Public spending worth Rs 20000 crore sans monitoring: Does MPLADS need a rethink?

An active citizen makes a case for decentralising or restructuring the MPLAD scheme to ensure greater transparency and better implementation.

The Members of Parliament Local Area Development (MPLAD) scheme was introduced in 1993 to enable MPs to create useful community assets in their constituencies. Currently, each MP is allotted Rs 5 crore per year, that is, Rs 25 crore per term which is a substantial sum of public money to be placed at the disposal of an individual.

MPs are expected to recommend projects based on local needs and the district authority is made responsible for due diligence, approval, selection of implementation agency and execution. The Government of India releases directly to the district authority the annual entitlement of Rs 5 crore in two equal instalments of Rs 2.5 crore.

From April 2014 to end of July 2018, out of 4,67,144 works recommended  by MPs, 4,11,612 works were sanctioned and 3,84,260 works completed. Overall, Tamil Nadu and West Bengal are the best performing states. Both have average proposal sizes of Rs 3.5 crore. Across the nation, the utilisation to fund released percentage is over 90 per cent and almost all States have used the funds. That is the statistical picture of the MPLAD scheme performance.

Findings of misuse and unfavourable reviews of the scheme by the government’s own organisations give a contrarian picture. Serious doubts of corruption, nepotism and collusion prevail over statistical reports based on completion certificates. Gross violation of the scheme’s guidelines in identification of “projects” that yield personal benefits or of those that exist only on paper but have been certified as completed, and irregularities in the selection of “suitable” contractors for execution have been cited. District Authorities do not inspect the required number of sanctioned works and do not render regular monitoring reports.  When sent, the reliability of these reports is questionable in the absence of verification by independent agencies.

These shortcomings are substantiated by reports of the Central Information Commission. Lack of transparency and accountability in the operation of this scheme have come in for adverse comment also from the National Commission to Review the Working of the Constitution (NCRWC), the Second Administrative Reforms Commission, the Comptroller and Auditor-General of India and the Central Information Commission.

The high degree of fund utilisation, over 90 per cent across all states – could be too good to be true – and the unsatisfactory outcome reports are contradictory and disturbing. As post-implementation verification is weak there is no assurance that all that is said to have been accomplished has in fact happened or served public purpose.

Reports suggest that there is hardly any participation of the local people to voice their needs. Small groups, having easy access to the MPs, tend to get clearance for works to serve their own needs. By rule, in Government schemes, a project is proposed, its viability assessed, funds allocated for viable proposals and released as it progresses.

But, in MPLADS, the process is reversed. Funds are first allocated, after which the works are recommended and the district administration, after assessing viability, implements them. MPLAD involves about Rs. 20,000 crore over a Parliamentary term that is, by and large discretionary, free of effective post verification and prone to serious misuse. The facility for an individual to have an almost exclusive say on expenditure of public money of as much as Rs. 25 crores over five years is susceptible to misuse.

Lack of fund provision for maintaining and operating the assets created under the scheme and absence of independent verification of project completion are defects in the system that are repairable but not the high susceptibility of the scheme in its present form for misuse. The earmarking of close to Rs. 4,000 crores of MPLAD in the annual Budgets, that is, Rs. 20,000 crores per Parliament duration of five years has assumed the nature of a fixed perk. The longer it continues, the more will it become indestructible, as it is voted upon by the MPs themselves.

The options are: either abolish the scheme or give it one more chance by revamping and decentralising it to see if its potential benefits are realised in larger measure with lesser risk of misuse. The scheme connects the people’s representative with the constituents to understand their needs. It helps citizens assess the representative’s commitment to serve the community and therefore decide on eligibility for re-election. It may generate a healthy competition among political parties to show good results. It creates a meaningful and specific performance indicator as there is no other way of measuring the elected representatives’ commitment.

If the scheme is not to be abolished, it should be decentralised to give it a higher chance of success. It is reported that many MPs are not close enough to the constituency to be able to understand diverse needs spread over a large area compared to the compact area of an MLA’s constituency. MLAs are more likely to remain in contact with their constituencies without having to make a special effort. They are, therefore, more likely to be familiar with local problems and be more accountable to people they face every day. It may be worthwhile for the Centre to try it out in a decentralised format allocating Rs 1 crore per MLA per year, entrusting the supervision and monitoring to the State Government.

[This article was first published in Madras Musings and has been republished with permission. The original article may be viewed here.]

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