THE New Delhi Municipal Council (NDMC) has finally discarded its British-era accounting system, which means scores yellowing files are on way out of the system.
Instead, the Council is reaping rich dividends from its recently adopted transparent, comprehensive and computerised accounting system. The result? As part of the new ‘accrual accounting’ system NDMC can now issue bonds (like private companies), access Rs 1,290 crore worth of funds from the Jawaharlal Nehru National Urban Renewal Plan (JNNURM), plan its finances realistically into the next century, and stem misuse of funds across its departments.
In 2002, the Supreme Court had ordered all municipal bodies in the country to switch to a computerised system after a case in Gujarat in which a municipal body said it could not pick up garbage due to lack of funds. The municipality pointed out that it could not access funds from the market due to the old accounting system.
NDMC financial advisor B B Pandit says only earnings and expenditures were part of the accounts books under the old system. “But this system shows exactly where how much money has been spent — all the way down to the ground level,” Pandit says.
The new system would also bring information all NDMC assets (like surplus cash or property) and liabilities (loans or losses) to the public domain, an official says.
The new accounting system uses number codes instead of alphabets, which makes the data easier to be computerised. The system will be linked to all NDMC departments, as also complete the Council’s e-finance project.
By shifting to the cmputerised system, NDMC has also fulfilled a crucial condition of accessing the Rs 1,290-crore JNNURM funds. By tapping into these funds, Pandit says the Council can replace “all our creaking infrastructure — from old water pipes to electrical connections”.
Project consultant Pradeep Tyagi says the new accounting system will enable NDMC to be rated by agencies like Standard and Poor and Morgan Stanley if it wants to issue bonds in the market to raise money. That, he says, is because all its assets and liabilities are now “in the clear”.
Also, under this system all expenses — right down to money spent on a pencil or a book — will have to be accounted for, and shown in the books. “This minute checking, along with the fact that we can now realistically assess costs and benefits of all projects, means funds will better utilised,” Pandit says.
The new system’s first achievement is automatically calculating pension plans for all NDMC employees over the next 40 years. An initial sum of Rs 900 crore has been set aside for the purpose, say officials.
What NDMC books show
* NDMC has cash surplus of US $600 million, invested in fixed deposits in 2005
* Between US $44 million and 66 million are added each year
* Liability is calculated at US $40 million, mainly in security deposits held by NDMC for various private works being carried out in its areas
* Other assets identified: 996 plots, 735 buildings, 392 vehicles, 194 roads, trees and plants, 1,249 sewage and drainage, electrical fittings, toilets and dustbins