OVERVIEW

This Audit Report for the year 2000-01 containing 65 paragraphs including five comprehensive performance reviews is presented in two sections:

Some of the important Audit findings included in this Report are summarised below:

Financial Implications

The total quantifiable financial implication of paragraphs and reviews included in this Report is Rs 1477.35 crore. The department-wise details with reference to the nature of irregularity are given as under:

The financial implication in respect of comprehensive performance reviews and paragraphs relating to the Department of Telecommunications which could be quantified is Rs 1373.84 crore as per details given below:

(Rs in crore)

The paragraphs and comprehensive performance reviews included in the chapters relating to the Department of Posts involved financial implication of Rs 103.51 crore as shown below:

(Rs in crore)

SECTION I - DEPARTMENT OF TELECOMMUNICATIONS

This section is divided into five chapters, each dealing with a specific subject as shown below:

The Revenue Audit Chapter 3 contains cases of non-recovery/outstanding dues etc., of Rs 480.80 crore. Out of this, the Department had realised Rs 11.68 crore, till finalisation of this Report, at the instance of Audit. For the remaining amount, replies of the Ministry were awaited. The Chapter 4 containing three comprehensive performance reviews has quantifiable financial implication of Rs 745.82 crore.

The Transaction Audit findings in Chapter 5 contain cases, which bring out loss/over payment/short recovery/other recoveries at the instance of Audit, infructuous expenditure, idle/ unproductive expenditure, excess expenditure in violation of rules, avoidable payment/expenditure, other irregularities etc., aggregating to Rs 147.22 crore. Out of this, the Department has since recovered Rs 53.65 crore, when pointed out by Audit. Replies of the Ministry in many cases were awaited.

• At the end of September 2000 DoT had a network of 28,625 Telephone exchanges with about 279.59 lakh telephone connections, 374 Trunk Automatic Exchanges, 4.17 lakh Public Telephones, 3.77 lakh kms of coaxial cable, Microwave, Ultra High Frequency, Optical Fibre Cable systems and 467 fixed satellite earth stations.
• The metered telephone calls which stood at 16,276 crore units in 1999-2000, totalled 14,435 crore during the six month period ending 30 September 2000. The revenue receipts of the department were Rs 10,176 crore at the end of September 2000.
• Due to network expansion there was fast expansion in the cadres of Group ‘A’ and Group ‘B’ services in DoT/DTS. The strength of Group ‘A’ and Group ‘B’ services increased from 29,878 officers in 1999 to 58,652 officers in 2001. The sudden increase as pointed out earlier was reportedly due to categorization of Junior Telephone Officers as Group ‘B’ and relaxation of period for promotion of Junior Accounts Officer (Group ‘C’) to Assistant Accounts Officer (Group ‘B’). DoT provided 14 lakh telephone connections during April 2000 to September 2000 as compared to the annual plan target of 54 lakh, besides shortfall in respect of switching capacity, village public telephones, optical fibre cable systems and satellite earth stations.
• As many as 28.91 lakh applicants were waiting for new telephone connections in the country at the end of March 2001. The states with the highest waiting list were Kerala (7.74 lakh), Maharashtra (2.89 lakh), Gujarat (2.29 lakh), Punjab (2.16 lakh), West Bengal (1.78 lakh), Karnataka (1.72 lakh), Tamil Nadu (1.50 lakh) and Andhra Pradesh (1.31 lakh).

(Paragraph 1)

• Department saved Rs 18749.04 crore in a budget of Rs 20431.31 crore under Grant No.12 and Rs 17167.87 crore in a budget of Rs 37478.08 crore under Grant No.13 during the year 2000-2001 under Revenue and Capital Sections. These large savings were mainly due to non-finalisation of Capital structure of Bharat Sanchar Nigam Limited and corporatisation of DTS and DTOs with effect from 1 October 2000.
• In five cases involving an amount of Rs 56.36 crore, re-appropriation was injudicious, in as much as in some of the heads from which the amounts were re-appropriated, the actual expenditure was more than the balance amount after such re-appropriation.

(Paragraph 2)

Licences of M/s Koshika Telecom Ltd. and M/s Bharti Mobile were not terminated by DoT despite non-payment of dues. While Rs 438.20 crore were outstanding from M/s Koshika Telecom Ltd, Rs 218 crore recovered from M/s Bharati Mobile was subject to the outcome of an arbitrator’s award.

(Paragraph 3)

Wireless Planning and Coordination wing of Ministry of Communications failed to recover Rs 83.41 lakh from 10 users who were using the facility without valid licence.

(Paragraph 4)

DoT failed to review and recover liquidated damage charges from a basic service operator which resulted in short recovery of revenue of Rs 0.70 crore.

(Paragraph 5)

Failure of department to realise penal interest from parties on belated payment of dues for the Satellite charges resulted in non-recovery of Rs 27.53 lakh.

(Paragraph 6)

Failure of DoT to levy Service tax on telecommunications services resulted in non recovery of Service tax of Rs 6.23 crore during July 1994 to September 2000 in five telecom units test checked in three circles and Mahanagar Telephone Nigam Limited, Delhi.

(Paragraph 7.3)

Audit scrutiny of records of 28 telecom units in 12 telecom circles during June 1996 and May 2001 disclosed short realisation of security deposits of Rs 5.94 crore from private STD/PCO operators. The heads of telecom districts failed to review and revise the amounts of security deposits upwards for PCO operators inspite of increase in their revenue.

(Paragraph 7.4)

A large number of cases came to the notice of Audit wherein various field units of DoT did not recover dues aggregating Rs 480.80 crore due to their failure to send completed advice notes to TRA branch, non application of revised tariff, failure to disconnect telephone facilities despite non payment of dues, non-billing of licence fee royalty and failure to issue bills etc. On being pointed out by Audit, the department recovered Rs 11.68 crore as of December 2001.

(Paragraph 8)

• The Telecom Factories at Kolkata, Bhilai and Richhai surrendered funds under capital grant during 1996-2001. The savings by these factories ranged up to 92 per cent.
• The performance of all the three factories was poor and there was shortfall in the production targets of a number of items, the shortfall ranging upto 100 per cent during 1996-2001.
• Galvanizing plant at Telecom Factory, Richhai was underutilised, resulting in short fall in production valuing Rs 41.08 crore during 1996-2001.
• The inhouse production cost by Telecom factory Kolkata exceeded the open market rate; the financial implication was Rs 12.42 crore during 1996-2000.
• 1765 work orders valuing Rs 14.15 crore were pending in telecom factories at Kolkata, Bhilai and Richhai for up to 10 years. Moreover, the capacities of these telecom factories were grossly under utilised; the under utilisation ranged from 31 to 56 per cent of machine hours available.
• The cost of galvanisation in Telecom factory Bhilai was very high, resulting in extra expenditure of Rs 9.89 crore during 1996-2000.

(Paragraph 10)

• Department did not follow the practice of ABC classification of stores, as a regular measure for scientifically determining the minimum and maximum stock levels of various kinds of stores according to their cost significance.
• Progressive Stock Taking (PST) and Independent Stock Verification (ISV) required to be done for all items every year were not conducted by many units. Discrepancy statements were not prepared in some cases. Cases of non-regularization of discrepancy statements were lying outstanding from 1978-79.
• Effective steps were not taken for disposal of obsolete and unserviceable stores. Stores valuing Rs 25.41 crore were lying in various store depots for several years awaiting disposal. Delay in disposal of these stores was fraught with the risk of theft, pilferage and loss through deterioration etc., apart from the avoidable cost incurred on store keeping charges.
• There was accumulation of non-moving/slow-moving stores, resulting in blocking up of capital and the risk of their becoming eventually unservicable/obsolete.
• Stores-in-transit valuing Rs 27.41 crore had not been adjusted for periods as far back as 1975-76, giving rise to reasonable apprehension of misappropriation, permanent loss, or pilferage of stores, not to mention fraud.
• Advances amounting to Rs 357.65 crore were paid to suppliers upto March 2000 but remained unadjusted up to March 2001.
• In some Controllers of Telecom Stores (CsTS) arrears of recovery for stores sold to other government departments amounting to Rs 29.44 crore remained unrealised as on 31 March 2001. The outstandings were dating back from 1992-93 onwards.
• The theft of stores involving Rs 73.22 lakh in CsTS remained unsettled. The earliest case dated back to 1975-76.
• The department did not take any satisfactory steps for settlement of outstanding amount of Rs 12.01 crore under the head ‘Stores Recoverable’ arising from thefts/damages/loss in transit and occurring up to March 2001 in respect of five wholesale depots.

(Paragraph 11)

• Department had not fixed annual physical/financial targets which resulted in non-monitoring of physical and financial performance of the Civil divisions.
• Four additional civil divisions were created prematurely in violation of prescribed norms resulting in an avoidable expenditure of Rs 2.41 crore.
• Despite existence of a planning and architectural wing, the department assigned the architectural work of a building to consultants incurring a liability of Rs 10.68 lakh towards service charges; the construction has not been taken up even after 14 years of initiating the formalities.
• The work of construction of 242 quarters at Kalibari, New Delhi could not be taken up due to department’s failure to protect the property against encroachment which resulted in avoidable expenditure of Rs 5.83 crore for relocation of Jhopri dwellers and removal of malba from the site.
• There was a blocking of capital of Rs 79.81 lakh as road restoration charges amounting to Rs 47.41 lakh paid to Kolkata Municipal authorities were neither adjusted nor got refunded on cancellation of work.
• In violation of the financial norms 57 works in six circles were awarded without calling for tenders.
• An amount of Rs 1.06 crore against earnest money deposit and security deposit in respect of 2328 cases was lying with the department without being transferred to lapsed deposit and Rs 35 lakh in 49 works were refunded after delays ranging from six months to one year.
• Non-recovery of excess cost on account of rescinded work from the defaulting contractors amounting to Rs 32.77 lakh and further loss of Rs 12.51 lakh towards cost of materials lying with the defaulting contractors was noticed in three circles.
• Cement and steel worth Rs 61.01 lakh issued to the contractors in excess of requirement resulting in non-recovery of Rs 9.26 lakh from the contractors.
• Delay in execution of 285 works resulted in payment of Rs 3.78 crore towards escalation in rates. In addition there was a potential loss of revenue of Rs 103 crore due to delay in completion and handing over telephone exchange buildings in respect of 21 works in two circles.
• Rs 8.26 crore on account of deposit works had not been recovered.
• Arbitration awards in favour of contractors due to departmental failure resulted in avoidable payment of Rs 5.44 crore towards compensation.

(Paragraph 12)

Non-recovery of unused cable worth Rs 2.96 crore from contractors

Eleven Sub-divisional Engineers (SDEs) under General Managers Telecom Dhanbad and Jamshedpur issued cable of various gauges measuring 1117.493 km to the contractors between January 1998 and February 2001. These SDEs, however, failed to recover the unused cable measuring 250.625 km from the contractors resulting in loss of Rs 2.96 crore. Further, Audit scrutiny of measurement books disclosed that 54.313 kms of cable were shown as laid in excess over the cable actually issued to the contractors. This resulted in fictitious payment of cable laying charges of Rs 8.46 lakh for the cable not actually issued to the contractors during the same period.

(Paragraph 13)

Abnormal delay in finalisation of rates and resultant loss of interest

DoT in December 1998 revised downward the rates of 100k digital local exchange equipment after a lapse of four years of placement of purchase order and instructed the heads of circles to regularise the payments accordingly. Chief General Manager Chennai Telephones and Chief General Manager Telecommunications Kerala circle took nine and 14 months respectively in regularising the payments. This, together with the impact on MTNL resulted in loss of interest of Rs 2.64 crore to the state exchequer.

(Paragraph 14)

Non-realisation of insurance claim

A 3k PRX type exchange equipment was transported by road in January 1994 for installation at Tirur with an insurance cover of Rs 1 crore against theft, damage etc. The exchange equipment was received at Tirur in an extensively damaged condition. General Manager Telecom Kozhikode failed to furnish the details of invoice value of parts/components of damaged exchange equipment to the Insurance Company for over seven years. This led to non-realisation of insurance claim of Rs 1 crore and the exchange equipment had to be declared as obsolete for further disposal.

(Paragraph 15)

Excess payment of service charges

Service charges were levied as a percentage of the net rentable/annual value of the property reckoned at nine per cent of the capital value of the property. Principal General Manager Telecommunications Lucknow made excess payment of service charges of Rs 71.23 lakh to Lucknow Nagar Nigam and Lucknow Jal Sansthan due to incorrect computation of capital cost of the properties.

(Paragraph 16)

Loss of Rs 62.42 lakh in unauthorised procurement of unapproved version of 4 channel Very High Frequency Systems

Chief General Manager Telecommunications Andaman and Nicobar circle procured 18 numbers of 4 channel Very High Frequency systems worth Rs 62.42 lakh between November 1995 and June 1998 from M/s Apel Radio Communication Systems without inviting tenders and without ascertaining whether the company had obtained the type approval certificate for the system from Telecom Engineering Centre. All the systems became faulty after working for a short period after their installation during 1996-99. Thus procurement of unapproved version from unauthorised firm resulted in unauthorised expenditure of Rs 62.42 lakh.

(Paragraph 17)

Other recoveries at the instance of Audit

In three cases audit pointed out excess payment, non-realisation of establishment charges and non-recovery of advance from supplier amounting to Rs 53.46 crore. The entire amount was recovered at the instance of audit.

(Paragraph 19)

Infructuous expenditure of Rs 2.19 crore due to contracting excessive power load

Despite repeated instructions by the Ministry and irregularities of this nature being pointed out by Audit in the past, seven units in Tamil Nadu circle and one unit in Bihar circle incurred infructuous expenditure of Rs 2.19 crore during April 1993 to March 2001 due to contracting power far in excess of actual requirement.

(Paragraph 20)

Wasteful expenditure in procurement of defective power plants

Chief General Manager Telecom Rajasthan circle Jaipur received 84 power plants from Uptron Powertronic Ltd and Shreetron India Ltd based on purchase orders placed by CGM Telecom Stores Kolkata in June 2000. All the 84 power plants supplied were found to be defective having major design problem and as such the same could not be commissioned. As a result the entire expenditure of Rs 2.15 crore incurred on 84-power plants became wasteful.

(Paragraph 21)

Defective planning and resultant blocking of funds

Chief General Manager Telecom Project West Zone sanctioned a project in November 1991 for installation of 6 GHz 140 Mbs digital microwave system between Kolhapur and Belgaum. The system was to work in non-cross polarisation interference cancellor (non-XPIC) environment. But the equipment supplied by the Indian Telephone Industries based on purchase order placed by DoT was of XPIC type, which could use both polarisations to carry telephone traffic. The main equipment, ordered in January 1996, was received in May 1996 and installed in October 1998 after receipt of Radio equipment. To utilise this equipment additional space diversity equipment was needed. The matter was taken up with the higher authorities only in April 2001.The delay of four years in placing orders for procurement, coupled with subsequent change in the specification, led to non-commissioning of the system for almost a decade after the project was sanctioned. It also led to blocking of funds of Rs 3.66 crore for over three years, besides loss of potential revenue of Rs 3.46 crore.

(Paragraph 22)

Unproductive investment on Electronic Telex Exchanges

Despite continuous decline in telex traffic and in the demand for new telex connections, DoT procured higher capacity electronic data exchange equipment for installation at Bhopal in Madhya Pradesh circle. The utilisation of the telex exchange since its installation in June 1995 came down from 25 per cent to 11 per cent in September 2000. This resulted in unproductive expenditure of Rs 5.60 crore in procurement of the 650 line electronic data exchange.

(Paragraph 24)

Procurement of high bit rate digital subscriber line system and their utilisation

• High bit rate digital subscriber line (HDSL) system is a technique, which allows high-speed data transmission in the local net work through existing copper pairs. DoT invited tender in January 1997 for procurement of 2566 HDSL systems for supply to 22 circles and placed orders in May/September 1999 on three firms for supply of 1345 systems at a total cost of Rs 12.59 crore. DoT took 876 days in placing the purchase order as against the stipulated period of 180 days.
• While finalising the tender DoT failed to take in to consideration the reduction in Customs duty from 43.96 per cent in 1997-98 to 22 per cent in 1998-99. This resulted in excess payment of Rs 20.70 lakh.
• Test check carried out in 12 out of 22 circles disclosed that out of 995 systems received, 321 systems were utilised up to June 2001, information regarding utilisation of 223 systems was awaited from four circles and balance 451 systems valuing 3.44 crore remained unutilised due to non-allocation of systems to the units.
• On one hand DoT was unable to fully utilise the systems already procured, on the other it placed order in December 2000 for another 1301 systems valuing Rs 13 crore, putting a question mark on their utilisation.

(Paragraph 25)

Idling of raw material and semi finished goods worth Rs 2.32 crore due to unplanned bulk procurement of raw material

Manager, Telecom Factory Bhilai, failed to ascertain the demand for 60/80-meter Triangular Hybrid towers from the user field units before embarking upon bulk procurement of raw material between 1995 and 1998 for manufacture of these towers. This led to idling of raw material and semi finished goods worth Rs 2.32 crore between 1995 and 2001.

(Paragraph 26)

Wasteful expenditure of Rs 2.22 crore in procurement of testing instruments

• DoT placed two purchase orders in November/December 1998 on two firms for supply of bit error rate testing instruments and packet assembly and disassembly for I-NET Phase II. But the I- Net Phase II was commissioned in phases between March 1996 and April 1998. Thus, procurement of the testing instruments worth Rs 2.22 crore after more than one year of commissioning of Packet Switch Public Data Network defeated the very purpose of its procurement, rendering the entire expenditure wasteful.
• Although M/s Wandel and Goltermann, on whom the DoT placed supply order for supply of analogue tester, failed to supply the same even after more than one year of the scheduled date of delivery of May 1999, DoT did not short close the supply order. Later DoT encashed the bank guarantee of Rs 18.90 lakh at the instance of Audit.

(Paragraph 27)

Idling of pulse code modulation multiplexing equipment

Divisional Engineer Telecom Transmission Projects Trivandrum received 128 units of primary MUX and 64 racks during March-April 1994 against a purchase order placed by DoT in 1993 for use in 13 GHz Microwave system. Consequent on digitalisation of network, the Microwave system for which the equipment was procured was commissioned in 1995-96 without using the equipment. As a result the equipment worth Rs 2.35 crore remained lying idle up to November 2000 since their procurement in March 1994.

(Paragraph 28)

Non-utilisation of land

Delay of three years in accord of sanction by DoT for construction of an administrative building after approval of building plan by the Lucknow Development Authority (LDA) in November 1994, coupled with ineffective pursuance of the case by Principal General Manager Telecom Lucknow for clearance of blockade created by LDA, resulted in delay in construction of the administrative building. As a result various offices continued to function from rented buildings and the department incurred rental of Rs 1.24 crore during the period April 1996 to September 2000.

(Paragraph 29)

Unplanned procurement of pulse code modulation cables

Chief General Manager Telecommunications Orissa circle Bhubaneswar procured 301.297 km of Pulse Code Modulation (PCM) cable worth Rs 3.08 crore from two private firms between July 1995 and July 1996. Out of this, 109.446 km of PCM cable costing Rs 1.13 crore was lying unutilised in Regional Telecom Store Depot Bhubaneswar and in 13 sub-divisions.

(Paragraph 30)

Idling of equipment due to in accurate assessment and poor follow up action

Chief General Manager Task Force Guwahati received 14 solar power panels worth Rs 1.56 crore from M/s Telemats India Private Limited between March 1997 and February 1998. Out of these 14 solar panels the supplier could install only six panels and the remaining eight panels worth Rs 85.34 lakh were lying idle since their receipt.

(Paragraph 31)

Idling of high density polyethylene pipes

General Manager Telecom Kota in Rajasthan circle failed to correlate and procure optical fibre cable before taking up the work of trenching and laying high density polyethylene pipes. This led to idling of HDPE pipes worth Rs 85.79 lakh during the period December 1999 to May 2001.

(Paragraph 32)

Unproductive expenditure on expansion of telephone exchange

General Manager Telecom Itanagar under North-East circle expanded Bomdila exchange from 1.4k to 3.4k C-DoT MAX L in March 2000 at a cost of Rs 78 lakh. The exchange was having 801 connections with no waiting list in March 2000. The expansion resulted in raising equipped capacity to 2599 lines. This injudicious expansion led to an unproductive expenditure of Rs 78 lakh.

(Paragraph 33)

Idling of microwave equipment

Microwave equipment meant for Satrod - Hissar route in Haryana Telecom circle was not received within the delivery schedule i.e. by December 1996. Hence the General Manager Telecommunications Hissar commissioned another system of 140 Mbs optical fibre cable in January 1997. The microwave equipment was received in May 1998, but the same could not be re-engineered and utilised in the circle and as such the same was diverted to Katihar in Bihar circle in September 2000. The diverted equipment had not been utilised till June 2001 resulting in idling of equipment worth Rs 44.29 lakh.

(Paragraph 35)

Unproductive expenditure on procurement of ineffective meter reading monitoring systems

General Manager Telecom Madurai procured in large numbers detailed call recording systems, which enable downloading of meter readings for bill processing and monitoring etc. The procurement was made from Tricom Technologies between February and September 1999 at a cost of Rs 31.21 lakh. The equipment were neither approved by DoT/ Telecom Engineering Centre nor was any field trial conducted before procurement. This equipment were not put to use for the purpose for which these were purchased, resulting in idling of equipment worth Rs 31.21 lakh from September 1999.

(Paragraph 36)

Irregularities in decentralised procurement of C-DoT 256 P exchange equipment

• DoT decentralised in January 1999 the procurement of 256 P switching equipment from April 1999 onwards and authorised the heads of circles to procure the same by floating tenders at circle level.
• Test check conducted in eight circles disclosed that the rate of 256 P equipment procured under decentralised procurement system varied between Rs 7.77 lakh and Rs 9.07 lakh for B type equipment and Rs 8.47 lakh and Rs 8.60 lakh for C type equipment. This resulted in excess expenditure of Rs 5.50 crore.
• Tamil Nadu circle incurred idle investment of Rs 5.96 crore in procurement of C-DoT equipment without properly assessing the recovered equipment available for re-use.
• Various other omissions and commissions in procurement of C-DoT equipment and upgradation kits, their utilisation and inventory management in Andhra Pradesh, Madhya Pradesh and Orissa circles resulted in excess/irregular expenditure of Rs 10.65 crore.

(Paragraph 37)

Unauthorised procurement of stores/equipment

• Stores of Telecom department are categorised as stocked and non-stocked items. Non-stocked items are being procured either centrally by DoT or by heads of circles under decentralised procurement system or by the heads of secondary switching areas within their delegated financial powers.
• Chief General Manager Telecom and five Secondary Switching areas (SSAs) in Madhya Pradesh circle procured centralised items of stores worth Rs 4.16 crore unauthorisedly.
• Nine SSAs in Andhra Pradesh, Madhya Pradesh and Maharashtra circles unauthorisedly procured decentralised items of stores worth Rs 2.15 crore in violation of departmental instructions during 1999 to March 2001.

(Paragraph 38)

(E)    Avoidable expenditure

Excess payment due to inconsistent application of procurement policy

DoT invited tenders during December 1998 and February 1999 for procurement of 2/140 Mbs optimux and regenerator equipment and optical fibre cable. However, while finalising the rates DoT did not counter offer the rates obtained in an earlier tender which was lower than the present tender. This resulted in excess payment of Rs 6.88 crore in procurement of 2059 optimux and regenerator equipment.

(Paragraph 40)

Transportation of stores by Circle Telecommunications Store Depots and Telecommunication units

Circle Telecom Store Depots in Assam, Bihar, Haryana, Maharashtra, North East, Orissa and West Bengal circles failed to adhere to the directions of DoT leading to ambiguity in contracts/agreements for transportation of stores, non-utilisation of forklifts, non-availing of concessional freight etc. This resulted in avoidable expenditure of Rs 3.49 crore during 1995-2000.

(Paragraph 41)

Avoidable expenditure on unnecessary over protection of under ground cables below 100 pairs

Bricks are required to be used as a protective device for protection of underground cable of 100 pairs and above from external damage to the underground cable. General Managers Raigad and Panaji, Goa under Maharashtra circle continued to award cable laying contracts including mechanical protection by warning bricks for underground cable of less than 100 pairs. This resulted in avoidable expenditure of Rs 1.13 crore between April 1997 and September 2000.

(Paragraph 42)

Avoidable expenditure on repair of faulty C-DoT cards from unauthorised agencies

DoT opened 24 repair centres for repair of printed circuit boards of C-DoT exchanges at various places and directed all the heads of circles to get the repairs done either at the Regional Repair Centres or through the manufacturers of C-DoT exchanges. General Managers Telecom Belgaum in Karnataka circle and Shimla in Himachal Pradesh circle got the faulty cards repaired from unapproved outside agencies during January 1997 to November 2000. This led to an unauthorised expenditure of Rs 93.41 lakh during that period.

(Paragraph 43)

Execution of works without sanction of estimates

Despite repeatedly being pointed out in the previous Audit Reports, General Managers Telecom Hyderabad, Khammam, Nellore, Srikakulam and Tirupathi in Andhra Pradesh circle incurred an irregular expenditure of Rs 7.77 crore on execution of routine nature of works without sanction of estimates and provision of funds.

(Paragraph 46)

SECTION II - DEPARTMENT OF POSTS

This section is divided into four chapters each dealing with a specific subject as shown below:

• Persistent reduction in projections of unregistered mail traffic indicated lack of adequate planning to increase the department’s share in the market or to regain the lost share.
• 17 of the 20 services provided by DoP were running at a loss. The net loss incurred by DoP on these services during 2000-01 was Rs 1424.96 crore which was up by Rs 433.90 crore (44 per cent) compared to the previous year.
• The total deficit in DoP stood at Rs 1550 crore during the year 2000-01, which was lower by Rs 46 crore as compared to 1999-2000. This indicated a slight improvement.
• Outstanding balances under the head “Advances from Public Account”, which mainly represented overpayments and short credit, stood at Rs 665.87 crore at the end of March 2001. Assam, Bihar, Madhya Pradesh and West Bengal Postal circles accounted for 86 per cent of the outstanding balances.
• An amount of Rs 3.60 crore was lying unadjusted under the head “Accounts with States” since long.

(Paragraph 50)

• DoP had a saving of Rs 46.02 crore (51.68 per cent) of the original grant under Capital (Voted) section during 2000-01. This was almost three times the savings during 1999-2000. These savings related primarily to money budgeted for Mechanisation and Modernisation of Postal Services.
• DoP obtained a technical supplementary grant of Rs 9.78 crore in August 2000 for the Reserve for development of North East Region which was not utilised at all and was surrendered in September 2000.
• Re-appropriations made under the heads Banking and Life Insurance, Stationery and forms printing, Operational training, Dispensaries and other items were injudicious because the actual expenditure under these heads was less than the original grant.

(Paragraph 51)

Speed Post Services

• Expenditure on speed post services had been understated substantially, on account of exclusion of manpower cost of personnel deployed from other wings of DoP.
• Speed post services short achieved financial targets by 40 per cent.
• Test check by Audit revealed that the delivery efficiency during the months of April 2000, September 2000 and March 2001 was only 65 per cent, 52 per cent and 52 per cent respectively. The department, however, reported this as 98 per cent, 98 per cent and 95 per cent, respectively, indicating inaccuracy in maintenance of records of delivery.
• Although there was improvement over the years in the proportion of settlement of complaints during the year, the number of complaints from customers increased from 32,802 in 1996-97 to 2,91,005 in 2000-01.
• The outstanding revenue under the Book Now Pay Later (BNPL) scheme increased from Rs 0.32 lakh in 1996-97 to Rs 338.88 lakh at the end of March 2001.
• Under the incentive scheme for bulk customers, rebate of Rs 103.85 lakh was granted irregularly between 1996-97 and 2000-01.
• There was loss of revenue of Rs 102.34 lakh due to uncoordinated fixation of tariff for registered articles and speed post articles.

(Paragraph 52)

Working of Postal Accounts offices

• Test check conducted in nine Postal Accounts offices disclosed that a sum of Rs 1045 crore drawn from bank remained unlinked in the bank schedules at the end of March 2001. The pairing work in Madhya Pradesh Postal Accounts office was very unsatisfactory as only 10 per cent of the amount drawn during 1996-2001 was paired. Also, Rs 797 crore drawn from bank remained unlinked in the post office schedules. Similarly a sum of Rs 30.82 crore drawn from Treasury remained unlinked in the post office schedules in five Postal Accounts offices test checked. In Orissa Postal circle although an amount of Rs 10.51 crore was drawn from treasury by post offices during 1996-2001, no pairing work was done by Orissa Postal Accounts office.
• Test check conducted in 10 Postal Accounts offices disclosed that a sum of Rs 2934.34 crore remitted to bank remained unlinked in the bank schedules. Similarly, a sum of Rs 1778.04 crore remained unlinked in the post office schedule at the end of March 2001. As a result any fraud, wrong debiting or crediting of money in Government accounts would remain undetected.
• Ministry of Finance issued instructions for levy of interest from Public Sector banks on all delayed remittances, excess/double reimbursement etc. It was observed that interest amounting to Rs 4.59 crore was not recovered from the concerned banks for such delayed remittances and excess/double reimbursement during 1996-2001.
• A sum of Rs 366.79 crore under credit suspense and Rs 587.86 crore under debit suspense were outstanding at the end of March 2001 in ten Postal Accounts offices under review due to non-receipt of vouchers or want of details for classifying the expenditure to correct head of account.
• Test check conducted in nine Postal Accounts offices revealed that an amount of Rs 95.86 crore was outstanding at the end of March 2001 under Departmental Advances-Other Advances which is a temporary head of account for booking the expenditure for want of details etc.
• General Provident fund accounts should not contain negative balances. The GPF accounts maintained by eight Postal Accounts offices, however, contained minus balances totalling Rs 0.32 crore from 1996 onwards.
• The accounting work relating to Cash certificates such as posting of cash certificate issues and discharges and other connected accounting work was in arrears ranging from three to five years in seven Postal Accounts offices. As a result any fraud that may have taken place would remain undetected. The department needs to take urgent steps for early clearance of arrears.
• Foreign Money Orders originating from other countries and paid in India should be recovered from the foreign Governments. A sum of Rs 26.44 crore on account of foreign money orders paid in India were to be recovered from the foreign Governments as of July 2001.
• Audit scrutiny disclosed that a sum of Rs 30.26 crore was to be realised on account of pension payments made by Post offices at the end of March 2001 on behalf of other Ministries/departments.
• British Postal orders paid in India should be reimbursed by the Government of United Kingdom on sending the paid vouchers through the Postal Accounts office nominated for this purpose. Due to non-receipt paid vouchers from Post offices an amount of Rs 94.83 lakh could not be realised in eight Postal Accounts offices test checked at the end of March 2001.
• Department of Posts did not realise Rs 28.49 crore from Department of Telecommunications from 1993-94 onwards being the commission for transmitting telegraph messages through combined Post Offices.

(Paragraph 53)

Short realisation of postage due to violation of conditions of postage

Postmasters in Delhi Postal circle allowed the publishers of newspapers/periodicals/ magazines registered as “Registered newspapers” to avail of tariff concession despite violation of the conditions of the licence resulting in short realisation of Rs 1.70 crore during 2000-01.

(Paragraph 54)

Other recoveries at the instance of Audit

Audit pointed out non-realization of dues from Border Security Force on account of increase in the postage charges for carriage of special bags and conveyance of mails and irregular payment of interest on accounts opened in contravention of rules, totalling Rs 31.75 lakh in the two cases. The entire amount was recovered at the instance of Audit.

(Paragraph 55 and 56)

Wasteful expenditure on account of delay in construction of Post Office Building

Postal units in Delhi and Rajasthan circle incurred an avoidable expenditure of Rs 1.57 crore between 1967-2001 towards rental on buildings, idle payment of lease rental and penalty due to non construction of building as per lease agreement.

(Paragraph 57)

Idling of staff quarters due to defective planning

Construction of staff quarters by PMG Indore under Madhya Pradesh circle at Shajapur in December 1993 despite adverse site suitability certificate by civil wing led to blocking of funds to the extent of Rs 17.59 lakh. It also led to avoidable payment of HRA of Rs 0.51 lakh and foregoing of licence fee of Rs 0.39 lakh between December 1993 and February 2001 due to non-allotment of these quarters because electricity/water connections were not provided on account of non-development of the area.

(Paragraph 58)

Payment of overtime allowance

Failure of the Senior Superintendent of Airmail Sorting division Chankyapuri Delhi to restrict payment of overtime allowance to the limit prescribed by the Government led to an excess payment of Rs 68.41 lakh to Group ‘C’ staff during 1996-2001. He further paid overtime allowance amounting to Rs 57.35 lakh to Group ‘D’ staff also despite having excess men-in-position during that period.

(Paragraph 59)

Excess payment to Railways for conveyance of mails

Chief Postmaster General Orissa paid twice to South Eastern Railway for carriage of mail between the same sections in the same trains during the same period resulting in excess payment of Rs 40.20 lakh.

(Paragraph 60)

Excess payment of haulage charges

Chief Postmaster General, Orissa made excess payment of Rs 20.24 lakh towards haulage charges for conveyance of mail through Railways for empty run of vehicle beyond the destination points for the mail.

(Paragraph 61)

Irregular payment of advances to contractors

Executive Engineer Postal Civil division Cuttack in Orissa circle made irregular payment of advances amounting to Rs 1.39 crore to various contractors during July 1997-March 1998 besides consequential loss of interest of Rs 12.77 lakh till the advance was recovered/ adjusted.

(Paragraph 62)

Retention of cash in excess of prescribed limits

Head Post Masters Kota and New Grain Mandi Kota in Rajasthan circle retained cash balances of Rs 33.94 lakh and Rs 76.18 lakh against the authorised limit of Rs 1 lakh and Rs 5 lakh respectively, which was fraught with serious financial risks. Even after revision of the minimum and maximum balances in August 2001, these post offices held cash balances to the extent of 1½ to 3½ times the maximum balance permitted.

(Paragraph 63)