MODULE - 8

LEARNING OBJECTIVES : CURRENT ECONOMIC ISSUES PLANNING COMMISSION FINANCE COMMISSION PUBLIC ACCOUNTS COMMITTEE COMPTROLLER AND AUDITOR GENERAL, PUBLIC INVESTMENT BOARD CENTRE & STATE FINANCIAL RELATIONS

PLANNING COMMISSION IN INDIA

1950- Planning commission was set up by a resolution of the GOI.

Commission for India Planning was established in order to bring about a steady and swift rise in the living standards of Indian citizens. The government sought to uplift the condition of India's teeming millions by exploiting the country's rich resources efficiently, providing employment opportunities to all, and by increasing the production levels in the agricultural as well as industrial sectors.

India Planning commission

The various functions of India Planning Commission are:
To assess the country's resources To formulate 5 year plans that make an effective use of the

country's resources To determine national priorities and allot resources to the plans To decide the machinery required to make the plans successful To make appraisals of the plans periodically in order to check their progress

India Planning commission

The composition of the India Planning Commission has changed a lot since its inception. At the head is the Prime Minister of the country who acts as the ex-officio chairman. The India Planning Commission has a deputy chairman who is nominated and the cabinet

members who act as part- time members.

India Planning commission

The full-time members of the Indian Planning Commission are experts from various fields such as industry, science, general administration, and economics. In 1951, the 1st 5 year plan was announced and the then Prime Minister, Jawaharlal Nehru was the chairman of that India Planning Commission

INDIAN PLANNING COMMISSION

India Planning Commission has helped in the better utilization of the country's resources for the common good of the citizens. The Planning Commission is considered by many as the backbone of the country's progress and all-round development.

PUBLIC ACCOUNTS COMMITTEE

PAC- Oldest financial committee. It consists of 22 members, 15 from Lokasabha & 7 from Rajyasabha. As a matter of practice, since 1967, member of opposition is being appointed as the chairman of the committee.

PUBLIC ACCOUNTS COMMITTEE

Functions of the Committee PAC - scrutinizes the Appropriation Accounts of the Government of India and the reports of the Comptroller and Auditor General of India thereon. While doing so, it is the duty of the Committee to

satisfy itself:-

That the moneys shown in the accounts as having been disbursed were legally available for, and applicable to, the service or purpose to which have been applied or charged;

PUBLIC ACCOUNTS COMMITTEE

Another important function of the Committee is the

discussion on points of financial discipline and principle. The detailed examination of questions involving principles and system is a leading and recognized function of the Committee.

While scrutinizing the Reports of the C&AG on Revenues Receipts, the Committee examines various aspects of Governments tax administration.

PUBLIC ACCOUNTS COMMITTEE

The Committee, thus, examines cases involving under-

assessments, tax-evasion, non-levy of duties, misclassifications etc., identifies the loopholes in the taxation laws and procedures and makes recommendations in order to check leakage of revenue.

Public Investment Board

The PIB considers investment proposals of the Central Government Ministries in regard to their Public Sector undertakings.

Central Sector Projects costing Rs. 100 Crores and above are considered by PIB.
Public finance influences the rates of consumption, savings and investment in both physical and human capital.

Public Investment Board

As government should be in a position to allocate resources efficiently when markets fail to do so and, provide relief to the poor, the public sector has expanded.

Public investment should therefore, promote development.

All developing countries are making major investments for socio-economic development and are undertaking a large no. of development programmes and projects

Dis-investments programme in India

The dis-investments programme began in 1991. The Government has adopted the route of disinvestment which involves the sale of the public sector equity and the public at large. The main approach of the Government in this regard is to bring down its equity in all non strategic public sector undertakings and closed down those public sector which cannot be revived.

Dis-investments programme in India

Objectives:
1. 2. 3.

Rising of resources Reducing day tp day interference in the working of public sector enterprises by loosening bureaucratic govt.control. Giving the management in the autonomy to act.

FINANCIAL RELATIONS BETWEEN THE CENTRE AND THE STATES

The

Centre State relations are crucial to the preservation of the unity and integrity of India within the framework of its linguistic and other diversities
The GOI Act of 1935 created the federal system & dealt with the problem of devolution of resources from the centre to the State.

FINANCIAL RELATIONS BETWEEN THE CENTRE AND THE STATES

Allocation of resources between Centre & States:

1. 2.

3.
4.

Sharing of Income Tax Sharing of Union excise duties Sharing of estate duty Grants to States

FINANCIAL RELATIONS BETWEEN THE CENTRE AND THE STATES

India- federal structure clear structure between the Union and State functions and sources of revenue, but the residual powers belong to the Centre.

States have been assigned certain taxes which are levied and collected & also share revenue of certain other taxes.

State receive grants in aid of their revenue from the Union.

Union taxes- corporation tax,custom duties, excise duties,Terminal taxes on goods carried by railways, sea, or air, taxes on sale or purchase of goods in the course of inter-state trade etc., State taxes Land revenue, taxes on the sale and purchase of goods etc.,

FINANCE COMMISSIONS
Under the provisions of Article 280 of the Constitution, the president is required to appoint a Finance Commission for the specific purpose of Devolution(delegation of power) of non-plan revenue resources. Functions of Finance commission are to make recommendations to the President in respect of
1.

The distribution of net proceeds of taxes to be shared between Union and the States and the allocation of share of such proceeds among the States.

FUNCTIONS OF FINANCE COMMISSION

2.

Principles which should govern the payment by the Union of grantsin-aid to the revenues of the States. Any other matter concerning financial relations between Union and the States.

3.

So far 12 Finance commissions been appointed by the Government since the inauguration of the Constitution in 1951.

RECOMMENDATIONS OF FINANCE COMMISSIONS Recommendations of Finance Commission can be Grouped into three heads;
1.

Division & Distribution of Income Tax and other taxes

2.

Grants-in-aid: for meeting the developmental needs of the states, to improve primary education facilities, improvement of communication and also upgrade of administration.
Loans by the Centre to States

3.

FINANCE COMMISSION & PLANNING COMMISSION

SL.NO 1

FINANCE COMMSSION Statutory body appointed by Presidential proclamation once in five years It helps to transfer non plan resources from the Centre to the States FC Recommendations are in the form of awards and the Central Govt. is bound to accept them FM get their authority from the constitution and they are not the instrument of the Central Govt. Finance commission recommendations are assertive

PLANNING COMMISSION Non-statutory body permanent body and the members are like full Govt. employee Has the discretion to transfer plan resources from the Centre to states PC transfer of funds is only discretionary PC is only an instrument of the central Govt. Planning Commission is discretionary.

Comptroller & Auditor General

There is a special arrangement for the audit of companies where the equity participation by Government is 51% or more. The primary auditors of these companies are Chartered Accountants, appointed by the Union Government on the advice of the Comptroller & Auditor General who gives the auditors directions on the manner in which the audit should be conducted by them.

Comptroller & Auditor General

Who is the comptroller and Auditor-General?
The office of comptroller and Auditor-General is a statutory office created by parliament In public audit Act 2001.

The Auditor-General is an officer of parliament. In the capacity, the Auditor-General is independent of executive government and answerable to parliament.

Comptroller & Auditor General

He is holding the office of Auditor-General is recommended for the position by the house of representatives and is appointed by the governor-general. The person appointed can hold the office for a once - only term of not more then seven years..

What does the Auditor-General do? As AuditorGeneral.. The Auditor-General is the auditor appointed by parliament to audit all types of public entity

Comptroller & Auditor General

Audit Jurisdiction

The organisations subject to the audit of the Comptroller and Auditor General of India are:All the Union and State Government departments and offices including the Indian Railways and Posts and Telecommunications.

Comptroller & Auditor General

Audit Jurisdiction
About 1200 public commercial enterprises controlled by the Union and State governments, i.e. government companies and corporations. Around 400 non-commercial autonomous bodies and authorities owned or controlled by the Union or the States.
Over 4400 authorities and bodies substantially financed from Union or State revenues

Comptroller & Auditor General

The Auditor General acts on behalf of Parliament by monitoring and certifying whether the Govt. has the necessary authority from Parliament for its proposed daily Expenditure. Audit & Assurance reports to audited entities The audit of the yearly financial reports of every public entity results in two kinds of report. One is the audit report that is attached to the published financial report the other is a report to the entitys management on matters arising from the audit.

Comptroller & Auditor General

Reports to parliament Reports are presented to Parliament arising from performance audits and inquiries, and on matters emerging from annual audits. The Auditor General also reports to Parliament on proposed activities in an annual plan, & on performance against the Plan in an Annual Report.

THE END