States fare badly in using Plan funds

Punjab, Bihar used less than 50% of funds

Though the United Progressive Alliance (UPA) government is committed to transferring more funds to the states, particularly to the agricultural sector, the utilisation of Plan funds by them has been anything but encouraging.

Funds utilisation by even progressive states like Punjab has been below 50 per cent. In some years, Punjab's performance has been at par with Bihar, considered a backward state.

Also, the financial position of the states is precarious. Interest payments as a proportion of states' revenue expenditure rose from 12 per cent in 1990-91 to 22 per cent in 2003-04, while pension expenditure rose from 0.9 per cent to 9.4 per cent in the same period. As a result, the Tenth Plan outlay has been slashed in several areas.

In Rajasthan, for instance, while the outlay for 'agriculture & allied activities' was Rs 224 crore in the annual Plan for 2002-03, it was reduced to Rs 76 crore when it was found the state could not possibly spend more. This is a big drop from the Rs 317 crore outlay under this head in 1997-98.

In Punjab, expenditure on 'agriculture & allied activities' went up from Rs 49 crore in 1997-98 to Rs 138 crore in 2000-01, representing an 80 per cent usage of the Plan outlay for that year.

In 1999-2000, however, a mere 54 per cent of the funds were utilised. In that year, the utilisation of funds for rural development was even lower at 44 per cent.

Though Punjab has a record of spending 70 per cent of its annual outlay on irrigation (except in 1999-2000 when it was 40 per cent), this performance is not matched in 'social services', which includes expenditure on education and health.

In 1997-98, 65 per cent of the outlay for 'social services' was utilised, this fell to 54 per cent in the next fiscal, rose to 62 per cent in 1999-2000, and 65 per cent the year after.

West Bengal's record in utilising Plan funds is also not very good. In 1997-98, the state spent just Rs 78 crore of the Rs 151 crore outlay for 'agriculture and allied activities'.

While the actual expenditure figures are not yet available on the Planning Commission website, the revised expenditure in 2002-03 is just around 56 per cent of the approved outlay under this head.

For rural development, the state's revised outlay is down to around a third of the actual approved outlay, while for irrigation and flood control it is less than a fourth of it. Also, the state only spent 40 per cent of the funds allocated for social services in that fiscal.

Bihar, in 1997-98, utilised less than 40 per cent of the outlay for 'agriculture & allied activities'. This rose to 60 per cent in 2000-01. For irrigation and flood control, 70 per cent of the funds were utilised in 1997-98, which fell to 44 per cent in 2000-01.

In states like Madhya Pradesh and Orissa, the gap between the expenditure and the Plan outlay is small. Indeed, there are several instances where expenditure is higher than the original outlays.

Little can be said about states like Andhra Pradesh and Gujarat, as the Planning Commission does not have details of their expenditure under different heads for most years.

States' expenditures have not only gone down in relation to the original outlays, they have also gone down over consecutive years.

Expenditure on social services, on both the capital and current accounts, has gone down from 33 per cent of total expenditure in 1990-91 to 25 per cent in 2003-04.

In the same period, expenditure on education fell from 17 per cent to 13 per cent, while on medical and public health it went down from 5 per cent to 3 per cent. For agriculture, it slipped from 8 per cent to under 4 per cent.