Srinagar, Sep 30 : The Comptroller and Auditor General of India has exposed grave financial and governance failures in Jammu and Kashmir’s public sector enterprises, revealing that 14 PSUs have been rendered insolvent by accumulated losses, 20 reported combined losses of ₹252.53 crore, and ₹461.67 crore of NABARD assistance remains unutilised even as 231 of 263 rural infrastructure projects lie incomplete.
In its composite audit report for the year ended March 2023, tabled in the J&K legislature on Wednesday, the CAG said that as of March 31, 2023, there were 42 PSEs under its audit jurisdiction — 39 government companies, two statutory corporations and one government-controlled other company. Six were inactive.
While the reported profit of UT PSEs rose to ₹1,286.79 crore in 2022-23 from ₹566.10 crore in 2021-22, only 11 were profit-making. Just one — Jammu & Kashmir Bank Limited — declared or paid dividend. The power sector alone cornered 78 per cent of total PSE investment.
The report exposed a systemic breakdown in financial reporting. Of 34 UTPSEs whose accounts for 2022-23 were due for audit, only four presented their financial statements by September 30, 2023. Nineteen have accounts in arrears for three years or more. The accounts of two statutory corporations — J&K Road Transport Corporation and J&K and Ladakh Financial Corporation — were in arrears for two years and more.
“In the absence of finalisation of accounts, government investments in such PSEs remain outside legislative oversight,” the CAG warned, recommending that the government direct PSEs to ensure early finalisation of financial statements.
The audit reviewed 33 UTPSEs and found widespread non-compliance with the Companies Act, 2013. Ten UTPSEs were required to appoint Independent Directors — only J&K Bank Limited did. Ten were required to constitute Audit Committees and Nomination and Remuneration Committees — again, only J&K Bank complied.
Only two of eight eligible UTPSEs appointed a whole-time Company Secretary; five had none at all. Just nine of 33 UTPSEs conducted the required number of Board meetings during 2022-23, and Annual General Meetings were not held in 24 of 33 UTPSEs.
On Corporate Social Responsibility, of nine UTPSEs meeting the criteria, only four constituted CSR Committees and framed policies. Seven were required to incur CSR expenditure, but only three did.
A performance audit of NABARD-RIDF works by the Public Works and Jal Shakti Departments (April 2018 to March 2023) found that against the Centre’s consent for raising ₹3,900 crore, J&K availed only ₹2,316.37 crore (59 per cent). Disbursement ranged between 28 and 84 per cent across tranches due to slow progress, and loans lapsed in several cases due to non-adherence to timelines.
As of March 2023, only 32 of 263 projects due for completion were finished. The remaining 231 were either not started or incomplete. Against a total release of ₹844.17 crore during 2018-23, expenditure was just ₹382.50 crore (45 per cent), leaving ₹461.67 crore unutilised. The unutilised portion ranged between four and 72 per cent each year.
The CAG flagged weak project planning, absence of baseline data, lack of encumbrance-free land and forest clearances, delayed release of Mobilisation Advance, diversion and misutilisation of funds, execution without Technical Sanction, defective DPRs, improper site selection and inadequate contract management. Monitoring was weak, with field inspections either not conducted or undocumented.
“The citizen-centric objective of NABARD funding to provide low-cost funding to State/UT Governments for completing delayed rural infrastructure projects, bridging the rural-urban gap and promoting inclusive growth, is yet to be realised,” the report said, noting that irrigation, flood management, safe drinking water and rural road connectivity goals were not achieved within envisaged timeframes.
The IT audit of the Integrated Financial Management System (IFMS) found that as of March 2023, only four of twelve proposed modules were fully operational, delaying full implementation by more than a decade.
The Business Process Re-engineering was deficient, and no Core Consultant Group had been formed. Due to non-revision of the DPR and non-achievement of milestones, the UT lost central assistance of ₹11.88 crore. Instead of upgrading the State Data Centre, NIC hosted all IFMS applications on its Mini Data Centre at Jammu without a backup site, while ₹5.26 crore in funding remained misutilised.
Lack of integration between BEAMS and TreasuryNet led to excess expenditure over allocation and rendered the system vulnerable to unauthorised modifications in bill particulars. The absence of robust logical access controls, password recovery options and transaction logs created opportunities for unauthorised access. The system lacks a complete audit trail of who inserted or modified records.
No comprehensive Disaster Recovery and Business Continuity Plan exists, exposing the system to cyber-attacks and operational disruptions. Administrative control of IFMS had not been taken over by the DGAT even after 12 years. User Acceptance Testing was not conducted except for TreasuryNet in 2011, and STQC certification was not obtained.
The CAG recommended early liquidation of inactive PSEs, remedial action for loss-making ones, timely finalisation of accounts, and compliance with the Companies Act. For NABARD-RIDF, it urged timelines for Mobilisation Advance release, a system to prevent double release, and pre-execution approvals. For IFMS, it sought a Core Consultant Group, comprehensive Business Process Re-engineering, role-based access control, Multi-Factor Authentication, audit trails, a Disaster Recovery Plan and STQC certification.
