Auditing is the task of counterchecking accounts. In india the auditing of government audits is done by comptroller auditor general as provided under article 148. Auditing is a legislative functions. Hence comptroller auditor general is an agent of parliament. He is appointed by president and submits the report to the president. CAG is responsible for auditing of
a. Central government accounts
b. State government accounts
c. Central public sector undertaking
d. State public sector undertaking
e. Public corporations
f. Joint stock companies ie PPPs
g. Consolidated fund of india
h. Contingency fund of india
i. Public accounts
CAG can perform the following types of audits
a. Revenue audit: It involves auditing the income of a department
b. Expenditure audit: It involves auditing the expenditure of public money by a department
c. Properietary audit: It involves auditing the expenditure of parliament granted funds of a department
d. Stores and stocks audit: It is the physical verification of assets
e. Efficiency audit: It examines the benefits accrued from the expenditure made
CAG audits accounts that he receives from Comptroller general of accounts. The audit report is forwarded to the president. The president forwards it to the parliament. The task of auditing being a legislative task is primarily to be undertaken by parliament. But since the parliamentarians lack the technical knowhow to conduct an audit, CAG conducts the audit on their behalf. The audit report is handed over to the public accounts committee in parliament. The CAG aids the committee in analysing the report in following ways
• Whom to examine?
• What to examine?
• How to examine?
• Suggest actions to be taken
• Helps in analysis of action taken report
Through these functions CAG acts as a friend, philosopher, guide of public accounts committee.
CAG also plays the role of watch dog of public purse by keeping a vigilant watch on the expenditure made by public servants. CAG at times has also played the role of a blood hound. When CAG’s requests werent heeded to by public servants, CAG personally investigated and gathered evidences for example in the bihar fodder scam, coffin scam of kargil etc.
CAG in india suffers from the lack of authority. CAG doesn’t have the authority to demand for infroamtion from public officials. It is through the PAC that he exercises authority. Depsite these flaws CAG has played a key role in governance in our country. Many a miscrepancies have been brought to light in recent times due to the watchful eyes of CAG.
quizzes, revision notes, etc for IAS 2013
Monday, September 27, 2010
Wednesday, September 22, 2010
India-China still brothers?
Hindi chini bhai bhai was a famous slogan of yesteryears. Now this brotherhood seems to be missing between the two. Interestingly both the nations were born around the same time and their growth trajectory has been more or less identical. China as a nation firmly established itself in 1949 and India immediately embraced it as a loving neighbour. China however started irritating its big bro(India). It published in its maps a large section of indian territory as its own. However when big bro asked for clarification, it claimed that the maps were of 1912 and necessary corrections would be made. That turned out to be lie and very soon it formalised the maps and waged a war to occupy its claimed territories. The big brother’s trust in china was shattered and both parted ways after war never to talk with each other again for a decade. Meanwhile china decided to launch an economic attack on india by growing into an economic superpower. In this endeavour the communist china opened up its country for the capitalists in 1970s.
While India lurched into dark days of emergency where all economic activity came to standstill, china began growing into an economically stable nation. India after the BoP shock of 1990 embarked on economic reforms and opened up its market for the foreign capital. Very soon we reached a respectable stage on world economic stage and began sharing space with big wigs like US and UK. China had already firmly established its position. In 2000, one of the fine statesman of our times Shri Vajpayee embarked on a tour of china and that visit proved to be an ice breaker. Major decisions were made on border dispute, trade , technology etc. Very soon the camarederie grew and now they are the two biggest economic powers in asia. However india china interests are blurred. On some issues like climate change and global economic reforms we share a great rapport with china. This partnership managed to put across asia’s views effectively at copenhagen and other important summits. We seem to behave politely and formally on the global stage but in our backyard the scenario hasn’t changed much.
China with its string of pearls startegy is trying to tie down india’s growing influence over south asia. With India’s growing relations with US, china has been trying to counterbalance it by firming up its relationship with pak and russia. Particularly china’s relationship with pak is going to hurt india dearly. India despite its growing economic power has unfortunately not been able to influence its neighbur’s to the extent that china ahs influenced. India has a growing trust and trade deficit with its neighbours. Our fixxation with pakistan over the years has resulted in neglect of our other neighbours while china has been benevolent with all of India’s neighbours and managed to leverage its economic power to forge relationship with them.
With both china and India bound to grow in future , their interests are increasingly becoming orthogonal. In this time of economoic prosperity of the two antions the last thing that we need is a war. It is high time that the two brothers forget the past and reconcile. India should shed all its inhibitions and get down to a frank talk with china. Post the economic crisis, the world is wary of US as a leader and is waiting for a new leader to lead it. An India-china partnership can prove to be a worthy leader to the world and transform the 21st century into an asian century.
While India lurched into dark days of emergency where all economic activity came to standstill, china began growing into an economically stable nation. India after the BoP shock of 1990 embarked on economic reforms and opened up its market for the foreign capital. Very soon we reached a respectable stage on world economic stage and began sharing space with big wigs like US and UK. China had already firmly established its position. In 2000, one of the fine statesman of our times Shri Vajpayee embarked on a tour of china and that visit proved to be an ice breaker. Major decisions were made on border dispute, trade , technology etc. Very soon the camarederie grew and now they are the two biggest economic powers in asia. However india china interests are blurred. On some issues like climate change and global economic reforms we share a great rapport with china. This partnership managed to put across asia’s views effectively at copenhagen and other important summits. We seem to behave politely and formally on the global stage but in our backyard the scenario hasn’t changed much.
China with its string of pearls startegy is trying to tie down india’s growing influence over south asia. With India’s growing relations with US, china has been trying to counterbalance it by firming up its relationship with pak and russia. Particularly china’s relationship with pak is going to hurt india dearly. India despite its growing economic power has unfortunately not been able to influence its neighbur’s to the extent that china ahs influenced. India has a growing trust and trade deficit with its neighbours. Our fixxation with pakistan over the years has resulted in neglect of our other neighbours while china has been benevolent with all of India’s neighbours and managed to leverage its economic power to forge relationship with them.
With both china and India bound to grow in future , their interests are increasingly becoming orthogonal. In this time of economoic prosperity of the two antions the last thing that we need is a war. It is high time that the two brothers forget the past and reconcile. India should shed all its inhibitions and get down to a frank talk with china. Post the economic crisis, the world is wary of US as a leader and is waiting for a new leader to lead it. An India-china partnership can prove to be a worthy leader to the world and transform the 21st century into an asian century.
India-China still brothers?
Hindi chini bhai bhai was a famous slogan of yesteryears. Now this brotherhood seems to be missing between the two. Interestingly both the nations were born around the same time and their growth trajectory has been more or less identical. China as a nation firmly established itself in 1949 and India immediately embraced it as a loving neighbour. China however started irritating its big bro(India). It published in its maps a large section of indian territory as its own. However when big bro asked for clarification, it claimed that the maps were of 1912 and necessary corrections would be made. That turned out to be lie and very soon it formalised the maps and waged a war to occupy its claimed territories. The big brother’s trust in china was shattered and both parted ways after war never to talk with each other again for a decade. Meanwhile china decided to launch an economic attack on india by growing into an economic superpower. In this endeavour the communist china opened up its country for the capitalists in 1970s.
While India lurched into dark days of emergency where all economic activity came to standstill, china began growing into an economically stable nation. India after the BoP shock of 1990 embarked on economic reforms and opened up its market for the foreign capital. Very soon we reached a respectable stage on world economic stage and began sharing space with big wigs like US and UK. China had already firmly established its position. In 2000, one of the fine statesman of our times Shri Vajpayee embarked on a tour of china and that visit proved to be an ice breaker. Major decisions were made on border dispute, trade , technology etc. Very soon the camarederie grew and now they are the two biggest economic powers in asia. However india china interests are blurred. On some issues like climate change and global economic reforms we share a great rapport with china. This partnership managed to put across asia’s views effectively at copenhagen and other important summits. We seem to behave politely and formally on the global stage but in our backyard the scenario hasn’t changed much.
China with its string of pearls startegy is trying to tie down india’s growing influence over south asia. With India’s growing relations with US, china has been trying to counterbalance it by firming up its relationship with pak and russia. Particularly china’s relationship with pak is going to hurt india dearly. India despite its growing economic power has unfortunately not been able to influence its neighbur’s to the extent that china ahs influenced. India has a growing trust and trade deficit with its neighbours. Our fixxation with pakistan over the years has resulted in neglect of our other neighbours while china has been benevolent with all of India’s neighbours and managed to leverage its economic power to forge relationship with them.
With both china and India bound to grow in future , their interests are increasingly becoming orthogonal. In this time of economoic prosperity of the two antions the last thing that we need is a war. It is high time that the two brothers forget the past and reconcile. India should shed all its inhibitions and get down to a frank talk with china. Post the economic crisis, the world is wary of US as a leader and is waiting for a new leader to lead it. An India-china partnership can prove to be a worthy leader to the world and transform the 21st century into an asian century.
While India lurched into dark days of emergency where all economic activity came to standstill, china began growing into an economically stable nation. India after the BoP shock of 1990 embarked on economic reforms and opened up its market for the foreign capital. Very soon we reached a respectable stage on world economic stage and began sharing space with big wigs like US and UK. China had already firmly established its position. In 2000, one of the fine statesman of our times Shri Vajpayee embarked on a tour of china and that visit proved to be an ice breaker. Major decisions were made on border dispute, trade , technology etc. Very soon the camarederie grew and now they are the two biggest economic powers in asia. However india china interests are blurred. On some issues like climate change and global economic reforms we share a great rapport with china. This partnership managed to put across asia’s views effectively at copenhagen and other important summits. We seem to behave politely and formally on the global stage but in our backyard the scenario hasn’t changed much.
China with its string of pearls startegy is trying to tie down india’s growing influence over south asia. With India’s growing relations with US, china has been trying to counterbalance it by firming up its relationship with pak and russia. Particularly china’s relationship with pak is going to hurt india dearly. India despite its growing economic power has unfortunately not been able to influence its neighbur’s to the extent that china ahs influenced. India has a growing trust and trade deficit with its neighbours. Our fixxation with pakistan over the years has resulted in neglect of our other neighbours while china has been benevolent with all of India’s neighbours and managed to leverage its economic power to forge relationship with them.
With both china and India bound to grow in future , their interests are increasingly becoming orthogonal. In this time of economoic prosperity of the two antions the last thing that we need is a war. It is high time that the two brothers forget the past and reconcile. India should shed all its inhibitions and get down to a frank talk with china. Post the economic crisis, the world is wary of US as a leader and is waiting for a new leader to lead it. An India-china partnership can prove to be a worthy leader to the world and transform the 21st century into an asian century.
Monday, September 13, 2010
Tax reforms
Tax Reforms
Why tax reforms?
India after independence decided to tread the socialist path and govt took upon itself the onerous task of wiping the tears of the poor. However in its effort towards delivering services to all and ensuring equitable growth, its expenditure on social sector shot up. It established numerous public sector industries to manufacture goods right from bread to ambassdor. All these resulted in heavy spending. However governments revenues remained weak. One of the main source of government revenues are tax revenues. Tax revenue was alarmingly low because of the regressive tax structure we had. This called for a tax policy reform. Finally the fiscal crisis of 1990 forced us to unlash a series of reforms in our economy popularly known as LPG(Liberalisation, privitisation, globalisation) reforms.
The tax policy pre 1991 suffered from following drawbacks
• It was retrogressive ie it taxed both the poor and rich equally. Majority of government revenue was from indirect taxes. Indirect taxes like excise duty , custom duty don’t differentiate between rich and poor
• It was irrational with tax rates going up as high aas 97.6%(i.e. for every 100 rs earned 97.6 rs goes to govt)!!!
• Irrational policies discouraged people from paying taxes and lead to tax evasion
• The more the rules, the more the loop holes. With so many rules in the income tax act people with help of their chartered accountants could easily exploit the loop holes and thus managed to legally avoid tax
• All this lead to a huge fiscal deficit for government which mad eit imperative on govt to undertake tax policy teforms
What were the tax policy reforms?
The need for tax policy reforms was
• To improve tax to GDP ratio
• To progressively tax people ie tax the rich more and the poor less
• To increase revenue from direct taxes
• To improve the fiscal balance of govt
• To lower tax rates and widen tax base
Keeping these objectives in view MMS formulated a meticulous fiscal policy which worked wonders for our country.
He undertook following steps
• Earlier cotton cloth was subjected to 50 different tax rates depending upon quality of cotton. Such multiplicity of rates resulted ina dministrative complexity. This was borugh down to a uniform single rate called CENVAT
• Earlier our tax dept spend rs 1.2 per rupee to collect Tax!!! By leveraging technology and optimising the administrative structure today the cost of collection is 6 paise per rupee
• The tax slabs were reduces encouraging more peole to pay taxes. As a result the direct taxes have increased and are today almost equal to indirect tax revenues
• The cascading effect of taxes on industry was corrected by implementing the advolarem taxation system through VAT
So what next?
The next step is to simplify our tax laws. The IT act of 1961 has become voluminous and is not in sync with current demands of economy.
Hence the government is undertaking GST and DTC to put in place a simplified, transparent tax system.
A transparent tax system will lead to a situtation where people would start voluntarily filing tax leading to surplus revenue with govt which could be benefeicially invested in social sector schemes. This would help in achieveing our goal of financial inclusion. It would encourgae people to save more leading to higher svaings rate and hence promoting investments. This would lead to a greta thrust to our economy and will jettision us into the league of developed nations.
So the need of the hour is a swift and smooth passing of DTC and GST bill
Why tax reforms?
India after independence decided to tread the socialist path and govt took upon itself the onerous task of wiping the tears of the poor. However in its effort towards delivering services to all and ensuring equitable growth, its expenditure on social sector shot up. It established numerous public sector industries to manufacture goods right from bread to ambassdor. All these resulted in heavy spending. However governments revenues remained weak. One of the main source of government revenues are tax revenues. Tax revenue was alarmingly low because of the regressive tax structure we had. This called for a tax policy reform. Finally the fiscal crisis of 1990 forced us to unlash a series of reforms in our economy popularly known as LPG(Liberalisation, privitisation, globalisation) reforms.
The tax policy pre 1991 suffered from following drawbacks
• It was retrogressive ie it taxed both the poor and rich equally. Majority of government revenue was from indirect taxes. Indirect taxes like excise duty , custom duty don’t differentiate between rich and poor
• It was irrational with tax rates going up as high aas 97.6%(i.e. for every 100 rs earned 97.6 rs goes to govt)!!!
• Irrational policies discouraged people from paying taxes and lead to tax evasion
• The more the rules, the more the loop holes. With so many rules in the income tax act people with help of their chartered accountants could easily exploit the loop holes and thus managed to legally avoid tax
• All this lead to a huge fiscal deficit for government which mad eit imperative on govt to undertake tax policy teforms
What were the tax policy reforms?
The need for tax policy reforms was
• To improve tax to GDP ratio
• To progressively tax people ie tax the rich more and the poor less
• To increase revenue from direct taxes
• To improve the fiscal balance of govt
• To lower tax rates and widen tax base
Keeping these objectives in view MMS formulated a meticulous fiscal policy which worked wonders for our country.
He undertook following steps
• Earlier cotton cloth was subjected to 50 different tax rates depending upon quality of cotton. Such multiplicity of rates resulted ina dministrative complexity. This was borugh down to a uniform single rate called CENVAT
• Earlier our tax dept spend rs 1.2 per rupee to collect Tax!!! By leveraging technology and optimising the administrative structure today the cost of collection is 6 paise per rupee
• The tax slabs were reduces encouraging more peole to pay taxes. As a result the direct taxes have increased and are today almost equal to indirect tax revenues
• The cascading effect of taxes on industry was corrected by implementing the advolarem taxation system through VAT
So what next?
The next step is to simplify our tax laws. The IT act of 1961 has become voluminous and is not in sync with current demands of economy.
Hence the government is undertaking GST and DTC to put in place a simplified, transparent tax system.
A transparent tax system will lead to a situtation where people would start voluntarily filing tax leading to surplus revenue with govt which could be benefeicially invested in social sector schemes. This would help in achieveing our goal of financial inclusion. It would encourgae people to save more leading to higher svaings rate and hence promoting investments. This would lead to a greta thrust to our economy and will jettision us into the league of developed nations.
So the need of the hour is a swift and smooth passing of DTC and GST bill
Sunday, September 5, 2010
India's growth: Its problems and solution
Indian economy has been growing at a rapid pace for the past 5 years barring the slow down during the crisis year. The main driver of this growth has been our service sector and the burgeoning foreign reserves thanks to the FDIs and FIIs flowing into India
The growth rate of any economy is measured in terms of increase in gross domestic product (GDP) in a given time period. GDP is the net value of all goods and services produced within a country in a given time period.
Indian economy is broadly divided into 3 sectors
i) Agriculture sector
ii) Industrial sector
iii) Service sector
Agriculture sector:
It employs 60% of our workforce. However it’s contribution to GDP is disproportionately low. Hence the fruits of growth and development don’t reach these 60%. Efforts need to be made to boost agriculture sector as india is mainly an agrarian economy. India is bestowed with large land area criss crossing with rivers and streams. Optimum utilisation of resources can lead to maximising yield and hence more money in the pockets of the farmers. Micro watershed management needs to be taken up on a priority basis especially in drought prone regions. Scientific agriculture should be adopted. Research findings need to be implemented. All these measures along with a holistic developemnt of key social sector areas can lead to a sustainable and higher growth of our agriculture sector
Industry sector:
We have the advantage of a huge population and this can serve as a huge demographic dividend for our country. But the lack of skill among majority of work force is an area of concern. In this land of a billion, employment is never a problem but lack of employable skills denies many a denizens the right to lead a dignified and prosperous life. Every year an estimated 15 million workforce enter the job market. But our institutions can train only a 3 million workforce. This is an area of concern.
Our industrial sector has attracted large foreign investments. Indian industry offers the following advantages
i) Cheap labour
ii) Cheap raw material
iii) Big and diverse market
However there is lot of scope to increase foreign investment in our industries. There are certain bottlenecks which need to be removed. They are
i) Obselete and stringent labour laws
ii) Inefficient banking system
iii) Overstressed physical infrastructure
Labour laws need to be amended to provide for easy shutting down of industries. Our banking systems are slow interms of verification and approval loans. Our ports are painstakingly slow in unloading and laoding, our roads are crowded and our power supply is frequently interrupted. The golden quadrilateral has adressed the problem of roads to some extent. But freight movement is mostly through railways . Railways need to implement the freight corridor project at war footing in order to not deny india the opportuniy to grow at over 10%. Our power stations are unable to meet the growing needs of differen sectors. The give away schemes of govt towards agriculture have resulted in disproportionate(over 80%) consumption of power in agriculture sector.
Power supply systems are easily tamperable and are hence prone to leakages. Measures need to be taken to ensure optimum utilisation of our power resources.
Services Sector:
Services sector employs around 20% of our work force and contributes to over 60% of our GDP. Services like Software, Hotels , Tourism have helped in boosting india’s image at international level. In the crisis period Software exports and worker remittances kept us afloat and ensured india was among the handful countires that showed a positive growth. Improvements in communication technology has helped in sectors like BPO to flourish. India has excelled in field of software while china is leader in hardware. A harmonious partnership between the two asian giants can ensure a boost in foreign trade.
Despite delivering a positive growth rate , we still arent able to put money into the hands of poor. The reason for this is the unbalanced regional development. Over 50% of FDI is concentrated in Mumbai and Delhi. This is majorly because of the infrastructure and transport facilities in these regions. With such high disparities it is difficult to achieve inclusive growth. Innovative concepts like rural BPOs need to be encouraged to deliver the fruits of India’s growth in the hinterlands.
The growth rate of any economy is measured in terms of increase in gross domestic product (GDP) in a given time period. GDP is the net value of all goods and services produced within a country in a given time period.
Indian economy is broadly divided into 3 sectors
i) Agriculture sector
ii) Industrial sector
iii) Service sector
Agriculture sector:
It employs 60% of our workforce. However it’s contribution to GDP is disproportionately low. Hence the fruits of growth and development don’t reach these 60%. Efforts need to be made to boost agriculture sector as india is mainly an agrarian economy. India is bestowed with large land area criss crossing with rivers and streams. Optimum utilisation of resources can lead to maximising yield and hence more money in the pockets of the farmers. Micro watershed management needs to be taken up on a priority basis especially in drought prone regions. Scientific agriculture should be adopted. Research findings need to be implemented. All these measures along with a holistic developemnt of key social sector areas can lead to a sustainable and higher growth of our agriculture sector
Industry sector:
We have the advantage of a huge population and this can serve as a huge demographic dividend for our country. But the lack of skill among majority of work force is an area of concern. In this land of a billion, employment is never a problem but lack of employable skills denies many a denizens the right to lead a dignified and prosperous life. Every year an estimated 15 million workforce enter the job market. But our institutions can train only a 3 million workforce. This is an area of concern.
Our industrial sector has attracted large foreign investments. Indian industry offers the following advantages
i) Cheap labour
ii) Cheap raw material
iii) Big and diverse market
However there is lot of scope to increase foreign investment in our industries. There are certain bottlenecks which need to be removed. They are
i) Obselete and stringent labour laws
ii) Inefficient banking system
iii) Overstressed physical infrastructure
Labour laws need to be amended to provide for easy shutting down of industries. Our banking systems are slow interms of verification and approval loans. Our ports are painstakingly slow in unloading and laoding, our roads are crowded and our power supply is frequently interrupted. The golden quadrilateral has adressed the problem of roads to some extent. But freight movement is mostly through railways . Railways need to implement the freight corridor project at war footing in order to not deny india the opportuniy to grow at over 10%. Our power stations are unable to meet the growing needs of differen sectors. The give away schemes of govt towards agriculture have resulted in disproportionate(over 80%) consumption of power in agriculture sector.
Power supply systems are easily tamperable and are hence prone to leakages. Measures need to be taken to ensure optimum utilisation of our power resources.
Services Sector:
Services sector employs around 20% of our work force and contributes to over 60% of our GDP. Services like Software, Hotels , Tourism have helped in boosting india’s image at international level. In the crisis period Software exports and worker remittances kept us afloat and ensured india was among the handful countires that showed a positive growth. Improvements in communication technology has helped in sectors like BPO to flourish. India has excelled in field of software while china is leader in hardware. A harmonious partnership between the two asian giants can ensure a boost in foreign trade.
Despite delivering a positive growth rate , we still arent able to put money into the hands of poor. The reason for this is the unbalanced regional development. Over 50% of FDI is concentrated in Mumbai and Delhi. This is majorly because of the infrastructure and transport facilities in these regions. With such high disparities it is difficult to achieve inclusive growth. Innovative concepts like rural BPOs need to be encouraged to deliver the fruits of India’s growth in the hinterlands.
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