 1.4 -0.8 0.6 2
Median 3.1 2.6 1.5 3.4 4
-2
-1
0
1
2
3
4
5
PerCent
Figures In Per cent
Assam’s growth rate of agriculture is substantially below the national median

1985-90 1992-97 1997-2002 2002-07 2007-12
Assam 3.1 3.2 1.9 7.9 8
Median 8.3 6.8 4.9 10.4 11
0
2
4
6
8
10
12
14
PerCent
Figures In Per cent
Assam’s growth rate of industry is substantially below the national median

1985-90 1992-97 1997-2002 2002-07 2007-12
Assam 4.5 4.4 3.9 7.3 8
Median 7.7 5.8 6.9 8.5 9
0
1
2
3
4
5
6
7
8
9
10
PerCent
Figures In Per cent
Assam’s growth rate of services is fast catching up with the national median

Human Services
• Medical & Public Health
• Education
• Water Supply & Sanitation
• I-T enabled services for remote areas
Infrastructure
• Power
• Alternative sources of energy
• Roads & Bridges
• Irrigation & Waterways
• Water Resources
• Communication
Economic
• Agriculture
• Manufacturing
• Financial Services
• Employment
Kautilya: Timeliness of Accounts & Penalty for
non-compliance
 On the basis of the records, the superintendent
should provide in writing the revenue estimate, accrued
revenue, outstanding revenue, income and
expenditures, balance, the time for officers to come and
present the accounts for various spheres of activity, and
the rules and norms for all departments.
 In case the responsibilities are not carried out by the
concerned official, the loss and liability would fall on his
co-receivers of the state revenue, the guarantors, those
living on his work, his sons, brothers, wives, daughters,
and servants (the one later in the list becomes liable if
the earlier one fails to compensate)
 Officers who do not show up at the scheduled time or
who do not bring the account books and balances, the
fine shall be one-tenth of the amount due.
 The fine for the works officer shall be double because
he has the actual nivi with him and yet has failed to
appear with it
 The superior offices should render the accounts in
full in accordance with their activity without
contradicting themselves.
The officer whose statements do not tally with those
of others or one who speaks falsely shall pay the highest
fine.
82

http://www.tradingeconomics.com/india/inflation-cpi
Kautilya: The Financial Year
 Three hundred and fifty four days and nights constitute
the official year for completing the various undertakings of
the year.
 Superintendent should fix the end of the year to be on the
full moon day in Aasadh whether the work is spread over the
full year or part of it.
 He should provide the intercalary month with a separate
bureau.
 The yearly accounts had twelve sections, one for each
month; accounts for the intercalary month were to be kept
separately
 He should have the activity of the departments watched by
informers

0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2
0
5
10
15
20
25
30
%age GSDP rise over previous year As %age of GDP
http://unidow.com/india%20home%20eng/statewise_gdp.html
Although GSDP has risen appreciably on year-to-year basis, the SCS’ GSDP remains a minuscule 0.8 to
1.78% of GDP.

0
20
40
60
80
GCS Tax:
GSDP GSDP GCS
SCS Tax:
GSDP GSDP SCS
Percent
GCS Tax: GSDP GSDP GCS SCS Tax: GSDP GSDP SCS
2014-15 8.97 13.55 6.31 11.77
2013-14 8.89 13.54 6.24 11.76
2010-11 8.66 12.57 6.02 11.33
2012-13 8.81 13.52 6.16 11.74
2011-12 8.74 13.09 6.09 11.55
2009-10 8.58 10.04 5.94 10.25
While in the case of General Category States (GCS), the gap between GSDP growth and tax rate growth has
worsened from approx. 1.5% in 2009-10 to a projected approx. 4.5%, the Special Category states (SCS),
including Assam, project a rise from approx. 4.5% in 2009-10 to approx. 5.50% by 2015. Obviously, there is
reticence to widen the tax net and/or raise existing rates of state taxes.

http://fincomindia.nic.in/ShowContentOne.aspx?id=28&Section=1 pp. 375-376 & http://www.tradingeconomics.com/india/gdp
VIII FC IX FC X FC XI FC XII FC
Transfers as %age of Gross Central
Revenues
37.86 40.33 35.79 35.27 38.51
Total Revenue Transfers from Centre
to States as %age of GDP
10.04 12.57 13.09 13.52 13.54
0
5
10
15
20
25
30
35
40
45
Percent

Although Twelfth FC fixed States’ share of Central taxes at 30.50% of net proceeds,
actual devolution has been below this level.
Year Revenue Receipts
of Centre
(Rs. In Crore)
Quantum of FCT
(Rs. In Crore)
FCT as %age of
Central Revenue
Receipts
Actual
devolution
%age
1990-91 - - 37.80 -
1999-2000 181482 46222 25.46 -
2004-05 305991 88354 28.87 25.77
2005-06 345754 115345 33.36 27.77
2006-07 434387 136486 31.42 25.41
2007-08 525098 155973 29.70 25.93
http://sfcassam.nic.in/13thFC/13thFCMemorandum.pdf p. 6
Quantum of Fine for causing loss of revenue in Ancient India
 Manu: Equal to the loss of revenue, increased by one fold in each succeeding case in the order of failings
 Parashar: In all cases the fine imposed should be eight times the loss caused
 Brahaspati: Ten times the loss caused
 Usanas: Twenty times the loss caused
 Kautilya: The fine should be in conformity with the offence.

Although GOI grants have risen by about 50% in the last decennial in absolute terms, Assam’s share has
declined by 1.88% in absolute terms from the IVth to XIIth FC. However, in real terms the decline is
substantially more when inflation is factored. Direct transfers for flagship Central schemes may be a
major factor for such decline.
http://sfcassam.nic.in/13thFC/13thFCMemorandum.pdf p. 11

Tax and non-tax revenues rose 4.5 and 4 folds respectively but were adversely affected by inflation
ranging from 2-17% per annum during this decennial, particularly from 2009-10. While tax revenue rose
partly in tandem with GSDP, non-tax revenue fell substantially short of GSDP growth rate primarily
owing to PSU/AB losses. The State also remained below the national average GDP growth rate except in
2009-10 with the services sector expanding by 8.76% in 2010-11.
2011-12 2010-11 2009-10 2008-09 2007-08 2006-07 2005-06 2004-05 2003-04 2002-03
Tax Revenue 16921.77 13898.46 10326.25 9340.11 8277.71 7382.31 6288.99 5297.65 4232.39 3748.87
Non-Tax Revenue 2866.76 2373.33 2752.94 2271.9 2134.59 1859.27 1459.28 1070.03 945.8 692.97
GSDP %age grow over previous year 10.74 18.4 13.57 6.61 14.62 34.63 8.23 8.51 9.76
Tax as %age of GSDP 17.14 15.62 14.86 14.98 14.33 14.57 12.22 10.04 8.16 7
0
5
10
15
20
25
30
35
40
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
Rs.InCrore

The rise in taxes on income and expenditure owes mainly to a corresponding nine-fold rise in the share
of net proceeds of Union taxes and duties assigned to the State from 2002-03 to 2011-12
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2011-12
2010-11
2009-10
2008-09
2007-08
2006-07
2005-06
2004-05
2003-04
2002-03
PercentageofTotalReceipts
2011-12 2010-11 2009-10 2008-09 2007-08 2006-07 2005-06 2004-05 2003-04 2002-03
Percentage to GSDP 23.79 24.01 22.59 23.32 21.08 21.55 25.57 22.83 19.36 21.78
Grants/Contributions 27.32 29.27 34.22 35.76 32.06 32.38 35.67 35.92 33.31 34.61
Economic Services 8.24 7.92 9.39 9.18 11.08 11.01 11.08 9.72 10.93 9.51
Social Services 0.09 0.12 0.13 0.12 0.2 0.99 0.32 0.21 0.64 0.19
General Services 0.32 0.39 1.77 0.77 0.92 0.24 0.29 0.64 0.44 0.37
Interest/Dividends/Profits 1.78 1.87 2.56 2.5 1.73 1.36 0.43 0.2 0.17 0.13
Commodities/Services 9.46 37.4 32.41 34.23 34.91 37.63 38.03 38.81 39.69 42.36
Property & Capital Tr. 1.2 1.18 1.16 1.25 1.25 1.27 1.35 1.33 1.61 1.66
Income & Expdn 20.97 21.83 18.36 16.19 17.85 15.12 12.83 13.17 13.21 11.17

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
Revenue 18.59 19.36 22.83 25.57 21.55 21.08 23.32 22.59 22.07 22.99
Expenditure 21.3 22.93 30.75 24.89 20.12 20.05 21.55 27.22 24.01 25.23
0
5
10
15
20
25
30
35
Supported by increasing Central grants-in-aid, the State’s revenue and expenditure as %age of
GSDP have broadly kept pace with each other, except in 2009-10 owing to arrear payments and
salary increases recommended by the 6th State Pay Commission. Low percentages may owe to
large unspent balances and expenditure.

Percentage of State’s own revenue to GSDP ranged from 4.62% to 6.62% from 2007-08 to 2011-12.
However, the State’s record in collecting taxes on commodities and services with a tax efficiency ratio
ranging from 0.82%-1.33% in the same period is praiseworthy. In the same period %age of State’s
share of Union taxes declined from 59.42% to 54.86%.
State's Own Taxes
53%
State’s share of
Central taxes
47% Decennial Average

15% 1%
38%
1%1%
10%
34%
Decennial Average
Income & Expd.
Property & Capital
Commodities & Services
Interest/Dividend/Profit
General Services
Economic Services
While taxes on income & expenditure have risen, grants-in-aid & contributions have declined compared
with revenue receipts. However, in absolute value, grants-in-aid increased from Rs. 2351.50 crore in
2002-03 to Rs. 7666.87 crore in 2011-12, i.e. over a three-fold rise in the decennial, showing continuing
dependence on central grants.

21%
11%
0%
9%
6%
6%4%
43%
Corporation
Other than
Corporation
Wealth
Customs
Union Excise
Duties
Service Tax
Art 275(1)
Other Grants
Receipts from Govt. of India increased over 2010-11 by Rs. 2248.64 crore to Rs. 16950.40 crore against
gross budget appropriation of Rs. 39,482.69 crore, i.e. 43% in 2011-12

Although the state registered a fiscal surplus from 2005-06 to 2008-09, 6th Pay Commission
payments forced it back into a deficit in 2009-10. Although interest payments remained largely
static, these rose substantially from 2009-10 owing to more payments under Internal debt, Small
Savings and PF, etc.
2011-12 2010-11 2009-10 2008-09 2007-08 2006-07 2005-06 2004-05 2003-04 2002-03
Borrowings 1646.05 1990.56 4043.42 -1406.79 -790.1 -711.38 -355.7 2057.45 1393.98 1197.43
Interest Payment 2074.5 1912.12 1832.58 1593.33 1512.24 1515.67 1510.12 1403.53 1446.1 1244.74
-2000
-1000
0
1000
2000
3000
4000
5000

While total internal debt and other liabilities show a rising trend, L&A from GOI shows a declining
trend, all without adjusting for inflation. Declining L&A from Ministries, other than Finance, write-
off of loans by 12th Finance Commission plus Assam’s special category eligibility for 90% grants and
10% loan, has caused a balance to emerge between GSDP, debt and other liabilities.
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
2008-
09
2009-10 2010-11 2011-12
Internal Debt 4507.97 5023.5 6633.71 11681.84 12402.53 13032.55 15198.13 16674.04 17903.67 17805.11
L&A from GOI 6482.36 6734.45 6904.25 2875.02 2775.31 2708.44 2639.57 2346.38 2238.69 2143.48
Other Liabilities 2768.36 3331.22 4006.96 4070.73 4675.38 5296.29 6403.74 9444.3 9550.37 11548.56
GSDP (Rs. In Crore) 36547 40115 43529 47113 63428 72700 77506 88023 104218 115408
0
20000
40000
60000
80000
100000
120000
140000
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
Progressive Balances

Uttarakhand Tripura Sikkim Nagaland Mizoram Meghalaya Manipur Jharkhand Chhatisgarh Assam
As %age of GSDP 87.5 71.8 68.9 57.7 44.9 43.3 33.5 29 28.1 21.3
Rs. In Crore 35403.16 25935.67 25066.9 18846.13 5228.67 5008.01 4930.45 3897.55 3783.3 2494.51
99%
99%
99%
99%
99%
100%
100%
100%
PerCent
http://fincomindia.nic.in/ShowContentOne.aspx?id=28&Section=1 p. 384

Debt and Liabilities as a percentage of GSDP is declining that is a positive sign of the state’s fiscal health
and its ability to sustain itself on limited borrowings. However, this decline owes primarily to the XIIth
FC’s 90% grant and 10% loan component of Central assistance
2011-12 2010-11 2009-10 2008-09 2007-08 2006-07 2005-06 2004-05 2003-04 2002-03
%age of GSDP 27.29 28.49 32.34 31.28 28.94 31.3 39.54 40.3 37.61 37.65
0
5
10
15
20
25
30
35
40
45As percentage of GSDP

The return on investments in PSUs is negligible owing to their below par performance, although state
investment on them has risen approx. four-fold in the last decennial
0.69
0.70
0.94
1.21
0.93
0.78
0.48
1.17
1.04
Effective %age return for FY

The state is living within its means owing, inter alia, to rising Central assistance from 2004-05
and onward in absolute terms
2011-12 2010-11 2009-10 2008-09 2007-08 2006-07 2005-06 2004-05 2003-04 2002-03
No. of days without advance 365 365 365 365 365 365 365 155 11 23
No. of days with advance 0 0 0 0 0 0 0 81 39 30
No. of days with overdraft 0 0 0 0 0 0 0 129 315 312
No.ofdays

Expenditure on revenue account (18-24% of GSDP) has risen appreciably faster than on capital account
(2-3% of GSDP) that has stagnated with few new capital assets being added without adjusting for
inflation.
0
5000
10000
15000
20000
25000
30000
35000
2011-12
2010-11
2009-10
2008-09
2007-08
2006-07
2005-06
2004-05
2003-04
2002-03
NPE on Capital Account PE on Capital Account NPE on Revenue Account
PE on Revenue Account GSDP (Revenue) GSDP (Capital)

Kautilya: Definitions of Malfeasance
& Preventive Vigilance
When the account officers come with their sealed
account books and works officers bring actual balances
in sealed containers, Accounts Superintendent should
impose restrictions so that the two sets of officers are
not allowed to converse among themselves
 If an officer shows a later date than the one on which
income was received or shows expenditure as having
incurred at an earlier date (thus using the money for
personal benefit for a period) that is “concealment”
 If an officer collects less than the fixed amount of
revenue, or causes an increase in the sanctioned
expenditure, that is called “causing loss”
 If an officer does not deliver the income that has
accrued, or does not pay the expenses put down in
writing, or denies the balance, that is called
“misappropriation”
102
ES SS GS
87%
11%
2%

128.14
327.2
2043.96
11.81 4.39 6.84
0
500
1000
1500
2000
2500

221.79
0.19
3126.97
6210.86
3271.94
634.71
6453.09
0.01 114.14
0
1000
2000
3000
4000
5000
6000
7000

Declining borrowings by 90% SCS grant, write-off of loans by 13th FC and extra budgetary transfers for
flagship schemes and reducing pensions with introduction of NPS have helped raise expenditure on social
services without adjusting for inflation. Although pensions have remained largely static as a percentage of
total revenue expenditure, in absolute terms they have risen by approx. 300% in the last decennial,
without adjusting for inflation.
2011-12 2010-11 2009-10 2008-09 2007-08 2006-07 2005-06 2004-05 2003-04 2002-03
Grants-in-aid & Contributions 2.47 1.56 2.59 1.04 0.07 0.07 0.1 0.13 0.15 0.11
Economic Services 17.58 20.34 17.71 20.26 22.4 23.3 22.18 22.14 18.3 15.39
Social Services 43.22 44.26 40.24 41.03 38.89 39.08 37.84 41.67 39.78 40.75
Pensions 12.79 10.68 14.99 10.1 10.52 10.29 9.61 10.39 10.76 10.92
Administrative Services 13.64 11.74 13.68 13.24 12.8 10.57 12.35 8.98 10.4 12.07
Debt Servicing 8.32 8.85 9.14 11.94 13.47 14.76 15.7 14.15 18.25 18.51
Organs of State 0.93 1.39 0.72 1.25 0.79 0.75 1.08 0.96 1.15 0.82
Fiscal Services 1.05 1.18 0.93 1.14 1.06 1.18 1.14 1.58 1.21 1.43
0
20
40
60
80
100
120
Percentage
As per cent of Total Revenue Expenditure

Although the State shows erratic fiscal health up to 2009-10, large budget surrenders/undrawn
balances every year by key infrastructure and social welfare departments shows that the state is
unable to apply such funds even when human development indices are among the lowest in India.
This also points to ineffective schematic monitoring and evaluation both by the State and GOI.
2012-13 2011-12 2010-11 2009-10 2008-09 2007-08 2006-07 2005-06 2004-05 2003-04
Revenue 5302.23 926.85 53.12 -1347.71 3833.71 2580.77 2210.42 1509.08 -291.87 -684.69
Fiscal 3592.23 -1646.05 -1990.56 -4043.42 1406.79 790.1 711.38 355.7 -2057.45 -1393.98
-6000
-4000
-2000
0
2000
4000
6000

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Excluded 0 0 5 9 12 12 16 13 7 11 20 0
Delayed 43 38 38 32 38 59 56 50 44 48 46 49
-10
0
10
20
30
40
50
60
70
No.ofUnits
Figures in Units
Delayed receipt of accounts causes the progressive figures not to depict an accurate status of the
State’s finances. Although this issue has been taken up with State at Chief Secretary level, there is
no appreciable improvement.

Mar Feb Jan Dec Nov Oct Sep Aug Jul Jun May Apr
Excluded 30 140 124 123 87 79 133 150 98 80 72 59
Delayed 103 73 76 73 89 88 79 67 85 94 88 86
0
20
40
60
80
100
120
140
160
No.ofUnits
Figures in Units
Excluded accounts are taken on account in the month they are received. Such delays/exclusions render the
progressive figures of the State’s finances inaccurate. Forest Divisions also account for a large share of
State Plan & Non-Plan expenditure and multilateral assistance for which utilization certificates are
required. State response to our repeated requests below average with not much change in defaults

Mar (P) Feb Jan Dec Nov Oct Sep Aug Jul Jun May Apr
Excluded 14 162 119 105 83 116 149 145 78 55 63 147
Delayed 162 119 105 83 116 149 145 78 55 63 147 0
0
20
40
60
80
100
120
140
160
180
No.ofUnits
Figures in Units
Excluded accounts are taken on account in the month they are received. Nevertheless, to the
extent they are delayed/excluded, the progressive figures do not depict an accurate status of the
State’s finances. Works Divisions also account for a large share of State Plan & Non-Plan
expenditure since they deal mainly with infrastructure. State response to our repeated requests
below average with not much change in defaults.

Mar (P) Feb Jan Dec Nov Oct Sep Aug Jul Jun May Apr
Excluded 1 108 101 104 80 47 101 116 79 78 74 89
Delayed 1 88 85 84 87 88 89 84 87 83 87 88
0
20
40
60
80
100
120
140
No.ofUnits
Figures in Units
Excluded accounts are taken on account in the month they are received. Nevertheless, to the
extent they are delayed/excluded, the progressive figures do not depict an accurate status of the
State’s finances. Hill Councils also account for a large share of State Plan & Non-Plan expenditure
and also have their own rules and regulations over which the State has limited accountability and
control. State response to our repeated requests below average with not much change in defaults.

Year 2009-10 2010-11 2011-12
Rupees in Crore
Expenditure 24968.34 25946.97 30268.92
Percentage Reconciled 19.54 20.79 29.25
Receipts 19884.49 23004.94 27455.40
Percentage Reconciled 0.42* 0.04* 79.43
Share of Union shareable taxes and duties and block grants reconciled with Union Ministries
but not shown in these years, although reconciled
Kautilya: Samples of what causes
loss of revenue
 Revenue accrued on a given date is realized later (for
a consideration) or due is not collected (for a
consideration)
 Revenue not due until later is realized earlier (by force
in order to compensate for above) or not due is made to
be paid (and misappropriated)
 Revenue not paid is shown as paid (for a
consideration) or shown as not paid (and
misappropriated)
 Small amount of revenue paid is made out as paid in
full; though paid in full only a small amount is shown as
received
 Revenue paid in one kind is shown as of lower value
or paid by one is shown as having been paid by another;
 What is to be paid is not paid or what is not to be paid
is paid ( to a favorite);
111

Central grants have risen in absolute terms by over 50% in the last decade. Utilization certificates are not
submitted to PAG/AG (A&E) in time – gross average annual unspent balances are 23-37% although some
departments have up to 90% in certain years. If unspent balances were drawn in toto, Assam may have
had a large budget surplus every year that would have militated against such excessive funding, if these
amounts were not expended. Transfers to current bank accounts compounds excess cash flow, perhaps
overstates physical achievements during a FY aside from understating cash balance and interest.
2009-10 2010-11 2011-12
Net Savings 3006.75 2640.44 2797.08
Capital 6742.89 5635.59 6537.45
Net Savings 9637.77 11313.55 6416.46
Revenue 30870.4 34265.8 32945.24
0
10000
20000
30000
40000
50000
60000
Rs.InCrore
112
PRINCIPAL ACCOUNTANT GENERAL (A&E), ASSAM

Fiscal Year 2009-10 2010-11 2011-12
R u p e e s i n C r o r e
Department Rev Cap % Rev Cap % Rev Cap %
Roads & Bridges 129.59 438.02 35.23 264.16 378.09 38.40 224.66 475.91 36.86
Water Resources 22.48 828.41 68.34 69.15 438.72 73.40 11.47 624.32 57.06
Social Security,
Welfare & Nutrition
891.69 0.18 57.36 466.34 1.52 37.65 372.02 0.10 26.63
Power 182.01 125.99 56.73 150.91 166.57 55.29 11.47 624.32 57.06
Welfare of SC/ST/OBC 226.32 9.66 38.98 224.02 0 42.58 123.82 0.24 19.64
Water Supply &
Sanitation
20.21 399.22 47.49 83.36 33.19 22.32 18.03 8.82 6.47
Urban Development 174.34 22.03 56.58 193.73 22.83 53.39 165.37 7.57 66.09
Social Service 391.13 0 68.03 704.82 0 90.43 506.32 0 73.51
Medical & Public
Health
380.65 0 21.15 543.96 0 28.91 192.75 0 11.66
Miscellaneous General
Services
2473.48 0 63.64 95.49 0 58.98 647.57 42.34 27.66
Administration of
Justice
54.74 0 39.44 61.76 0 29.87 76.66 0 37.19
Education 156.65 0.10 22.38 108.66 0 10.86 132.14 0.10 12.29
Secretariat & Attached
Offices
437.62 -1.64 24.66 1114.14 4.78 63.98 479.31 1.50 28.23
Rural Development 153.40 0 27.88 242.59 0 40.74 50.80 0 9.21

2009-10 to 2011-12
 23-37% of State’s gross budget allocation surrendered annually
 Social Service (68-90%)
 Water Resources (57-68%)
 Social Security, Welfare & Nutrition (27-57%)
 Urban Development (57-67%)
 Roads & Bridges (35-38%)
 Power (55-57%) etc.
Within such large overall savings are large capital fund surrenders:
 Water Resources (Rs. 1891.45 crore)
 Roads & Bridges (Rs. 1292.02 crore)
 Power (Rs. 916.88 crore)
 Rs. 11716.40 crore of cumulative surrenders in 14 major budget heads
 In 2011-12, except for few budget heads, in all others were savings

 Externally funded schemes like those of the North Eastern Council (NEC) savings of Rs. 1426.72 crore from
2009-10 to 2011-12 with Rs. 861.01 crore in 2011-12 alone:
 Flood control of Brahmaputra and Barak rivers
 Medical colleges and rural family welfare sub-centers
 Water supply & flow irrigation
 Child services & Mid-day meals for school children
 Grants for backward regions and hill areas
About the Arthasastra
Kautilya wrote The Arthashastra, the science of
wealth and welfare, during the latter half of the
4th century B.C.E.. The Arthashastra contains
150 chapters, which are classified by topic in
15 books. It consists of three reasonably well
developed parts: (i) national security issues
including a foreign policy, (ii) administration
of justice including crime and punishment
issues, and (iii) policies related to economic
development, taxation, labor management and
financial management. The latter includes a
discussion on the critical role of accounting.
The Arthashastra is a theoretical treatise
designed to instruct kings everywhere and for
all time.

2009-10 to 2011-12
 Total Plan schematic surrenders of Rs. 16951.84 crore
 Rs. 9163.28 crore on account of major schemes
 75% savings in about a dozen
 50-74% in 18 and
 20-49% in another 19
 Affecting diverse budget heads such as, but not limited to:
 Water Resources, Hill Areas, Social Security/Services, Urban Development, Water Supply & Sanitation, Roads
& Buildings, Rural Development, Medical & Public Health

2009-10 to 2011-12
 Large surrenders of revenue allocations that sub serve Plan schematic expenditure such as:
 Rs. 1117.36 crore in Medical & Public Health
 Rs.1730.05 crore in Social Security, Welfare & Nutrition
 Rs. 574.16 crore in Welfare of SC/ST/OBC and
 Rs. 1602.27 crore in Social Service
 Include unfilled posts of doctors, teachers, repairs and maintenance of existent capital projects, etc.

0
2000
4000
6000
8000
10000
12000
14000
16000
Market Loans Interest Paid Unspent Balance/Surrender
 Decadal unspent balance: Rs. 85,887.87 crore
 Savings range: 9.7% to 38.32%
 Market Loans: Rs. 11550.79 crore (relates to repayment of pre-2003-04 Peerless, etc. loans)
 Interest paid on market loans: Rs. 6,396. 43 crore

2007-08 2008-09 2009-10 2010-11 2011-12
GOI Treasury Bills 5146 8858 8175 6747 6021
Interest 231 351 481 407 464
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
Rs.InCrore
While there are large budget surrenders every year large investments are made in short-term investments
in Govt. of India Treasury Bills. If current bank account balances are factored, the State is not short of
funds even if Central Plan grants were temporarily reduced

To state the facts frankly is not to despair the future nor
indict the past. The prudent heir takes careful inventory of
his legacies and gives a faithful accounting to those whom
he owes an obligation of trust.
US President John F Kennedy

 Artificial revenue surplus of Rs. 926.85 crore that
 Artificially lowered the fiscal deficit to Rs. 1,646.05 crore, in 2011-12, i.e. 1.43% of GSDP (of Rs.
1,15,409.64 crore), less than half the maxima set by the FRBM Act
 If 80% of capital allocations were expended, fiscal deficit = Rs. 8822 crore in 2011 raising fiscal deficit to
7.64% of GSDP
 If 80% of revenue budget allocations were expended = revenue deficit of Rs. 4829 crore in 2011-12
 2010-11 & 2011-12 Annual Plan Outlays almost equal gross budget
unspent balances

Months
2012-2013 2011-2012
MONTHLY PROGRESSIVE MONTHLY PROGRESSIVE
APRIL 1,464.89 1,464.89 1,250.91 1,250.91
MAY 1,435.41 2,900.30 1,216.58 2,467.49
JUNE 1,408.29 4,308.59 1,218.98 3,686.47
JULY 1,398.99 5,707.58 1,227.88 4,914.35
AUGUST 1,354.17 7,061.75 1,234.56 6,148.91
SEPTEMBER 1,429.16 8,490.91 1,306.21 7,455.12
OCTOBER 1,418.44 9,909.35 1,308.29 8,763.41
NOVEMBER 1,396.04 11,305.39 1,060.69 9,824.10
DECEMBER 1,560.51 12,865.90 1,737.98 11,562.08
JANUARY 1,500.09 14,365.99 1,319.24 12,881.32
FEBRUARY 1,516.41 15,882.40 1,189.46 14,070.78
MARCH 2969.08 18,851.48 2,826.88 16,897.66

Months 2012-2013 2011-2012
APRIL 262.89 262.89 183.83 183.83
MAY 68.08 330.97 196.20 380.03
JUNE 151.68 482.65 150.07 530.10
JULY 196.08 678.73 215.68 745.78
AUGUST 140.40 819.13 263.72 1,009.50
SEPTEMBER 197.55 1,016.68 279.74 1,289.24
OCTOBER 191.01 1,207.69 251.87 1,541.11
NOVEMBER 287.08 1,494.77 134.42 1,675.53
DECEMBER 199.80 1,694.57 450.18 2,125.71
JANUARY 222.78 1,917.35 280.53 2,406.24
FEBRUARY 211.44 2,128.79 73.10 2,479.34
MARCH 326.07 2.454.86 365.94 2,845.28

Months 2012-2013 2011-2012
APRIL 260.77 260.77 223.69 223.69
MAY 814.85 1075.62 432.22 655.91
JUNE 455.67 1,531.29 326.34 982.25
JULY 835.97 2,367.26 553.96 1,536.21
AUGUST 1,075.73 3,442.99 666.35 2,202.56
SEPTEMBER 910.99 4,353.98 789.64 2,992.20
OCTOBER 593.97 4,947.95 620.07 3,612.27
NOVEMBER 394.50 5,342.45 400.00 4,012.27
DECEMBER 1,118.46 6,460.91 971.39 4,983.66
JANUARY 353.80 6,814.71 492.53 5,476.19
FEBRUARY 1,125.49 7,940.20 632.81 6,109.00
MARCH 1,413.17 9,353.37 1,287.72 7,396.72

Months 2012-2013 2011-2012
APRIL 1,167.84 1,167.84 977.82 977.82
MAY 880.37 2,048.21 966.80 1,944.62
JUNE 2,178.50 4,226.71 1,378.07 3,322.69
JULY 1,432.93 5,659.64 1,305.44 4,628.13
AUGUST 1,922.65 7,582.29 1,691.73 6,319.86
SEPTEMBER 2,693.78 10,276.07 2,357.18 8,677.04
OCTOBER 2,269.63 12,545.70 1,241.81 9,918.85
NOVEMBER 1,485.16 14,030.86 2,100.19 12,019.04
DECEMBER 2,799.31 16,830.17 1,991.28 14,010.32
JANUARY 2,722.57 19,552.74 2,528.25 16,538.57
FEBRUARY 2,829.65 22,382.39 1,682.63 18,221.20
MARCH 9,013.90 31,396.29 9,946.06 28,167.26

Months 2012-2013 2011-2012
APRIL 1,104.08 1,104.08 956.23 956.23
MAY 815.36 1,919.44 898.30 1,854.53
JUNE 1,902.68 3,822.12 1,236.62 3,091.15
JULY 1,259.86 5,081.98 1,079.16 4,170.31
AUGUST 1,748.36 6,830.34 1,570.89 5,741.20
SEPTEMBER 1,951.77 8,782.11 2,048.85 7,790.05
OCTOBER 1,792.16 10,574.27 836.95 8,627.00
NOVEMBER 1,294.61 11,868.88 1,525.45 10,152.45
DECEMBER 2,046.72 13,915.60 1,546.78 11,699.23
JANUARY 2,198.36 16,113.96 1,644.67 13,343.90
FEBRUARY 1,793.20 17,907.16 1,309.97 14,653.87
MARCH 4,132.83 22,039.99 4,738.40 19,392.27

Months 2012-2013 2011-2012
APRIL 0.00 0.00 0.00 0.00
MAY 0.63 0.63 0.52 0.52
JUNE 9.78 10.41 7.42 7.94
JULY 5.59 16.00 4.50 12.44
AUGUST 7.17 23.17 0.80 13.24
SEPTEMBER 1.49 24.66 4.04 17.28
OCTOBER 1.41 26.07 4.70 21.98
NOVEMBER 3.26 29.33 0.56 22.54
DECEMBER 2.61 31.94 0.72 23.26
JANUARY 0.25 32.19 1.53 24.79
FEBRUARY 0.13 32.32 7.60 32.39
MARCH 40.01 72.33 42.29 74.68

Months 2012-2013 2011-2012
APRIL 89.75 89.75 100.56 100.56
MAY 58.28 148.03 56.87 157.43
JUNE 159.85 307.88 143.93 301.36
JULY 75.03 382.91 70.07 371.43
AUGUST 200.64 583.55 223.39 594.82
SEPTEMBER 252.14 835.69 237.54 832.36
OCTOBER 68.94 904.63 69.54 901.90
NOVEMBER 93.77 998.40 119.33 1,021.23
DECEMBER 110.07 1,108.47 94.53 1,115.76
JANUARY 90.03 1,198.50 98.95 1,214.71
FEBRUARY 178.81 1,377.31 205.06 1,419.77
MARCH 285.70 1,663.01 290.79 1,710.56

Months 2012-2013 2011-2012
APRIL 59.78 59.78 21.34 21.34
MAY 29.35 89.13 23.47 44.81
JUNE 185.43 274.56 44.92 89.73
JULY 73.65 348.21 162.59 252.32
AUGUST 98.51 446.72 80.62 332.94
SEPTEMBER 275.34 722.06 207.54 540.48
OCTOBER 293.81 1,015.87 224.12 764.60
NOVEMBER 104.25 1,120.12 458.90 1,223.50
DECEMBER 407.32 1,527.44 236.10 1,459.60
JANUARY 390.00 1,917.44 678.32 2,137.92
FEBRUARY 824.56 2,742.00 254.85 2,392.77
MARCH 3,548.15 6,290.15 3,867.58 6,260.35

Months 2012-2013 2011-2012
APRIL 3.97 3.97 0.24 0.24
MAY 34.87 38.84 44.52 44.76
JUNE 79.90 118.74 89.11 133.87
JULY 93.83 212.57 59.19 193.06
AUGUST 68.59 281.16 39.41 232.47
SEPTEMBER 118.32 399.48 93.52 325.99
OCTOBER 178.72 578.20 176.05 502.04
NOVEMBER 83.04 661.24 114.84 616.88
DECEMBER 301.61 962.85 205.59 822.47
JANUARY 131.98 1,094.83 203.73 1,026.20
FEBRUARY 211.39 1,306.22 109.60 1,135.81
MARCH 1,227.14 2,533.36 1,216.10 2,351.90

Months 2012-2013 2011-2012
APRIL 1,167.82 1,167.82 977.82 977.82
MAY 880.37 2,048.19 966.80 1,944.62
JUNE 2,178.48 4,226.67 1,378.09 3,322.71
JULY 1,432.94 5,659.61 1,305.45 4,628.16
AUGUST 1,922.68 7,582.29 1,691.73 6,319.89
SEPTEMBER 2,693.78 10,276.07 2,357.16 8,677.05
OCTOBER 2,269.63 12,545.70 1,241.84 9,918.89
NOVEMBER 1,485.17 14,030.86 2,100.18 12,019.07
DECEMBER 2,799.31 16,830.17 1,991.29 14,010.36
JANUARY 2,722.57 19,552.74 2,528.25 16,538.61
FEBRUARY 2,829.65 22,382.39 1,682.63 18,221.24
MARCH 11,365.25* 33,747.64* 12,047,68* 30,268.92*
* Includes all adjustments

Months
2012-2013 2011-2012
APRIL 1,163.85 1,163.85 977.57 977.57
MAY 844.70 2,008.55 921.76 1,899.33
JUNE 2,088.08 4,096.63 1,281.54 3,180.87
JULY 1,333.50 5,430.13 1,241.75 4,422.62
AUGUST 1,846.93 7,277.06 1,651.52 6,074.14
SEPTEMBER 2,227.11 9,504.17 2,256.39 8,330.53
OCTOBER 2,085.97 11,590.14 1,061.08 9,391.61
NOVEMBER 1,398.86 12,989.00 1,984.35 11,375.96
DECEMBER 2,454.04 15,443.04 1,782.88 13,158.84
JANUARY 2,588.36 18,031.40 2,322.99 15,481.83
FEBRUARY 2,617.76 20,649.16 1,564.80 17,046.63
MARCH 7,680.98 28,330.14 8,605.97 25,652.60

Months
2012-2013 2011-2012
APRIL 3.97 3.97 0.24 0.24
MAY 35.51 39.48 45.03 45.27
JUNE 89.68 129.16 96.53 141.80
JULY 99.42 228.58 63.69 205.49
AUGUST 75.75 304.33 40.21 245.70
SEPTEMBER 119.81 424.14 97.55 343.25
OCTOBER 180.12 604.26 180.75 524.00
NOVEMBER 86.31 690.57 115.41 639.41
DECEMBER 304.22 994.79 206.31 845.72
JANUARY 132.23 1,127.02 205.26 1,050.98
FEBRUARY 211.52 1,338.54 117.21 1,168.19
MARCH 1,267.15 2,605.69 1,258.40 2,426.59

0.00
5,000.00
10,000.00
15,000.00
20,000.00
25,000.00
APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB
Tax Revenue Non-tax Revenue
GIA & Contributions Total Receipts
Total Expenditure Total Revenue Expenditure
Total Capital Plan Expenditure Total Plan-Revenue Expenditure
Notwithstanding steady accretion of receipts through the year, the Govt. of Assam spends nearly 30-33%
of its annual budget in March alone

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb
Revenue 824.71 2298.33 2225.93 3323.43 4046.81 4357.4 4474.85 5153.61 5578.34 5066.65 5302.23
Fiscal 822.62 2262.25 2101.63 3101.78 3751.33 3599.23 3535.08 4128.8 4210.88 3566.73 3592.23
0
1000
2000
3000
4000
5000
6000
Rs.InCrore
Accumulation of expenditure in March, combined with receipt of excluded/delayed accounts of
previous months by PAG (A&E) causes major changes in fiscal and revenue/fiscal saving/surplus
not available till then

Plan-
Capital
Plan-
Revenue
Non-Plan
Capital
Non-
Plan-
Revenue
Non-Plan
Interest
TOTAL
3274.27 7423 75.22 1452.37 742.64 12224.86*
i.e. Rs. 394.35 crore per diem from 1st -31st Mar, 2013
BE: Fiscal Surplus 2910.33 BE: Revenue Surplus 8138.31
Citations for Kautilya’s Arthaśāstra
 Bhattacharya, A. K. 1989. Modern Accounting
Concepts in Kautilya’s Arthaśāstra. Calcutta, India:
Firma KLM Private Limited.
 Choudhury, N. 1982. “Aspects of Accounting
and Internal Control—India 4th Century B.C.,”
Accounting and Business Research, 46 (Spring):
105-110.
 Kangle, R. P. 1960. The Kautilya Arthaśāstra,
Part I, A Critical Sanskrit Edition with a
Glossary, Second Edition, 1997 Reprinting,
Bombay: University of Bombay 1969.
Part II, An English Translation with Critical and
Explanatory Notes, Second Edition, 1997
Reprinting, Bombay: University of Bombay 1972.
Part III, A Study, 1997 Reprinting, Bombay:
University of Bombay 1965.
 Mattessich, Richard. 1998. “Review and
Extension of Bhattacharya’s Modern Accounting
Concepts in Kautilya’s Arthaśāstra,” Accounting,
Business and Financial History Vol. 8 No. 2.
Reprinted in Mattessich, The Beginnings of
Accounting and Accounting Thought, New York:
Garland Publishing
* Owing to excluded treasury/PW accounts, figure may be lower in F&A Accounts 2012-13

Deficit 3%<
XII & XIII FC
Incentives
90% grant + 10%
loan
Low Interest
liability
Increasing Plan
grants
Unauthorized
transfers outside
Govt. Account
F&A Accounts
shows figures of
expdn. only

 Director, Social Welfare (DSW) drew Rs. 355.95 crore spread over 151 transactions from 5th-30th Mar, 2012 and had
Rs. 358.03 crore closing balance as on 31st Mar, 2012
 Items for which such moneys were transferred included funds for Anganwadis, ICDS medicines and kits, purchase of
school bags, child weighing scales and utensils (ICDS receipts from GOI in 2011-12 = Rs. 687.46 crore)
 Amounts drawn by the DDO from the treasury without details of beneficiaries, location-wise quantities of supply, and
details of work done by contractors
 Even vendor payments for items such as for purchase of school bags, utensils, Anganwadi materials, medicines and
kits under ICDS have been transferred to the above current account and vendors not paid from the government account
 Dy. Director, Elementary Education drew and transferred a total amount of Rs. 336.03 crore spread over 26
transactions from 3rd-31st Mar, 2012, to an unknown current account
 Amounts included state’s share of Sarva Shiksha Abhiyan and Mid-day meal component
 Dy. Director, Secondary Education, drew a total of Rs. 80.29 crore spread over 13 transactions from 25-31 Mar, 2012,
and the treasury transferred these amounts to SBI current account no. 30726979917
 Transactions related to the setting up of model schools (Rs. 4.46 crore), promotion of sports (Rs. 6.65 crore), building
grants for 50 secondary schools (Rs. 2.50 crore), contractual teacher salaries (Rs. 5.38 crore), publication of school
magazine (Rs. 13.30 crore) and central share for information and communication technology in schools, etc.
 All amounts drawn without details of beneficiaries, locations and quantities of supply, cash/cheque receipts, and
names of contractors with details of work done by them (such as for construction of kitchen stores)

Financial Mismanagement and Lack of Development in Assam

Financial Mismanagement and Lack of Development in Assam

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