Perhaps the most obvious resentment of the hill people is the perceptible lack of money and opportunity in the hill areas of Assam as compared to the easy availability of cash in the markets of the neighboring hill districts of Meghalaya and Nagaland. This is the direct ramification of the disparity of fund allocation to the hill tribal areas of the Northeast, which together shared a common socio- political status within the State of Assam before the state was reorganized in 1969 and 1971. For instance for the financial year of 2004-2005, the per capita government expenditure for Meghalaya was Rs 11, 565/-, Nagaland – Rs 13, 151/- and Mizoram Rs 20, 166/-, but for Karbi Anglong, even in the Budget Estimate for 2009, the per capita government expenditure projected is a lowly Rs 8275/-. The per capita Capital Expenditure for the corresponding year being Rs 2431/- for Meghalaya, Rs 4685/- for Nagaland and Rs 4461/- for Mizoram, while for Karbi Anglong the Budget Estimate of per capita Capital Expenditure for 2009-2010 is put at only Rs 1667/-. And therefore, not surprisingly, the ‘Karbi Anglong district has the highest HPI (Human Poverty Index) value of 33.82, indicating that this district has the highest number of people in human poverty’ (Assam Human Development Report, 2003). Such disparity is unacceptable which makes the people of the hill districts of Assam resentful.
2.The constitutional position for the financial administration:
Para 7 of the Sixth Schedule has four features: a) the constitution of the District Fund to which all the moneys received by the Autonomous Council would be credited; b) Governor to make rules for the management of the District Fund, for the procedure to be followed in respect of payment of money into the Fund, the withdrawal of money there from, the custody of money therein and any other matter connected with or ancillary to the matter of the District Fund; c) the Comptroller and Auditor General to prescribe, with the approval of the President of India, the form and manner the accounts of the District Fund is to be kept; and d) the Comptroller and Auditor General to audit the Council’s account and to submit the report to the Governor who will cause it to be laid before the Council.
The onus of framing rules for the financial administration of the Autonomous Council therefore rests with the State government; the rules have not been framed so far and through various Office Memoranda issued from time to time ad hoc measures have been taken by the State Government.
3. Ad hoc rules set up through Office Memoranda (OM):
OM No TAD/R/153/70 dated Shillong the 30th May 1970: The relevant features are –
a) It shall be the duty of the District Council to ensure that monthly accounts with supporting vouchers are submitted to the Accountant General regularly;
b) The District Council shall not be competent to utilize funds sanctioned under one major head of development for schemes under another major head of development without prior concern of the State Government as this would require formal approval of the Legislature. They shall however be fully competent to sanction re-appropriation from one scheme to another within the same major head. They shall also have full powers for the issue of financial sanctions, administrative approval, etc in respect of the schemes transferred to them subject to availability of budget provision.
c) In the matter of scrutiny and acceptance of tenders etc of a technical nature, which are at present submitted by the district level officers to their superior officers for decision, the present procedure and rules prescribed in the Departmental Manuals will continue to be followed. In the matter of allotment of work or acceptance of tenders of any nature at the district level, the existing instructions of the State Government regarding preference to local industries, local people etc will be followed till the district frame their own policy in this regard;
d) The district council shall be fully responsible to the State Legislature in all matters relating to the funds transferred to them and this purpose the Principal Secretary and the other Secretaries to the Executive Committee should be made available for examination by the public accounts committee and other committees of the Legislature;
e) Any plan funds left unutilized at the close of the financial year should be refunded to the Treasury by the 15th March with intimation to the State Finance Department and can not be carried over to the next financial year;
f) The district council shall not entertain new staff out of the funds placed at their disposal without specific prior approval of the State Government;
g) The salary and allowances of the Principal Secretary and other Secretaries to the Executive Committee as well as officers and staff of the different departments placed at the District Council’s disposal will be made available to the district council for this purpose. For the purpose of provident fund, leave, increment and other related matters, however, these officers and staff will continue to be controlled by the concerned administrative departments.
h) The district council shall not be liable to pay leave salary or pensionary contribution in respect of any Government officer placed at their disposal for implementing the schemes. The salary of the present Secretary to the Executive Committee of the Mikir Hills District Council (former nomenclature of the Karbi Anglong Autonomous Council) will also be paid by the District Council from out of the funds placed at their disposal by the State Government from 1st June 1970 onwards. The district council shall not be liable to pay any leave salary or pensionary contribution in his case from 1st June, 1970;
i) In order to enable the District Council to finance the expenditure on the schemes transferred to them without difficulty, it is proposed to make adequate funds available every month as advance under the head T – Deposit & Advances Pt – III – Deposit not bearing interest – Departmental Advance – Special Advance. It shall be the duty of the district council to submit separate detailed accounts every month to the Accountant General in adjustment of the advance so drawn to enable the Accountant General to make necessary adjustment by debit to the appropriate head of account in the State Budget.

OM No TAD/R/65/75/110, dated 3rd February 1976: Other things remaining the same as the OM of 1970, the following modifications were made –
a) All the District level officers of the development department enumerated in the Annexure and their subordinate officers and staff will be placed under the administrative control of the District Council with immediate effect. These officers and staff will not cease to be Government servants but will function primarily as officers and staff of the district council and the district council will be associated in the preparation of their annual confidential report, in accordance with detailed procedure to be prescribed by the State Government. These officers and staff will nevertheless required to be responsible to the state government for implementing schemes which have not been transferred to the district council and no agency charge shall be admissible to the district council for such implementation. While the administrative control of the district council over the officers and staff placed at their disposal will be complete in the matter of intra-district transfer, inter-district transfer shall be within the exclusive jurisdiction of the state government.
b) The Head of department will continue to exercise full powers and responsibility in the matter of technical control and supervision over the officers placed at the disposal of the district council even in respect of schemes transferred to the district council;
c) In respect of provident fund, leave, increment and other related matters, however, these officers and staff will continue to be controlled by the concerned administrative departments;
d) In order to enable the district council to finance the expenditure of the schemes transferred to them without difficulty, necessary fund will be made available to the district council in accordance with the procedure s laid down in Development Commissioner’s letter no. HPB 1/73/72 dated 11.10.74 under the head “K – deposits and advances – (b) – 850 – Civil Advances – advances not bearing interest department Advances”.

OM No TAD/R/65/75/153, dated 25th August 1976: Other things remaining the same as the OM issued in February of 1976, the following modification was made –
a) The district council shall not in any circumstances divert funds from plan schemes to non-plan schemes, and shall strictly comply with the instructions given from time to time by the state government regarding utilization of funds placed at their disposal.

OM No HAD 218/77/155, dated the 14th November 1979: Following demands of the Chief Executive Members (CEM) of the two district councils, namely, Karbi Anglong District Council and the North Cachar Hills District Council, for revision and changes of the terms and conditions of the entrustment of executive power to them, the Government appointed a committee headed by the Hill Commissioner, vide Government Notification No HAD 218/77/23 dated 28.11.77 to examine the demands and make necessary recommendations. Accepting some of the recommendations, the following changes were made to the OM issued in August 1976, other things remaining the same –
a) The state government will pay to the district council as administrative charge affixed amount for meeting the expenditure incurred by the district council for implementation of the entrusted functions. The exact quantum will be fixed by the state government separately for each of the district councils on the basis of actual expenditure incurred by the two district councils for the past years on a year-wise basis on administering the entrusted functions. Further the district council shall not create any new post, emoluments of which are liable to be met out of the administrative charge to be paid by the government without prior approval of the government.
b) The procedure for making such payment shall be determined by the government.
c) The district council shall not entertain new staff out of the funds placed at their disposal without specific prior approval of the state government. Whenever appointments are made after such approval in regard to posts carrying a salary up to Rs 800/- per month preference will be given to candidates who are registered in the local employment exchange.
d) Whenever the district council is associated in the preparation of annual confidential reports in respect of officers and staff placed at their disposal, they shall do so in accordance with the detailed procedure to be prescribed by the state government. Such procedure will inter-alia be that the secretary – in – charge of the respective entrusted functions shall initiate the annual confidential report of the district level officers, the Executive Member in charge of the respective entrusted functions shall review the annual confidential report initiated by the said secretary in charge and this will be accepted by the respective heads of concerned government departments.
e) The district council shall not in any circumstances utilize funds sanctioned for agriculture and allied programmes, primary education and rural water supply schemes under other sectors; nor shall they divert plan funds for non-plan purposes;
f) The state government will retain the powers regarding de-reservation and settlement of forest villages;
g) Forest resource survey and forest research will continue to be the responsibility of the state forest department;
h) The working plan will be prescribed by the state forest department.

(The OM provisions about forest department effectively limits the scope of the district council to mobilize revenue from the forest department which happens to be among the major revenue resources of the district council)

MoU signed by the State Government and the Autonomous State Demand Committee (ASDC) and other organizations under the Central Government supervision on 1st April 1995:
Funding and delivery system of the fund has been a sensitive issue for many years because it is through this sector the ruling party of the day at Dispur seeks not only to command political control over the hill area and impose contractor-friendly development schemes but also to proxy-spend the funds through selected contractors and officers posted in the hill areas. Often the Autonomous Council Authority is also kept in the dark about the plan fund allocated by the Planning Commission for the hill area. Fund used to be released at the fag-end of the financial year when the Autonomous Council is then hard-pressed to utilize the fund in time and in the effort to beat the 15th March deadline, the funds go out of control and the Drawing and Disbursing Officers (DDO) in collusion with the contractors and politicians get the chance to pilfer the money on the pretext that if the fund were not shown to be utilized the allocation in the subsequent years would be reduced. It is the right of the hill people to know how much fund they are getting, to plan how the money would be spent and to receive the money well in time. That is why the MoU of 1995 made three provisions to deal with them:

“(ix) In the finalisation of the Annul Plan, for the discussions with the Planning Commission, Officers of the Councils would be included in the State delegation.

(x) The feasibility of separately mentioned the funds meant for the areas of the Councils in the releases made by the Union Government and the modalities for the same will be examined urgently.

(xi) A suitable mechanism will be evolved to monitor the adequacy and promptitude in release to the Councils by the State Government of funds meant for the Councils.”

The Government OM No HAD. 57/95/309, dated 31st December 1996 issued as a consequential action of the MoU provision reads –

“The Modalities and administrative changes are –
(a) In order to enable the Karbi Anglong Autonomous Council to finance the expenditure of the entrusted and delegated functions of the thirty subjects / departments without difficulty, the State Government shall make funds available in advance under the Head ‘K – Deposits Advances, part- III – Advance not bearing interest – Departmental Advances – Special Advance’. The Administrative Departments of the State Government shall release the funds on a six monthly basis in April and October of each financial year. It shall be the duty of the Council to submit separate detailed accounts every month to the Accountant General, Assam to make necessary adjustment by debit to the appropriate Head of Account of the State Budget.”

The MoU and the consequential OM have in effect provided for the principle of ‘automatic release’ of funds in two installments in the month of April and October. But in spite of the provisions, the State Government Departments had continued to resist honoring the agreements in letter and spirit and had continued to indulge in the old practice of whimsical release of fund and proxy spending. So in the tripartite meeting of the MHA, with representatives of the Government of Assam and the Representatives of the Autonomous Councils of Karbi Anglong and North Cachar Hills and presided over by Shri G.K.Pillai, Joint Secretary (NE), MHA on 18.06.1998, it was again decided that –

“…the Planning Commission will send a copy of sanctioned release relating to Hill Areas directly to the two Autonomous Councils. It was also agreed that the Planning Commission would advise all Central Ministries to take similar action in this regard.”

The purpose of the decisions so far taken has been to make the councils more autonomous in the matter of the management of funds sanctioned for them, but no significant changes on the ground have taken place in spite of all the decisions taken over the years. Far from conceding to the decisions taken, which were taken with the active evaluation and participation of the Central Government, the State Government has surreptitiously and unilaterally, and in a direct affront to the accepted principle of automatic release of fund in April and October, took a cabinet resolution to the effect that the release of plan fund, non-plan fund and centrally sponsored schemes fund will be made by the Hill Areas Department (HAD). The decision was taken in the Cabinet Meeting held in the Cabinet Room of the Chief Minister’s Block, Dispur on 22nd June 2007 at 6 PM. This new arrangement would require the department concerned to surrender the fund to the HAD first, or get clearance from the HAD first, in either case delaying the process. As the fund now is channeled through a single window, this opportunity is being used to politically arm-twist the Councils or to collect bribe money. The ‘Manisana Commission’ has indicted the HAD Ministry on this front .

4. Implications under the current disposition:
a) The onus of framing rules for the financial administration of the Autonomous Councils lies with the State Government as this responsibility has been taken away from the Autonomous Council in 1969. The Manisana Commission has found out that the State Government is yet to frame rules for the financial administration of the Autonomous Councils . So if whimsicality and confusion prevail in the delivery, utilization and administration of funds in respect of the Autonomous Councils today, it is due to the failure of the State Government.
b) The autonomous Council authority normally is not aware of the quantum of fund sanctioned by the planning commission or other department and agencies of the central government for Karbi Anglong;
c) Funds are expended, on behalf of the autonomous council authority, by the departmental officers being the Drawing and Disbursing Officers (DDO). The drawal of money is to be endorsed by the autonomous council authority, no doubt, but the process of the expenditure is not under the control of the council. Making of the estimates, drawing up of the tenders, allotment of the work, supervision of the work, maintenance of the MB, auditing of the bills and passing of the bills are functions that come under the purview of technical matter which are under the control of the departmental heads; and the departmental heads are not under the administrative control of the council and as such are not accountable to the council authority. Once the payment bills are certified to be technically correct as per the departmental rules being enforced by the departmental heads, the council authority cannot withhold the payment nor can the council authority intervene / interfere in technical matters or over ride the technical certification of the departmental heads.
d) Before endorsing expenditure the council authority is required to get the clearance of a Senior Finance and Accounts Officer (Sr FAO) who is under the control of the Directorate of Accounts, Government of Assam.
e) Therefore while the council authority gets the blame for any misappropriation of funds, they are all actually done by the government officers, perhaps in certain cases with the collusion of the council authority; because experience has shown that unless the council authority colludes with the departmental officers to a certain degree, he normally does not get the cooperation of the officers to get works done. The problem is that the departmental officers in the said councils are in the ‘no-man’s-land’ of officialdom, neither truly the employees of the State Government nor under the complete control of the Councils and any disciplinary action taken by the Council against any departmental officer becomes ineffectual once he goes back to his parent department; and he gets to go back because unless he is released, a replacement is not given by the State Government.
f) Releasing of fund at Dispur has become a lucrative enterprise and the Council authority has to take the services of businessmen to release the fund because the council on its own cannot officially sanction bribe money; and the powers-that-be at Dispur have their own trusted businessmen for the purpose. Council authority, it is talked about, has to ensure at least 50% of the work against the fund to the contractor engaged in the release of the fund on the terms he has previously arranged with the departmental officer concerned. So the collusion appears to take place right from the time of the release of the fund.
g) So unless the fund is directly given by the Central Government to the Council, the Council Authority cannot be made accountable; and unless the Council Authority is made accountable for all the expenditures made, the system is bound to fail. To this will have to be added that the implementing officers and staff placed at the disposal of the Council Authority will have to be under its full control including disciplinary and technical matters. If the State Government is unable to provide with the personnel under this term, the council may be allowed to recruit the manpower needed or employ experienced manpower on contractual basis.

5. Conclusion:
Hence, the pattern and quantum of funding of the present hill area of Assam need to be completely overhauled and made at par with the States of Mizoram, Meghalaya and Nagaland, being a part of a shared geo-political history; meaning that all the expenditure of the Autonomous Council must be defrayed from the revenues collected within the Autonomous Council areas and supplemented and complemented by the Grants-in-aid of the Central Government, award of the Finance Commission, etc. and the required funds must be directly deposited in the accounts of the Autonomous Council, so that controversies over release of fund, quantum of the allocation and proxy spending of the funds by Dispur are eliminated. If the Central Government has gracefully borne the burden of Mizoram, Meghalaya and Nagaland, the Hill Areas of Assam deserve the same treatment considering the common geo-political history of the said areas. In this regard opening of a direct relationship with the Union Finance Ministry, opening of a separate section in the Planning Commission and appropriate amendment of Article 280 of the Constitution for the purpose of accommodating the Autonomous Council may be necessary; and why not because even Village Panchayats have come within the purview of the Finance Commission awards. (The author can be contacted at



  1. The mainstream press centred at Gauhati is condemning NCHAC in the wake of the NIA investigation and arrest of the CEM to justify that all these happened because of ‘more autonomy’ granted to the hills after the MoU of 1995. If this argument is to be believed, then what about so many corruption issues recently surfacing in the country? If Punjab’s former CM Capt. Amrinder Singh and recently Madhu Koda’s cases are taken, then even Punjab and Jharkhand states should have their ‘autonomies’ curtailed. Right?

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