The Hindu : National : Shunglu panel detects irregular transfer of funds by IIM-A

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Sunday, May 09, 2004

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Shunglu panel detects irregular transfer of funds by IIM-A

By J. Venkatesan

NEW DELHI, MAY 8. The Shunglu Committee has found that the Indian Institute of Management-Ahmedabad has irregularly transferred to "other funds" an amount of Rs. 13.55 crores during 2001-02 and 2002-03 out of the surplus income over expenditure.

In its report submitted to the Government, the Committee has observed that as a result of this transfer, the balance in the corpus fund had come down from Rs. 111.83 crores to Rs. 98.28 crores as shown in the balance sheet on March 31, 2003.

The Shunglu Committee was constituted by the Human Resource Development Ministry in the wake of a controversial order passed by the Ministry reducing the fees in IIMs from Rs. 1.5 lakhs to Rs. 30,000.

Further, IIM-A had followed the practice of apportionment of investment income (interest earned on investments) without routing through income and expenditure statement. For the years 1993-94 to 2002-03, Rs. 27.19 crores had been shown towards amount credited to balance sheet to earmarked/project accounts.

As a result, these funds, meant for specific projects, could not be used for creation of assets for these projects or for achieving the object for which the funds had been allocated. Instead, they were invested along with other surpluses and yielded substantial interest income.

Also, there had been a substantial increase in expenditure since no action was taken on cost-cutting measures accepted in 1994 and changes in accounting policy. The report has pointed out that in 1994, orders issued by the Government required the IIMs to undertake cost-cutting measures, to reduce revenue expenditure and to effect reduction in non-faculty staff. Unfortunately, no action had been taken except for some voluntary retirements during 2002-2003.

Other major increase in expenditure was on account of other administrative expenses, which had increased from Rs. 33 lakhs during 1992-93 to Rs. 593 lakhs during 2002-03 or roughly 18 times. Depreciation provided was also shown in the expenditure statement. If these amounts were to be excluded from 2001-2002 and 2002-2003, the aggregate expenditure would fall to about Rs. 23 crores during 2001-02 and Rs. 26 crores during 2002-03.

Considering all these irregularities and mismanagement of accounts, the Committee has recommended auditing of the accounts by a Government-approved chartered accountant and a supplementary audit by the Comptroller and Auditor-General. Justice V.R. Krishna Iyer, retired Supreme Court Judge, in a letter to the HRD Minister, has lauded the stand taken by him on the reduction of fees in IIMs.

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