CAG’s audit on Panchayati Raj institutions in Bihar Context:

As per latest information, after an audit by the Comptroller and Auditor General (CAG), Panchayati Raj Institutions (PRI) in Bihar submitted utilization certificates (UC) for only 42 per cent of the funds received from the State Panchayati Raj Department (PRD) during the financial years 2007-08 to 2020-21.

Key-highlights

• Utilization Certificates: This certificate/audit provides assurance to the sanctioning authority that the Grants, Aid, Funds are utilized for the purpose they are sanctioned & disbursed and within the stipulated period, as well as there is no misuse, delay in use, improper use, of these funds by the utilization Agency/Utility/Entity.
• Lack of clarity pertaining to revenue collection: The audit observed that PRIs were unable to levy and collect revenues from their own resources till August 2021, as the Bihar government did not specify the rates at which the tax/non-tax revenues were to be collected.
• Lack of human resource: The audit mentioned that, Staff crunch in PRIs in the state impacted the devolution of functions.

Structure of PRIs for village administration:

• PRI was constitutionalized through the 73rd Constitutional Amendment Act, 1992 to build democracy at the grass roots level and was entrusted with the task of rural development in the country.
• Though the basic structure of the PRIs is identical across the states of India, it is described via different nomenclatures in different states.
• Panchayats in every state has its own characteristics and even election procedures to these institutions are at variance.
  • District Panchayat or Zilla Parishad is co terminus with the district. Each district has one Zilla Parishad.
  • Block Panchayats or Panchayat Samitis: A Block may have several villages within it, but Gram Panchayats are not necessarily co terminus with each village.
• Depending on the size of population (as a matter of fact, number of voters) a Gram is defined under the law with a specific geographical area, which may consist of a single village or a cluster of adjoining villages.
• Members of Panchayats:
  • Gram Panchayat: A Gram (meaning a village or a cluster of villages) is divided into a minimum of five constituencies (again depending on the number of voters the Gram is having).
  • From each of these constituencies one member is elected. Body of these elected members is called the Gram Panchayat (GP).
  • Size of the GPs varies widely from state to state. In states like West Bengal, Kerala etc. a GP has about 20000 people on an average, while in many other states it is around 3000 only.

Working mechanism of PRIs:

• Revenue Collection:
  • The finances of Gram Panchayat come from both the state and the federal government.
  • Grants from the Central Finance Commission are currently one of the most important sources of funds for Gram Panchayats.
  • In addition, grants from state finance commissions are also available.
  • Most Gram Panchayats have largely untapped revenue sources as well which mainly includes, Land revenue, vehicle tax, tax on industries located within the village's geographical boundaries, toll tax, and festival tax are all sources of funding for the gram panchayat.
• Concerned authority: In times of crisis, the district collector has the authority to distribute funds.
• Auditing process:
  • The audit of panchayat accounts is covered by Article 243J.
  • The State legislature could mandate that panchayats record accounting and have them audited.

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Propriety Audit:

• This kind of audit extends beyond scrutinizing the mere formality of expenditure to its wisdom and economy and to bring to light, cases of improper expenditure or waste of public money.
• CAG is authorized to conduct a ‘Propriety Audit’ for PRIs.