End of financial year : Large number of LOCs lapse
Source: The Sangai Express

Imphal, April 01, 2013: Even as the 2012-13 financial year got over on March 31, maximum number of Letter of Credits (LOCs) released by the State Government for different departments could not be encashed.

Official sources informed that some departments are facing a dicey condition where they would not be able to function well as they could not encash the LOCs.

Most of the LOCs which could not be encashed till March 31, the last day of FY 2012-13, pertained to annual plan amounts.

As for the non plan amount and other funds sanctioned by the Finance Commission, the larger portion has been utilised in payment of salaries to Government employees for the Government has little resources of its own.

Even as the sources refused to divulge the exact percentage of plan amount spent so far, it is estimated that around 65 per cent has been spent.

The LOC's released to different departments could not be encashed at the end of the financial year because the LOCs were not released in time.

Although March 31 happened to be Sunday, Treasury offices were opened and all nationalised banks were also opened at the instruction of the Reserve Bank of India.

However, most departments did not send bills to the eight Treasury offices which remained open on Sunday, March 31.As such, the Government directed all Treasury offices to stop working at 2 pm.

Departments could not send bills to Treasury offices on account of the failure of their respective DDOs to prepare bills in time.

On the other hand, an office memorandum issued by the Finance Department directed that encashment permission should be sought first for departments to encash LOCs released to them.

But the general understanding is that the departments are authorised to encash LOCs if the same are released to them.

In addition, DDOs are authorised with �delegation of financial power', said the sources.

Remarking that such is the nature of the State Government's financial management, the sources pointed out that the State's economy is largely dependent on central assistance.

Generally, the State's annual financial requirement is worked out by the Government in advance.

But the moot question is, whether this awkward condition is caused by the Centre's delay in releasing the State's share of fund or is it because of the State Government's own failure.

The RBI's instruction is clear.

There can be transfer of funds on March 31 but no transaction would be allowed.

The same instruction is aimed at ensuring a healthy closing balance at the end of each financial year, they added.

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