After the multi-crore National Rural Health Mission (NRHM) scam in Uttar Pradesh, the Centre has decided to tighten financial management of the states. In a move that will ensure transparency, for the first time ever the government has proposed annual audits of its flagship scheme NRHM by the Comptroller and Auditor General of India (CAG).

“We have decided to introduce concurrent audits and for that the CAG has agreed. From this year, the CAG will conduct audits annually. The states have been told that external audits will happen,” said Anuradha Gupta, additional secretary and mission director, NRHM.

A handbook detailing the way financial matters should be handled has also been prepared by the health ministry and will be sent out to the states shortly. The handbook specifies the principles of keeping the accounts and guidelines on how the money should be spent. Officials say that this will bring in more transparency.

To make sure that the financial matters are handled as per the laid down procedures, the Centre has also insisted the states to appoint a full-time director of finance and has asked the states to discourage re-appointment of their auditors.

“At the most, the auditor can be appointed for a year. In case the state feels go for appointing the same auditor for another year, special permission will have to be taken from the Centre,” added Ms Gupta.

The health ministry is also emphasising on capacity-building and is preparing training modules to make sure that the money is spent well. “We are putting in place a system so that any illegal departure catches the attention,” Ms Gupta further said.

The decision comes in the wake of major irregularities revealed during the review by the Central team of the NRHM scheme in UP last year. The review found major irregularities by the state.

It found that the state had procured 779 ambulances for `56.36 crores for the Emergency Medical Transport Services (EMTS), of which most were lying unused.

Also, as per the report, `334.62 crores was already available with the office of director-general (family welfare) for procurements.