FAQs on NRHM Fund Flows
By Sruti Bandyopadhyay, 30 Dec 2009

The National Rural Health Mission (NRHM) aims at strengthening the financial management structure and accounting systems so as to conform to best practices and meet accounting and auditing standards, at all levels. However, on several fronts, achievements have fallen short.

1. At what level can one identify the variations in reported figures?

Answer: The Comptroller and Auditor General (CAG) report observed that at times, variations were noticed between the funds releases by GOI and those received by State Health Society (SHS).
a) For FY 2007-08, the figures released to SHS, Andhra Pradesh (reported by GOI) was Rs. 597.83 crore. However the SHC reported to have received only Rs. 556.96 crore.
b) Even there is a gap between the funds released by SHS to District Health Society (DHC) and funds received by DHS. For FY 2008-09, Kurnool district in Andhra Pradesh had reportedly received only Rs. 951.75lakhs, however as per the SHC’s record, they have released Rs.1131.13 lakhs.

2. How regular is the fund flow from SHC to DHC?

Answer: Considerable fund remains with ICICI bank (banking partner in 13 states), both at State and District levels, till such time they were actually utilised. In Kerala, the monthly balance in the ICICI bank account of the SHS ranged between Rs. 17.52 crore to Rs. 86.12 crore during 2007-08. Average monthly balance worked out to Rs. 49.52 crore.

3. Does this unspent amount earn interest?

Answer: As per the NRHM framework, funds were to be kept in interest bearing bank accounts. However, in two States, unspent funds were not kept in interest bearing accounts.
a) In Assam, DHS Lakhimpur kept Rs.1.20 crore in current account
b) Similarly, in Bihar, SHS deposited Rs. 106.76 crore in March 2007 in non-interest bearing account
c) DHS, Bhojpur kept the NRHM funds in a current account and sustained an interest loss of Rs 37.42 lakh as of June 2008.

 

Cases of discrepancy between opening balance of SHSs and DHSs, difference between cash balance depicted in accounts and bank pass book, inconsistency between opening balance of the current year and closing balance of the previous year etc. were observed.

4. Has the money always get spent on prescribed line items?

Answer: As per rules, funds were required to be spent for the purpose for which they were intended. But that is not always the case.
For instance, for FY 2008-09, in Karnakta, Rs. 0.36 crores of NRHM fund was spent on purchase of
i) four wheelers under Kysanur Forest Disease Control Programme, ii) control of Handigodu disease, iii) and even on Mysore Dasara Exhibition.

5. What is the experience so far with the state wise audited reports?

Answer: Cases of discrepancy between opening balance of SHSs and DHSs, difference between cash balance depicted in accounts and bank pass book, inconsistency between opening balance of the current year and closing balance of the previous year etc. were observed.
In Bihar, four different opening balances as on 1 April 2005 were noticed in four different sets of documents of SHS detailed below:
Opening balance Amount (Rs. in crore) as on 01-04-2005
As per SOE--------- ---------------------47.66
As per annual account of 2005-06 ----45.12
As per financial statement -------------52.67
As per Bank account -------------------43.78

6. So, after spending this huge sum of money every year, does all PHC/SC/CHS have atleast electricity facility?

Answer: No. For example, as per latest figures available, by the end of FY 2008-09,
A) In Bihar 72 SC and 30 PHC do not have electricity connection
B) In Arunachal Pradesh 37 SC and 5 PHC do not have electricity connection

7. Now that we know the problem, what is the solution?

Answer: There should be clear guideline for the nodal personnel to integrate data under various NRHM components at the DHC and SHS level.
a) Unique identification number for institutions (UIID), in line with UID, might make the fund flow tracking process easier to operate and monitor. It would provide the authorities a tool to make timely interventions.
b) We should also have a country wide unique accounting and reporting framework. The format should be user friendly and should not vary from state to state. As part of this new format the district level accountant should have the capability to consolidate realtime data presented in Rogi Kalyan Samiti’s (RSK) meetings.

Sruti Bandyopadhyay is a Research Associate with the Accountability Initiative