Development directions

Fundamentally flawed as a concept as it is, the Member of Parliament Local Area Development Scheme has been witnessing numerous instances of violation of guidelines and financial rules in implementation. Yet, allocations under the scheme are set to be enhanced.

THE Member of Parliament Local Area Development Scheme (MPLADS) was announced by the Prime Minister on December 23, 1993 to enable MPs to execute in their constituencies small works of a capital nature based on locally felt needs. At the start of the scheme, the quota for each was fixed at Rs.50 lakhs a year. It was raised to Rs.1 crore from 1994-95 and to Rs.2 crores from 1998-99 onwards. The MPLADS Committee of the Lok Sabha has recommended an enhancement of the amount to Rs.4 crores. A Rajya Sabha MP can choose a district for deployment of his funds allocation and a nominated member may select works in one or more districts anywhere in the country. The Union Ministry of Statistics and Programme Implementation is the administrative Ministry.

Under the scheme, each MP can suggest to the District Collector works worth up to Rs.2 crores in a year. Normally the advice of the MP shall prevail unless it be for technical reasons of non-suitability of land for the work or non-admissibility under the guidelines. The Ministry releases the funds directly to the Collectors, who will get the works carried out through government agencies or panchayati raj institutions. Private contractors are not to be engaged.

The funds should be used for the creation of durable assets to be vested in government. The government has given an illustrative list of 28 items of works that may be taken up, such as construction of buildings for schools, roads, culverts, and so on. There is also a list of works not permissible - such as the construction of government office buildings, works of private organisations, repair or maintenance works, raising of memorials, acquisition of land, creation of assets for individual benefit and building of places of worship.

On the performance of MPLADS, the Comptroller and Auditor General (CAG) presented a report in 1998 and another in 2001. These are available at the CAG's website: www.cagindia.org/reports

During the period between 1993 and 2000, Parliament sanctioned Rs.5,558 crores for the MPLADS and the Ministry released Rs.5,018 crores. The total amount utilised was Rs.3,221 crores representing 64 per cent of the released amounts. Low utilisation has been noted particularly in Jammu and Kashmir (38 per cent), Tripura (43 per cent), Dadra and Nagar Haveli (40 per cent), Lakshadweep (33 per cent) and Pondicherry (24 per cent).

The guidelines lay down that "the release of the funds will be made with reference to the actual progress achieved in expenditure and in execution of works" and that "the normal financial and audit procedures would apply to all actions taken under this Scheme subject to the guidelines". When a public authority gets a grant for some work, it is incumbent on it to obtain a utilisation certificate (U.C.) on completion of the work. The Audit Report reveals that the District Collectors failed to obtain utilisation certificates in respect of 11,915 works constituting 70 per cent of the 16,968 works completed. The Ministry continued to release funds without any correlation to their end use.

The Report states that amounts to the extent of Rs.1,797 crores remained unspent with the implementing agencies as on March 31, 2000. This represented 36 per cent of the total releases. The Financial Rules require that any unspent amount of a grant in a financial year should be returned to the Consolidated Fund.

The audit found that the Collectors reported inflated expenditure figures to the Ministry, by reckoning the amount released to the implementing agencies as the final expenditure. In a sample audit of 106 constituencies, it was found that out of a total expenditure of Rs.265 crores reported by the Collectors, Rs.82 crores, that is, 31 per cent of the total, was, in fact, not incurred at all. The Ministry had not maintained any check on the utilisation of funds released; hence there was no action to recover amounts that remained unspent.

It appears that the guidelines have been observed more in the breach. The audit found numerous instances of violation of guidelines and financial rules in the implementation of the scheme, especially in the matter of expenditure relating to (i) 1,220 inadmissible construction works in 48 constituencies, (ii) 518 works of private and commercial organisations and trusts, (iii) 1,552 repair and maintenance works in 47 constituencies, (iv) purchase of stores and stocks for Rs.5.5 crores in 38 constituencies, (v) 66 works in places of religious worship, (vi) construction of memorials in 13 places, (vii) works in private land without surrender of titles in six States, (viii) irregular sanction of loans, grants and donations in six constituencies and (ix) other 533 inadmissible works in 33 constituencies.

The scheme lays down that no work be taken up without detailed design and estimates approved and technically sanctioned by the competent authority. A sample audit in 20 constituencies found that 3,397 works had been undertaken without technical sanction while eight had been done without administrative sanction.

There is a clear directive that recommendations made by an MP in his or her letterhead and under his or her signature alone should be entertained by the Collector and that recommendation by any representative of the MP is not to be considered even if such a representative may have been authorised by the MP concerned. However, the 1998 Audit Report found in the sample audit in five States that works worth Rs.25 crores were sanctioned without proper recommendations by the MPs concerned: (1) Maharashtra: The Collector of Nanded accepted and approved nine works involving Rs.33 lakh recommended by the son of a Rajya Sabha MP during 1994-95 (2) Haryana: A Rajya Sabha MP authorised the Chief Minister to utilise Rs.1 crore released for 1994-95 anywhere and on any work. The Chief Minister recommended works of Rs.51 lakhs in Ambala district and authorised five MLAs of Ambala to suggest works for the remaining amount of Rs.49 lakhs. (3) Orissa: In 1995-96, the Collector of Cuttack sanctioned 144 works on the recommendations of some MLAs, ex-Ministers and ex-Speaker of the Orissa Assembly on behalf of a Rajya Sabha MP. (4) Tamil Nadu: In 1995-96, 17 works suggested by an MLA on behalf of a Lok Sabha MP were sanctioned by the Collector of Madurai and completed. (5) Uttar Pradesh: The District Magistrates of Allahabad, Lucknow and Sonebhadra sanctioned 920 works costing Rs.22 crores, not under written recommendations of the MPs concerned, but on the suggestion of some others 'representing' the MPs.

The 2001 Report stated that Collectors incurred expenditure on 570 works not recommended by the MPs.

In this regard, the Audit Report (Civil) of the Tamil Nadu government for the year ended March 31, 2000 also presented test audits. In the review of the scheme in six Lok Sabha constituencies and seven areas of Rajya Sabha members, the audit found that while an MP had recommended provision of computers in 25 selected schools, the Collector issued administrative sanction for construction of classrooms in some of them. This report adds that against the recommendation of another MP for the purchase of an ambulance for a medical college, a passenger vehicle was purchased. With amiable sobriety, the audit remarks: "The vehicle is being used by the Dean of the college for official purpose."

The 2000 Report was compiled on the basis of test audits conducted in 241 of the total 786 constituencies/ areas under the scheme. The irregularities cannot be taken as stray instances in a few regions. When each type of irregularity has been regularly repeated in hundreds of works throughout the country, there appears to be an allround financial mismanagement. There are numerous paragraphs in the 2000 Report about the 'maladies' that persist despite a mention in the 1998 Report. This has been due to the failure of the Ministry concerned to take action and remedial measures on the irregularities pointed out in the Reports. Had a thorough check been made on the entire operation of the scheme in all constituencies and States, the findings may be more staggering and distressing.

To say the least, the management of the scheme is a shambles. The accounting process is abominably anarchic. Some guidelines are blatantly contradictory to the constitutional provisions and the general financial rules. There is a clear guideline that the funds released under the scheme are non-lapsable: it means that funds unutilised in a particular year can be carried forward to the succeeding years.

Under Article 112 of the Constitution, the Annual Financial Statement, popularly known as the Budget, presents the estimated receipts and expenditure of the government. After the grants are approved and the Appropriation Bill is passed by Parliament, the government is empowered to draw from the Consolidated Fund monies not exceeding the amounts sanctioned. The grants sanctioned by Parliament are valid only for the financial year. The General Financial Rule No.64 states: "Any unspent amount is not available for utilisation in the following year."

THE guidelines require that the funds released for the scheme be deposited in savings account for each MP in a nationalised bank. Whatever be the manner of keeping the amounts released - in a treasury or in a bank - it is imperative that unspent monies in a grant should be returned to the Consolidated Fund. Otherwise there is no need to have Financial Rules directing that the Departments shall surrender to the Finance Ministry all the anticipated savings noticed in the grants or appropriations controlled by them.

The 2001 Report in paragraph 43(a) states: "The Ministry told the audit query that the Committee of Secretaries (CoS) in their meeting held on 6 August 1997 had decided that central monitoring of large number of works was neither practicable nor desirable."

Nothing could be more incredible than the Secretary in administrative charge of the Ministry disowning the basic responsibility in administration of the grants placed at the disposal of his Ministry. Financial Rule 65(1) reads: "The Department of the Central Government administratively concerned or the authority on whose behalf a Grant or Appropriation is authorised by Parliament shall be responsible for the control of expenditure against the sanctioned grants and appropriations placed at its disposal and shall exercise control through the Heads of Departments and other controlling officers, if any, and Disbursing Officers subordinate to him."

About the decision of the Council of Secretaries, the Audit observed: "As already mentioned earlier, this was a flawed decision, as the financial rules make it obligatory for any sanctioning authority to ensure fruitful application of resources whose transfer they sanction."

It is the Secretary of the Ministry concerned who will have to appear before the Public Accounts Committee to explain and justify the expenses incurred out of the grants and appropriations at the disposal of the Ministry. The Secretary cannot renounce his responsibility as the administrative head of the Ministry and his accountability to Parliament.

The First Report (December 1999) of the Rajya Sabha Committee on MPLADS has given an elucidative narration on the background leading to the creation of this scheme. In the introductory chapter, the report states: "He (MP) had to remain merely a silent spectator on any element of corruption which generally creeps in the entire system of implementation of projects and financing the same... Apart from this, the ghastly countenance of the mechanics of mal-implementation or delayed implementation of projects coupled by channellisation of funds for projects and absence of close monitoring of schemes contributed negatively to the entire scenario which gradually assumed a pernicious aberration from a normal state of affairs... Hence, there was a persistent demand from the Members of Parliament that some method should be evolved under which he or she should be able to recommend works directly in their constituencies and could also involve himself/herself in the system of implementation and completion of project works."

The Committee first accepts the position of the emergence of corruption, maladministration, delayed implementation and absence of close monitoring of development works by the government. Then, it hopes that the MPLADS would be an instrument for meeting the felt needs of the people.

There is a fundamental defect in the concept of the MPLADS itself. MPs are primarily responsible to look after legislative work and to ensure accountability of the administration. In the House, they question, debate, legislate, approve grants and taxation measures and give policy directions. On behalf of the House, they work in committees to inquire into the performance of Ministries and government organisations and submit their recommendations to the House.

The MPLADS changes the role of the MP. It allots a lump sum of Rs.2 crores to each MP and gives him or her the choice of the works to be undertaken. As the Rajya Sabha Committee expounded the position, the MP is to "involve himself in the entire system of implementation and completion of the project". In the process, the MP unerringly becomes a part of the administrative system of the government and loses his or her capability and moral right, as a member of the House and as a member of parliamentary committees, to scrutinise the 'faithfulness, wisdom and economy' of the expenses incurred in the administrative implementation of the works initiated by himself or by his colleagues under the scheme.

It is one thing for an MP to suggest a project, during a debate in the House, in a committee report or through personal representation to a Minister. Then it is for the executive to investigate the feasibility and desirability of the project and take suitable administrative action. Then, the Ministry concerned assumes responsibility for the work taken and becomes accountable to the House and to its committees. The conditions of responsibility and accountability on the part of the government have been lost sight of under the MPLADS. This is the prime reason for the growing number of irregularities, financial and administrative. As the MPs are involved in the works of the scheme from the beginning, the administration conveniently shifts the responsibility and disregards audit objections and reports.

It is neither here nor there in the MPLADS. The controlling Ministry disclaims responsibility for implementation of the works. The Collectors do not get utilisation certificates and make no effort to return unspent amounts released to them. The Rajya Sabha Report found fault with the element of corruption, mal-implementation, improper canalisation of funds and absence of close scrutiny in the works undertaken by the government. The failures of the government during the last 50 years have been overwhelmed and overshadowed by the volume and variety of irregularities generated by the MPLADS in a short period of seven years. The MPs have again become silent spectators to the implementation of several works without their knowledge, without their recommendations, in all possible violations of the financial and constitutional provisions. It is not known whether the works chosen under the scheme have been found to be different from the various projects undertaken by the planning departments at the national and the State levels. India is a country of mass poverty and hence concerted and coordinated measures are to be taken, on high priority, to tackle the problem nurtured by centuries of vast disparities and disabilities in the social and economic spheres. Piecemeal distribution of a few crores here and there will have no impact on the perennial poverty of the masses.

In the 2001-02 Budget, the grant for MPLADS was Rs.1,580 crores included in the Plan under Central Assistance for State Plans. The MPLADS grant is less than 1.7 per cent of the total Plan expenditure of Rs.95,100 crores allocated in the Budget. Where the total planning process has been found wanting and failing, it is futile to think that the felt needs of the people could be met by such disjointed efforts of works chosen individually by MPs within a limited areas.

There should be effective decentralisation of the planning process starting from the District Planning Boards where MPs, MLAs and heads of the district, block and panchayati raj institutions should be involved in the formulation of planning and supervision of the projects chosen. The MPLADS has only served the purpose of diverting the attention of the MPs from the failures of planning and administrative performance at all levels, and to confine their attention to some small schemes restricted to individual constituencies.

The government's disowning of responsibility for the works under the scheme and the involvement of MPs in the administrative system, thereby weakening their capability to ensure the accountability of the executive to Parliament, cuts at the very roots of the parliamentary system of democracy in the country.

Era Sezhiyan is a Senior Fellow, Institute of Social Sciences, New Delhi, and a former chairman of the Public Accounts Committee of Parliament.