Case Study: Automation of

Treasury Department In Karnataka Government

Presented To:

Mr. A.T. M. JakariaKhan

Lecturer, Institute of Business Administration

University of Dhaka

Presented By:

Md. Ariful Haque, Roll- 18, Batch -52D

Md. SohanHaidearSiraji, Roll- 19, Batch -52D

Government established in 1964

216 treasuries functioning across the state

31 treasury offices and 185 sub-treasury offices

Annual Budget over Rs27,000 crores

STATE GOVERNMENT

FINANCE DEPARTMENT

DIRECTORATE OF TREASURIES

DIST TREASURY 1

SUB TRY 1

D T 2 D T 31- - - - - - - - -

SUB TRY 2 - - - - - - SUB TRY 185

State government transactions

Salary Payment to 3,00,000 state employees

Pension payments to 1M+ widows, disabled people and retirees.

Transaction services to 4500 village administrators (panchayats)

Lack of accountability, transparency and responsibility

Long delays in payment

Inefficiency in Information system management

Lost trust among service takers for Fraud

Manual operations required huge paper records

Huge delay in updating budget and issuing payments

Required large human resources (around 300) only for budget allocation and financial calculations.

Involves expenses classification errors

Suffers data redundancy and inconsistency

Basic Information:

An integrated financial management system

Developed by CMC, a TATAenterprise

Became fully operational in 2003

Technical Specification:

Software: Oracle 8i as the Relational DBMS

Disaster management: Oracle standby database technology

Security: Password-based and role-based access

Architecture: Consists of satellite segment, hub and remote VSAT terminals

Centralized Database

Real Time Data update

Eliminate data redundancy and inconsistency

High efficiency, transparency and accountability

Facilitates electronic tracking stamp for bills

Maintenance of Bill Process Log for transactions

Eliminate payment processing delay

Online transactions, balance checking

Automated customer service hotline and IVR

Has Category at the Ninth National Conference on e-Governance at Kochi on February 2, 2006

Q-1: Why was it so difficult for the departments of treasury to manage its operations?

Millions of transactions and approvals daily

Constant monitoring of budget allocations to avoid overspending

Lack of proper control and transparency

Mountains of paper records during year end financial audit makes employees overburden

With nearly 100 departments sent their bills to treasury, it involves huge delays in consolidating information, updating the budget and payments

What kind of challenges did the department encounter when implementing Project Khajane? What management, organization and technology issues had to be addressed?

2000 Employees had to be trained most of whom were never exposed to using Information Systems before

A core team of 25 officers was trained thoroughly by CMC team regarding the use of the application software, preparation of accounts, system administration, etc.

At least one experienced officer was included in this core team from each district. They acted as nodal officers for training at the districts

About 1400 staff members were trained in the basics of computerization, mainly data entry and 600 officials on use of application software

About 75 officials were imparted with system administrator training

Refresher courses were provided for better retention

Elaborate study of the existing system and deficiencies in it by a committee headed by the secretary (Resources) had to be done

Defining the best practices: A Team of officers from finance and treasury studied the Andhra Pradesh, Maharashtra, Tamil Nadu, and West Bengal treasury practices

Finding and eliminating Redundant Processes

The number of drawing officers was brought down to around 21,000 from 40,000 as redundant processes were cut

The nightmare of updating the software versions in an application containing 630 forms, 800 tables and nearly 300 reports without the support of an efficient network could become a nightmare

The pilot testing of the application software was carried out in 5 sites, which covered all types of treasuries

The feedback from the pilot run carried out for 6 months was used to modify the software suitably.

Networking of all the treasuries were great boon as hundreds of minor and major modifications, bug fixings and enhancements were carried out centrally, immediately all other fields would get updated

How did Project Khajaneimprove Decision making and operations for the department? Are there benefits to vendors, employees and pensioners?

Managers can use the online system to check budgets and expenditures

So decision can be made about releasing funds

System controlled budget check ensures that managers can focus less on control and have more time for Decision making

Reports from all treasuries are now accurate, uniform and easy to consolidate- so decisions made are also reliable

It generates state-wise/district -wise MIS reports from the central server

Bottleneck and Delay Payments have been removed

Before,100% reconciliation of expenses to the

accurate

Overdrawing never takes place anymore

Freed up most of the 300 employees who used to handle classification and consolidation of budget allocation tasks and make related financial calculation; now they are working on other tasks

From 45 days, now it takes 2 days for bill receiving at the Finance Department

Directorate can prioritize bill payments based on a first-in, first -out rule

No more bottleneck and delay payment for customers and pensioners

Occurrences of Fraud dropped substantially

automatically performs audit on entries

No of complaints has reduced, both from vendors & other departments

Vendors can now check their payments by using their unique tracking numberand talking to Interactive Voice Response

As a result, there is no longer a queue of vendors in front of office

Cost Item System Stat Drawing

Disbursement

Officer

Payee

Number of

Trips

Manual Mean 2.706 2.115Computerized Mean 1.624 1.216

Waiting Time

(Minutes)

Manual Mean 63.157 60.058Computerized Mean 21.759 24.667

Amount of Bribe

Paid (Indian Rs.)

Manual Mean - 233Computerized Mean - 0

Other Amount

Paid to

Intermediaries

Manual Mean - 332.857Computerized Mean - 0