Parking of Funds and Personal Ledger Account PLA

 Parking of Funds and Personal Ledger Account PLA

-Dr. Lalit Kumar

The Government Departments, Boards, Corporations usually receive funds/grants/money from parent departments, finance departments, other state governments, central government, national and international financial institutions, etc., and the amount is usually deposited in a saving bank account for safety purposes. The bank provides nominal interest on the savings account. Whenever the Government audit the financial records relating to cash including cash at treasury and bank balance, it becomes difficult to detect the irregularities as the bank account is easier to use for non-government purposes. The cash at treasury is used strictly with vigilance on part of Treasury Officer w.r.t. sanctions, approvals, rules, instructions, etc.

Loss of interest to Government

Secondly, the amount deposited in the bank receives nominal interest. In case, such an amount is kept in treasury, the Government can utilize it for the time period it is not spent. The debt of the Government will reduce and the cost of debt service will be reduced. 

Illustration

For example, a government department received Rs. 10 crores for a particular project from UNDP, and the amount is deposited in a savings bank account. Suppose the amount is used within 6 months and the rate of interest is 4% on the saving account. The department will earn interest on Rs. 10 Crores, an amount of Rs. 20 Lacs. At the same time, the Government took a debt of Rs. 10 Crores from the same bank to finance its requirements. Suppose the bank is charging interest on loan 8%. The Government will pay interest on Rs. 10 Crores loan for 6 months, an amount of Rs. 40 Lacs.

In case, the department would have kept the amount Rs. 10 Crores in Treasury, the Government would have saved net Rs. 20 Lacs (i.e. Rs. 40 Lacs paid to the bank – Rs. 20 Lacs earned as interest on deposit from the bank). 

What can be the solution to this problem

Is it possible to keep such an amount in treasury instead of a bank? Can Government stop the parking funds in bank accounts by the departments? Is it possible to better supervise the amount received from external departments, other state governments, central government, national and international financial institutions to get the maximum benefit out of it?

Since the opening of a Saving/Current Bank Account can easily lead to misuse of funds/money as the treasury officer has no control over the bank account.

Personal Ledger Accounts (PLA)

Yes, it is possible by using Personal Ledger Accounts (PLAs) which are maintained at the level of treasury officer. An amount deposited in PLA remained in the hands of the Government, before each withdrawal from this account, the concerned treasury officer can control misuse of the amount because the Financial Rules state that money can only be drawn from Treasury as and when there is an urgent requirement for disbursement. The sanctioning powers are in the hands of concerned departments while the amount stays in the hands of concerned treasuries. The Drawing and Disbursing Officer (DDO) can draw the funds/money only when it becomes essential to disburse and with digital payments, now the amount is directly transferred to the accounts of payees.

*Copyright © 2021 Dr. Lalit Kumar. All rights reserved. 

This article is written by Dr. Lalit Kumar Setia; a renowned author and trainer. He completed his Doctorate in Commerce from Kurukshetra University Kurukshetra and MBA in Information Technology from GJU, Hisar. He also wrote two books, 15 research papers, and organized more than 200 Training Courses during his working period since 2006 in Haryana Institute of Public Administration, Gurugram. The article was published on 25th September 2021 and last updated on 25th September 2021. The writer can be contacted on lalitkumarsetia@gmail.com 

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Solutions to Environmental Crisis

Solutions to Environmental Crisis

By Dr. Lalit Kumar Setia |  @drlalitsetia  |  drlalitsetia@gmail.com 

In ancient times, every person was so sensitive to create any waste and the waste created by any family was usually used inside the home and there was no waste contributed to the society. In scriptures, the solution of environmental crisis is well described. With the advancement, the cultural values diminished and now-a-days, everywhere the management of waste became a major problem leading the environmental crisis. People in metro cities started to purchase Oxygen cylinders to get rid of polluted air. Can it be a solution? What should be done to solve the problem permanently? What Government can do and what each person on this earth can do?

Reduce, Reuse, Recycle, and Reform (4 Rs)

The government as well as citizens should reduce the waste by being sensitive in using the products. The life-style should be improved in such a way that the waste can be minimized significantly. In scriptures, it is written that a house should use its waste inside so that it cannot put burden on the other persons outside the house. The waste water from washing clothes can be purified and used for the plants’ growth; an example of the same can be seen at Dera Sacha Sauda, Sirsa located in India. The waste from kitchen if consumable should be provided directly to feed the animals. The waste from kitchen and dressing room which can be reused should be reused by using the skills of art and craft. It can also improve the income of the family.

In case, the waste cannot be reused, it should be properly thrown inside the green or blue dustbins as per the directions of Government so that the waste can easily be recycled by using the approach of Solid Waste Management (SWM).

Funding Solid Waste Management Factories:

There is huge unemployment around the world, particularly in developing and underdeveloped countries. The Government can provide funds for setting up factories for solid waste management at large level, it will boost the employment and also solve the environmental crisis. In most of the developed nations, there are environmental inspectors, entrusted to ensure the green environment in various areas of the countries. They are empowered to impose fines and penalty for misuse of natural resources. In India, this role is played by municipal organization at local level.

To reform the SWM sector, it is must to provide enough funds for setting up factories at local level so that the waste can easily be recycled everywhere. The licenses should be given to the organizations for converting waste into finished products so that the waste can also be a medium of economic progress of the nation.

Opportunity to set up Micro-factories to generate employment:

Now-a-days, the waste of cities disposed-off in the fields of villagers and the agricultural activities are also polluted due to such illegal disposing of the waste. It is required to set up micro factories at local level in each city. The micro-factories can manage the solid waste and there will be no need to cover huge distances to carry the waste from one location to another. The waste from domestic as well as industries which usually cover several types of plastic, glass, furniture, paper can easily be recycled in the micro factories and produce finished products. Setting up micro-factories will generate a lot of employment. The entrepreneurs should be provided enough funds to move in this area and change the whole picture of the nation.

Once the micro-factories are set up, the finished products should be sold with the support from the government. The government should not impose taxes upon the products manufactured in micro-factories so that their sales can easily be increased at affordable prices. It will lead to a permanent solution to the environmental crisis.

Work from Home (an option for Energy Efficiency):

The Multinational Companies (MNCs) have already opted to provide employment on "Work from Home" basis as it saves their infrastructure, time, money, and other resources. It also solve the problem of environmental pollution as the number of natural resources are utilized efficiently. The energy efficiency is the key to sort out the problem of pollution.

*Copyright © 2018 Dr. Lalit Kumar. All rights reserved.

Public Sector Reforms : Solution for Revival

Public Sector Reforms: Solution for Revival

-Dr. Lalit Kumar Setia*

The public sector banks are suffering with rise in the Non Performing Assets (NPAs) and the Finance Ministry to Government of India reviews the performance of public sector banks to control the NPAs on annual basis. In 2019, the Finance Minister Nirmala Sitharaman directed for the detailed study of NPAs and provided a detailed questionnaire seeking responses from the public sector banks on the reasons for the steep rise in NPAs during the years 2015 to 2019. The questionnaire also sought the responses on 'decline in credit flow'. Instead of rise in IIP from 2.8% (2014-15) to 4.6% (2017-18); the credit to manufacturing sector reduced; why it is reduced? 

It is a great concern, how Government of India achieve the national priorities like doubling farmers income, Jal Shakti, Housing for All, Ease of Living, Ease of Doing Business etc. without the performance of Public Sector Enterprises including Banks.

Public Sector Reforms:

The Public Sector Reforms are planned and implemented to improve the performance of organizations serving citizens directly or indirectly. India being a mixed economy and one of the country with largest population; is facing challenges in overcoming corruption or mal-practices in governance. In 1956, the Industrial Policy Resolution (IPR) identified the areas of strategic importance particularly in public sector undertakings. The core services to citizens are required to be delivered with maximum dedication and without any corrupt practice. In 1960s and 1970s, the public enterprises improved and attracted private investments wherever possible. The public enterprises grew dominantly both in terms of capital as well as number of organizations at central and state levels.

Assessment of Performance of enterprises:

In 1993, there were 237 central public enterprises with investment of Rs. 1,47,000 crores. At that time, after assessing the performance of enterprises, it was found that there were various shortcomings in the public enterprises like : 

(i) Insufficient growth in productivity, (ii) Poor project management, (iii) Inadequate attention to research & development, (iv) Low rate of return on investment, and (v) Lack of innovation

Shortcomings in Enterprises:

Most of the organizations had been seen as white elephants due to such shortcomings. The organizations seemed as burden rather than an asset and even one third organizations identified as sick units (the organizations delivering lowest performance year after year). A large number of organizations had been working with functions of non-strategic and non-core areas. The areas of services had been changed as per the requirements of citizens. The Industrial policy 1991 introduced to reform the public sector organizations with emphasis upon growth and dynamic use of technology. The Industrial Policy 1991 set the future priorities for public enterprises such as 

(i) Essential infrastructural goods & services, (ii) Exploration and exploitation of oil & minerals, (iii) Manufacture of goods of strategic importance, and (iv) Development of technology and manufacturing capabilities in crucial areas for long term economic development.

Sick Units:

The sick units had been referred to Board for industrial & financial reconstruction (BIFR) for their revival. The organizations had been confined to be more strategic, high-tech, and largely perfect in required essential infrastructure. However, the workers or employees of sick units had been protected by making their postings either in healthy organizations or by incorporating similar organizations from fresh level. In 1992, a non-statutory National Renewal Fund (NRF) had been established to provide assistance covering cost of retraining and redeployment of labour. The affected employees had been provided compensation for the loss happened due to the closure of nonviable or sick public sector units.

In order to improve the performance, after every 5 to 10 years, there is always requirement to introduce public sector reforms to cope up with the changes happening in business environment. The need of improving performance and giving autonomy to public sector enterprises leads to introduction of public sector reforms. The accountability and responsibility of employees increased with the pace of growth. The use of memorandum of understanding (MOU) for improving the performance also worked in granting greater autonomy to the organizations.

The healthy public sector organizations used issue of bonds to meet their financial requirements. With mobilising extra budgetary resources, the organizations become effective in meeting their financial requirements. However, the bonds for raising capital had been governed with guidelines issued by the Government. The public sector reforms are aimed to improve the financial performance and improve rate of return. In 1990s and during the years 2001 to 2010; the over staffing of employees is curbed without providing more employment in the organizations. The officers had been provided charges of two or more organizations without recruitment of new officers. Even the government started to provide Voluntary Retirements by launching schemes known as VRS. The data states that in 1990-91, there were 22.19 lakh employees in PSUs and the number reduced to 20.41 lakh due to VRS. This also effects the profitability of organizations positively. The overall net profit earned by Central Public Sector Entreprises increased significantly due to less payments of salaries to employees.

After 2010, with the replacement of planning commission with NITI Ayog, the whole economic environment had been changed. There is greater emphasis on use of technological means in providing services to the citizens. The Right to Information (RTI) act and Citizen Charter with introduction of Grievance Redressal Mechanisms; had become tools of further reforms in public sector organizations. The use of web-sites, applets, and space technology has changed the whole scenario. The NITI Ayog is making public sector organization self-reliance with getting their resources earned from the user charges being charged directly or indirectly from public. The use of Pubic Private Partnerships (PPPs) in infrastructure made the resources arranged directly from the beneficiaries. The economic inequalities are targeted with the help of Direct Benefit Transfer (DBT) initiatives.

Need of Critical Study of Government Organizations:

It's time to analyse the data and making critical decisions.

*Copyright © 2017 Dr. Lalit Kumar. 

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