Do our civic agencies know where their money goes?

A robust auditing system, citizen participation and transparency are what our civic agencies need most, floundering as they are in debt and inefficiently-managed funds. A report by local NGO Janaagraha rating the financial management of three parastatal agencies, BWSSB, BBMP and BDA, shows that major reforms are needed - and soon!

How do our administrative bodies manage their finances? According to a report by city-based NGO Janaagraha, Bengaluru’s position is precarious. BMTC, BDA and BWSSB, our three parastatal agencies, all scored in a range of 4-6, less than  50%. This is an indication that our civic agencies are not well governed, financially speaking, which impacts their ability to raise funds and use them efficiently to meet their service obligations, explained Srikanth Viswanathan, Coordinator, Advocacy and Reforms, Janaagraha.

Unveiling the report on Thursday, Viswanathan said that the performance of the  BMTC has been satisfactory, with a score of 6 out of 15 parameters. “If the  BMTC has adhered to timelines under the two unanswered questions on budgetary discipline, it would have scored 8 on 15,” he pointed out. “On account of the lack of details provided by the agency, Janaagraha was unable to rate them on these benchmarks,” he added.

Read: Guest column – Bengaluru’s civic agencies are badly managed financially

Bengaluru is one of the nation’s fastest growing cities in terms of economy, job creation and influx of people, which makes the delivery style of our civic agencies very poor in comparison. Pointing out the poor balance sheet and lack of transparency, Viswanathan added that private agencies and corporates score zero negative observations on audit maintenance, which should be the benchmark for our civic bodies too. The organization recommends that the civic agencies call in experts to help them better their financial management and emulate the corporate systems in terms of financial management.

Janaagraha has brought out six key recommendations in order to improve the financial prudence of our civic bodies. They include a mandatory five-year medium term fiscal plan for all civic agencies. The concerned body should be dis-incentivised if there is a difference of more than 15 per cent between budget and actuals. These civic agencies must have empanelled independent chartered accountants to audit annual accounts in civic agencies and as internal auditors. The financial and operational performance indicators must be published every quarterly, this helps maintain transparency on how the money is being spent. Legal provision should be ensured for systematic citizen participation in both annual budgeting and intra-year resource allocation, for neighbourhood level projects, he suggested.

While the BBMP’s financial management has been in focus for the several years, other civic agencies have escaped the glare. A little attention might have helped, for being under constant scrutiny from the media, resident welfare associations and elected bodies, has improved the BBMP’s situation considerably over the last year. Meanwhile, other civic bodies like the BDA and BMTC, have a lot to answer for, having escaped the glare so far. The state government needs to usher in financial management reforms in other civic bodies, which are falling apart, to meet the twin objectives of financial stability and accountability.

Other civic agencies which have been let off the hook so far will also be brought under the auditing system to be rated and brought to the public domain. The other agencies which will be audited are Bangalore Traffic Police, Bangalore City Police and Bescom. 

BMTC: just ahead of the rest
Of the three civic agencies  rated, Bangalore Metropolitan Transport Corporation (BMTC) has performed slightly better in terms of financial accountability. On a scale of fifteen parameters, the BMTC has secured 6, the equipvalent of a ‘just pass’, with 40 per cent. The KSRTC Rules, 1961 governing BMTC mandates a monthly operational review report.

The BMTC has suffered losses in 2014-15. The audit report for 2012-13 was not available as the website has only the audited financial statements. The BMTC is not transparent about the revenue and profit. It has also not made public the number of new buses and old buses that have been taken off the road. 

BDA: tripped up by its budgets
The BDA has presented unrealistic budgets over successive years. The BDA’s budget has recorded a variance of a whopping 49 % to 87 %. As per the Finance Member of BDA, the budget books are yet to be printed for 2016-17. Although the BDA, which was dying a slow death, was revived during SM Krishna’s tenure as chief minister of Karnataka, the civic body has failed to maintain financial prudence and audit maintenance.

Transparency in finances, operations emerges as a huge area of concern. None of the agencies are transparent in respect of annual budgets, audited annual accounts and civil works and capital expenditure. The details of annual budget were not available online depicting an absolute lack of transparency.

BWSSB: mired in debt
The BWSSB seems to have stolen the show this year, with an abysmally low performance. The agency, said representatives from Janaagraha, has not provided data on financial accountability. Poor cash management and debt management may well be a drain on the average taxpayer. The outstanding loan balance has resulted in an interest outlay of Rs 300 crore per annum.

The agency owes Rs 3,446 crore, as of March 31, 2014. Their income has grown by 10 percent between 2012 and 2014, whereas costs have increased by 23 percent during the same period. The website has no details on the extent of the body’s water supply and sewerage network across the city. There is an average variance of 43% between the budget and actuals.