Is It Mandatory to Share Our Balance Sheet with the Statistical Department? What Are the Risks of Non-Compliance?

Every year, we receive a mail and a visit from an officer of the Statistical Department. They provide us with some forms to fill out and also request the company's balance sheet. We provide them with the necessary information and also have to provide them with a certain amount of money. While there is no issue with this process, I am curious to know if it is mandatory to provide information such as a balance sheet to the Statistical Department. What authority do they have, and what are the consequences if we do not cooperate with them?

Dear HBJ,

The submission of information to the statistical department is an activity that repeats every year. Could you please find out which ministry this department is a part of? Is it under the union government or the state government? The individuals working in the department are best suited to provide information on what happens to the data that is submitted. Do they conduct research on the industry segment to which your company belongs?

Looking at the bigger picture, the Department of Statistics must be collating the information you provide, which is likely valuable to the economic research cell of either the Ministry of Industry or the Ministry of Commerce. Accurate data is essential for policy-making. If business owners start withholding information, how will policymakers formulate policies concerning imports, exports, domestic consumption, taxes, and other related matters? Let us not deprive them of this vital information.

Thanks,

Dinesh Divekar

Dear Dineshji, thank you for the reply. This is the NSO department; I believe it must be under the Central Government. I do agree with your point, and we will definitely provide the required information as we always do.

Is it compulsory to provide information to the NSO?

However, my question is whether this is compulsory and what authority the NSO officer has. Many times, government employees behave in an intimidating way with employees and "demand" information rather than request it, as if they will penalize if the information is not provided properly or in time. They also always expect something in return.

Existing information sharing practices

We already provide employee details to various departments such as labor, employment exchange, etc., from time to time. This information is also available online with the PF department, and the balance sheet is accessible through MCA. I fail to see why the statistical department needs to receive this information from each industry in written forms.

Dear HBJ,

You have written, "Many times government employees behave in an intimidating way with employees." However, this is happening in most government departments, whether from central or state government. Therefore, it is nothing new if employees of NSO demand the information.

Furthermore, you have written, "We already provide details of employees to various departments like labor, employment exchange, etc., from time to time. This is available online with the PF department also. The balance sheet is available with MCA. I do not see why the statistical department needs to get this from each industry in written forms."

Yes, what you say is correct. The information should be submitted only once, and the various agencies can derive the information from that source. Nevertheless, it requires the integration of all government departments vertically as well as horizontally. This has never happened earlier and is unlikely to happen in the future too. Government ministries or departments work in silos. They do not have any vision beyond their department.

I had a chance to work in an MNC that operated in 220 countries! Despite the enormity of their operations, the work went on smoothly. Due to automation, most of the work happened on its own, and there were no data entry operators. They had made a tremendous investment in developing their own IT systems.

We need leadership that has a vision and takes a holistic view. In our country, we have not had a PM who has worked in an MNC. Though Shri Rajiv Gandhi worked as an employee, he was a pilot, and that too in a government service like Air India. With his background in a bureaucratic organization, the bureaucracy continued during his regime as well.

For the method of work that you are expecting, we need visionary leadership that launches administrative reforms vigorously. But then, which political leadership will do that? They always want servile or subservient officers, famously called "babus." What you are witnessing is "babugiri" that we inherited from the British. No political leader worth their salt has the acumen to shed the bureaucracy. Therefore, let us accept it without grumbling!

Thanks,
Dinesh Divekar

The Annual Survey of Industries (ASI) is conducted by the Ministry of Statistics and Programme Implementation under the Collection of Statistics Act, 2008 through the State Statistical Departments. As per the Act, it is obligatory on your part to furnish the return in the prescribed format mentioned in the notice issued under Section 5 of the Act. Failure to do so could result in a fine ranging from Rs. 5,000 to Rs. 10,000.

Thank you.

I agree, Dineshji. It's not possible to change the bureaucracy and corruption that seem ingrained in our system. We have to accept it without grumbling, as you mentioned, rather than getting frustrated.

Thank you for the information, Umakanthanji; this is exactly what I wanted to know. Yes, we will provide the necessary information as we do every year. I only wish government officials had some basic decency and training on how to interact with people. I guess that's too much to ask.

As Umakanthan ji has correctly replied, this is a statutory requirement, and you are obliged to provide it.

Providing the Balance Sheet

As for providing the balance sheet, the Balance Sheet of a company (both private and public) as well as for LLP is a public document and can be seen by anyone from the MCA website. So there is no secret you are sharing by providing them with the balance sheet.

Indian Jurisprudence on Limited Liability

Indian jurisprudence provides that in the case of an organization with limited liability, the person doing business with the organization is doing so at his own risk and liability. Therefore, he should have access to your Annual Accounts to figure out whether you are a safe customer/vendor. Therefore, anyone who is doing business with you can demand a copy of your annual accounts.

I understand now that it is a statutory requirement, and we always provide this information. I just wanted to be sure because of the attitude of the person demanding the same, as I had written above. Thanks for your input.

Many companies ignore these requests because they believe the entities have very few rights. I had a client who mentioned he would rather pay the ₹10,000 penalty than spend time providing the data.

Points to Consider Regarding the Statistical Department's Request

1. Balance Sheet: I assume you mean the published annual accounts, which is a public document, so you might as well provide it.

2. Legal Obligations: You need to read the act and verify what documents they can actually request. I read it a long time ago, so I don't remember the details. If the data they are asking for is not specified in the act, you can refuse to provide it.

Indian Bureaucracy vs. Private Sector Management

Learned Shri Umakantan has placed things in the true perspective. Maybe Indian bureaucracy may be deficient in professionalism. But are the managers in the private sector any different, considering that the querist himself concedes, "We give them the required information and also have to give them some amount"?

Hi Vinayak, the reply given by the learned colleague Mr. Umakanhan is precise, to the point, accurate, and limited to the scope of your inquiry. I appreciate it.

In my humble view, there is a lot to learn from his style of reply. One should avoid giving unsolicited views on things not sought by the querist and also try to score some brownie points by showing off the image of being knowledgeable on each and every subject of the query when one is not.

Another point, if you provide information as statutorily required, why should you pay any money to the visiting officer? Just think.

Regards, Vinayak Nagarkar HR and Employee Relations Consultant

Dear Mr. Banerjee, Mr. Venu, Mr. Nagarkar,

Thank you all for taking the time to reply. It is interesting to know the views of different people on an issue and how everyone might tackle the same thing differently. I appreciate your inputs.

Vinayakji, all or definitely most officers expect to be given something; it is an unwritten rule. One cannot escape that if one wants to run a small industry peacefully. This is not to do anything illegal but just to avoid any deliberate harassment. In our 40 years of running an industry, we have learned that one cannot escape from this for getting work done in any government department. There are minimum "fixed charges" that one must consider; otherwise, you end up running around the offices and officers. I think it's better not to get into that debate. This is nothing new or no secret.

Providing Information to Organizations

Information that organizations are required to provide is always specified. Please ensure that you provide the information in the prescribed form. It is advisable to have a checklist of forms and deadlines by which the information must be submitted, along with the legal authority for providing the information. There is no need to provide anything beyond what is required. While the official may request additional information, you can politely decline and only provide what is specified in the form.

Dealing with Additional Requests

I do not understand why there is fear in refusing any illegal demands unless the information is incorrect or a mistake has been made. The NSO is a statistical organization that collects statistics, and that is all. During my employment, I dealt with various officials, and aside from a cup of tea, nothing extra was ever given. However, I always knew what returns needed to be filed and by which date. Therefore, ensure your return information, dates, and schedules are ready, and handle everything meticulously and on time.

Rightly said by Mr. Nagarkar, “The reply given by Mr. Umakanhan is precise, to the point, accurate, and limited to the scope of your inquiry,” as usual, he does for every post. I would like to explain my view. I am working in an MNC that builds and maintains water treatment plants. We have taken a Factory Licence for some plants. As per discussion with the ASI Inspector, “when we take a Factory Licence, our file goes to the Statistics Dept. as well. Through ASI Return, they collect various data.”

Rightly said by Mr. Dinesh, “the data is useful for ‘Economical Research’ and for making policies.”

Dear Mr. HBJ, through the Balance Sheet, the Inspector traces out what kind of major expenses are claimed in the P/L for the unit. Moreover, various factors related to manpower are also checked and filled in the Return (like the number of personnel deployed (men-women), number of mandays worked and mandays paid, PF-ESI, Bonus, etc.).

I slightly differ from Mr. Natharao. Yes, it is good practice to maintain information in the prescribed format. But following all labor laws, employment laws, and statutory compliance is very difficult. But in my opinion, it is always not possible to follow. “Cannot understand why you are scared of saying no to any illegal demand unless the information is wrong or some mistake is being done.” Yes, we can deny illegal demands if our data is absolutely correct. But in case we made any mistake (which is obvious in this day-to-day changing environment) and the Inspector refuses to cooperate, then it will be more difficult. Moreover, in the case of ASI Return, Senior Inspectors visit the site/office, not any “Babu.” We should practically take up the issue to accomplish the job as a whole.

I arrange meetings at the site, collect the company balance sheet, and maintain contractual labor data. On the basis of the data, the Return is prepared and the Inspector gives us an acknowledged copy. It is nice to read the views of senior members on this unique issue.

With regard to your comment "I slightly differ from Mr. Natharao," I want to clarify. The idea of stressing complete records is to set high standards. In real life, it may not be 100% practical to be right all the time. However, if we allow compromises, we will fail to complete compliances on time. Most big units have third-party auditing for compliances, ensuring the unit is compliant to the best extent possible.

Inspectors need to be treated respectfully and given full cooperation to ensure the unit is not dragged into legal issues. However, this does not mean engaging in unhealthy practices. The best approach is to be compliant and reduce any element of friction with Babus (Babus are referred to in a general manner).

I hope this clarifies the situation.

Dear Mr. Pan Singh and Mr. Nathrao,

Thanks for the replies. The truth is that nothing works without greasing palms. For the statistical department, maybe one may even get away with not giving anything, but there are other departments where a small company cannot escape. We have had demands from the PF department, without fulfilling which online PF claims after retirement are held up due to small errors in the paperwork or some technical reason. You may say that if there are errors, then they have the right to hold the payment. But if the error was serious, then after fulfilling the demands, how does the error get resolved?

Government babus are supposed to help the people and not make them run around the offices, which may be 30-40 km away from small industrial towns. The person gets frustrated and gives in. This is not an isolated incident but a well-set practice. If one is doing something illegal, then the demand is much more, not just a small amount, but that's a different thing. Mostly, even for getting their own money, the employees have to give something to PF.

I think it would be best to leave this debate as it is, as every company may have a different take on this. Large MNCs may be able to maintain perfect paperwork as they have the resources, but small companies struggle, and instead of getting the correct advice from the department, their demands have to be fulfilled. This is the harsh reality in any department.