The case against MPLADS

Print edition : November 05, 2004

Although various committees have recommended a "thorough review" of the MPLAD Scheme in view of the serious irregularities in its implementation, successive governments at the Centre have done little to plug the loopholes and prevent the improper use of thousands of crores of public money in the name of development.

THE Central government released Rs.5,018 crores during the period 1993-2000 for the Member of Parliament Local Area Development Scheme (MPLADS) for development projects in members' constituencies. Of this, the MPs utilised only Rs.3,221 crores, a mere 64 per cent. The balance, Rs.1,797 crores, lies either "unspent" or in the category "status not known".

Even where the money has been utilised, the Ministry of Statistics and Programme Implementation, which administers the scheme, has failed to obtain utilisation certificates from the District Collectors, who are the nodal implementing authorities for these schemes. Thus, it is not known whether the money was utilised for the purpose for which it was sanctioned. Besides, the genuineness of the projects undertaken remains suspect because various studies have pointed out that the work is generally of poor quality, at times even "inadmissible" under the guidelines of the scheme, in violation of the rules and not necessarily reflecting "locally felt needs". This mammoth "misuse" or "waste" of resources has gone on unchecked since 1993 when the scheme was launched.

The Parliamentary Standing Committee on Finance, in its second report on demands for grants (1998-99), raised doubts about the implementation of the scheme. The Comptroller and Auditor-General (CAG) undertook a review of the scheme covering the periods 1993-97 and 1997-2000. The CAG report, in a strong indictment of the scheme, stated that implementation of the scheme had gone from bad to worse since its inception. It pointed to poor utilisation of the fund, poor monitoring by the Ministry, poor quality and at times inadmissible work, and suspected fraud and corruption.

The CAG report said the Ministry often released funds without any correlation with end use and it did not insist on utilisation certificates from the implementing agencies. The CAG, which studied 111 sample constituencies across the country, found out that expenditure of Rs.161 crores under the MPLADS scheme was not supported by any document. In other words, there was nothing to suggest that the development work had been undertaken at all.

The CAG also found out that even where there were documents to support execution, in 33.12 per cent of the cases the implementing agency did not refund the "unspent" money. Misreporting of financial progress, mostly with inflated cost estimates; irregular clubbing of work under MPLADS with other inadmissible projects; diversion of funds to other projects, work for commercial and private purposes (prohibited under guidelines); and irregular sanction for repair and maintenance, etc., were the other irregularities that the CAG report highlighted. It also pointed out that money was spent on religious places (Rs.74.12 lakhs) and memorials, which is not permissible under the guidelines.

The report stated that there was a decline in work undertaken under the scheme. The amount of work undertaken went down to 86.41 per cent in 1997-2000 from 89 per cent during 1993-97. Besides, the amount of work completed fell to 39.22 percent in 1997-2000 from 56.13 per cent in 1993-97. Interestingly, the quantum of work not undertaken went up during the period: from 11 percent in 1993-97 to 14 per cent in 1997-2000.

The CAG report also pointed to frequent breach in propriety, as work was often undertaken by the District Collectors without the necessary sanction from the MP. Moreover, "suspected frauds and misappropriation" were detected in works worth Rs.118.36 lakhs. Incomplete or abandoned work, poor or no maintenance of completed projects and the Ministry's failure to monitor the scheme were other drawbacks the CAG highlighted.

Poor utilisation of the fund by various States was another drawback pointed out by the CAG. Of the 32 States and Union Territories where the study was done, only seven - Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Andaman and Nicobar Islands and Daman & Diu - reported over 80 per cent utilisation. Twenty States reported utilisation between 50 to 80 per cent. Of these, eight States - Gujarat, Kerala, Maharashtra, Orissa, Punjab, Rajasthan, Chandigarh and Delhi - reported 50-60 per cent utilisation.

In Andhra Pradesh, Assam, Bihar, Goa, Karnataka, Uttar Pradesh and West Bengal the utilisation was 60-70 per cent, while in Arunachal Pradesh, Haryana, Himachal Pradesh, Madhya Pradesh and Tamil Nadu it was 70-80 per cent. States and Union Territories that showed less than 50 per cent utilisation included Jammu and Kashmir, Tripura, Dadra & Nagar Haveli, Lakshadweep and Pondicherry.

In view of these findings, the CAG suggested a "thorough review of the present arrangement for the implementation of the scheme. Such a review should cover the present manner of resource transfer along with technical and administrative arrangements".

The Ministry of Programme Implementation, then headed by Arun Shourie, directed the Programme Evaluation Organisation of the Planning Commission to undertake a study of the scheme. This study, which looked into the period between 1994-95 and 1998-99, also came down heavily on the scheme. It pointed out that of all the works undertaken, only 68 per cent was completed, 14 per cent was in progress and nine per cent was yet to start. In another nine per cent of works, the status was not known.

This study also found that many MPs tended to select the same district, not always for development reasons, and these districts were not necessarily the least developed ones. So lopsided development took place. In Moradabad (Uttar Pradesh), for example, 10 Lok Sabha or Rajya Sabha MPs had recommended works from their MP fund.

This study also disclosed that even in the selection of works, there was a deformity in the sense that 53 per cent of works undertaken were for either roads or bridges while other sectors like health, education, drinking water and housing, remained neglected. Weak monitoring, no proper assessment of "locally felt needs", inadequate allocation for works leading to their remaining incomplete and poor awareness among the people were the other drawbacks this committee pointed out.

It said: "There is a need for revitalising the scheme in terms of financial management, inter-departmental coordination, and involvement of people for identifying proper works, and monitoring and maintenance of created assets." It suggested that MPs should be given full information before they made the recommendation; the cost of the work should be made clear so that there was adequate allocation; maintenance should be assured and people should be fully informed so that they can act as watchdogs.

DESPITE such strong indictment of a scheme, involving huge amounts of money, the previous National Democratic Alliance government failed to take remedial action, except for issuing a circular that utilisation certificates be procured from MPs before releasing any further amount. This measure, however, failed to rectify the serious lapses in the scheme.

"There was a move to review the scheme, but elections came and before much could be done, the government went," said a senior official in the Ministry of Programme Implementation. Interestingly, even the present government has failed to act on this account so far. Senior officials in the Ministry disclosed that "some modifications were being considered, but a thorough review was not on the cards yet".

The changes recommended by the Ministry will have to be vetted by the MPLADS committees. While the Lok Sabha Committee has been formed, the Rajya Sabha Committee is still to be constituted.

Prasanna Acharya, who heads the MPLADS Committee of the Lok Sabha, said they were not aware of any modification being considered in the scheme yet. He, however, admitted that there were "serious lacunae and ambiguities", which needed to be removed for the scheme to work efficiently. "The scheme should run with some changes in the guidelines regarding monitoring and supervision," he said.

But there is also a strong view among some MPs that the scheme should be scrapped, as it had become "a breeding den for corruption". Rajya Sabha member and former Minister for Programme Implementation and Statistics Arun Shourie is of the opinion that the basic premise of making MPs executives for development projects was faulty. "There should be separation of the legislative and executive functions. The MPs should be left only to legislate, while the executive should be given responsibility for development." In his opinion, such programmes were breeding grounds for corruption because there was no mechanism available with the MP to check whether the work sanctioned was being executed, whether it was the right kind of work being done and so on. Besides, he said, even where money was shown to be spent, it remained doubtful whether it was for the right purpose.

Actually, this suspicion has found mention in the CAG and Planning Commission reports too. These studies found out that in Karnataka an unusually large number of community halls were built under the MPLAD scheme even though drinking water was a more acute problem. In one case, the community hall was built in a village where nobody was living at that time and the hall was being used by a local contractor for storing construction material for his ongoing work in the area. A freedom fighters' home was built, which is now being used as a parking space for trucks.

In Uttar Pradesh, a three-room building was built for a school at a cost of Rs.1.5 lakhs, but as the Education Department had not sanctioned any school in that area the building was being used as a cow shed. In Rajasthan, Rs.1.5 lakhs was sanctioned in 1996-97 for building a badminton court. It was never built; 50 per cent of the money was spent by the nagar palika for some other work and nothing is known of the remaining 50 per cent. Such examples abound, giving rise to the belief that even where the MPLAD fund was shown as used, there was no guarantee that it was used actually for development.

In view of such findings Arun Shourie had recommended the scrapping of the scheme, but was persuaded by MPs to agree to increase the amount to Rs.2 crores. Unfortunately, with so much money available for development, there is hardly any development worth talking about under this scheme in most of the constituencies. The least that the United Progressive Alliance government can do is to rectify the loopholes in the scheme so that money earmarked for local development is spent for that purpose.

Why the scheme

THE need for the scheme was felt in 1993 when MPs raised the point that areas represented by Opposition MPs remained backward in development and said that all MPs should be given resources to undertake development projects in their areas. The MPs also pointed out that the central planning authority, because of the huge size of the country, could not provide a regional perspective for planning development, so the people's representatives should be given the power to recommend development works in their areas.

Acknowledging the merit in this argument, the then Prime Minister, P.V. Narasimha Rao, announced the scheme on November 23, 1993. A token amount of Rs.5 lakhs per MP was set aside, which was increased to Rs.1 crore in 1994, and further raised to Rs.2 crores from December 1998. Initially, the Ministry for Rural Development was the monitoring agency, but since 1994 the Ministry for Statistics and Programme Implementation has been the nodal agency monitoring the scheme. There are strict guidelines about what works can be undertaken: these should be for "locally felt needs" and necessarily be "durable capital assets".

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