Across party lines, members of Parliament have hailed the 150% rise in allocation for the MP Local Area Development Scheme.
Thumping of desks in Parliament signifies a loud cheer from its members. Only a few occasions in the otherwise unruly sittings of Parliament find members across party lines cheering any proposal on the floor of the House. One such rare occasion came minutes before the Lok Sabha approved the General Budget for 2011-12 on March 11. Members of Parliament thumped their desks, just as school students cheer a teacher announcing a class party. It was Finance Minister Pranab Mukherjee’s announcement of an increase in allocation for the MP Local Area Development Scheme (MPLADS) that invited the applause.
Some 780 members of Parliament would now be entitled to annually recommend works worth Rs 5 crore each to be undertaken in their respective constituencies. The one-and-a-half-time increase in entitlement came 14 years after it was previously increased to Rs 2 crore in 1998. “This (the increase) was essential. Cost of construction has increased nearly 300 per cent since the last revision in 1998,” says K Rahman Khan, deputy chairman, Rajya Sabha, and chairman of the Rajya Sabha’s committee on MPLADS.
An official involved with the monitoring of the MPLADS says the scheme “flows from the need of people” in a constituency and is one of the most efficient ones. “You have to see how other schemes are performing in the same geographical area,” says an official in the Ministry of Statistics and Programme Implementation (Mospi). He points out that the fund utilisation in the MPLADS is one of the highest among government schemes. Ninety per cent of the Rs 19,845.91 crore available with district authorities (DAs) from 1993-94 to 2008-09 have been utilised.
A look at the performance audit report of the Comptroller and Auditor General (CAG) of India tells a different story. On an annualised basis, “the expenditure incurred against funds available with the district administration countrywide during five years (2004-09) indicated that the utilisation of funds ranged between 37.43 per cent and 52.44 per cent of available funds” in each of the years. In fact, the report points out that the expenditure under the scheme had a propensity to increase closer to elections, while funds tended to accumulate during the intermediary period.
The two peaks in the expenditure incurred during 2004-05 and 2008-09, conterminous with the beginning and close of the 14th Lok Sabha and the pre-election years of the 15th Lok Sabha, respectively. “The acceleration of expenditure in the year close to the elections indicated administrative lethargy during the period between the two elections due to the non-lapsable nature of unspent balances of previous years,” says the CAG report. Funds released to DAs are non-lapsable and held in a savings account, but funds are not released by the Centre till the end of a financial year lapse.
Khan says MPs cannot be blamed if there are unutilised funds in the scheme, since they just recommend works. “They do not spend. The implementing machinery, mainly the state governments and DAs, is to be blamed. Otherwise, the scheme is working very well. We monitor the progress every month,” says Khan.
MPLAD guidelines were overhauled in 2004 after detection of irregularities in the execution of the scheme. In fact, four Lok Sabha members — Alemao Churchill (Congress), Paras Nath Yadav (SP), Faggan Singh Kulaste and Ramswaroop Koli (BJP) — were named in an MPLADS scam in 2005. A Parliamentary committee that probed the scam recommended they be reprimanded and suspended for a few weeks. The committee, however, gave the benefit of doubt to the four, saying the “improper conduct” on their part “did not strictly relate to their Parliamentary duties and none of those members was actually shown as accepting money”.
Among the first ones to question the scheme were politicians themselves. The Left parties have openly criticised it. Besides, Era 
Sezhiyan, a former MP from DMK, in a booklet titled ‘MPLADS – Concept, Confusion and Contradictions’, argued the scheme was contrary to the Constitutional provisions that envisaged separate roles for the executive and the legislature. Another former MP, Bhim Singh, petitioned the court, seeking scrapping of the scheme.
Following the expose, several writ petitions were filed questioning the Constitutional validity of the scheme. The Supreme Court clubbed the petitions as the Bhim Singh versus Union of India case. Upholding the Constitutional validity of the scheme last year, the court observed there was no violation of the concept of separation of powers because the role of an MP in this case was recommendatory and the actual work was carried out by panchayats and municipalities, which belong to the executive organ.
T R Raghunandan, programme coordinator, IPaidABribe.com, an initiative of Bangalore-based non-government organisation Janaagraha Centre for Citizenship and Democracy, criticises the judgment. “An MP is people’s representative in Parliament and his job is to legislate. Why should he be involved in building roads and bridges? If they want to do that, they should be councillors.”
Under the scheme, MPLAD funds can be utilised only if an MP recommends a work, which is not in the negative list, on his letter head, duly signed. But the CAG audit found that nine DAs in eight states, executed 700 works amounting to Rs 9.45 crore without formal recommendation of the MP concerned. Besides, three DAs executed 150 works amounting to Rs 2.44 crore, recommended by representatives of MPs, such as personal secretary or the zonal president of the political party concerned.
There also are instances where funds have been shown to be utilised for a purpose but not put to that use, or the asset created could not be used due to lack of other facilities. Besides, there is poor maintenance of facilities, as MPLAD funds are used only for creation of capital assets and not for their maintenance.
Mospi, responsible for policy formulation in consultation with the Planning Commission, releases funds directly to DAs according to the entitlement of MPs who recommend works in their constituencies.
DAs open MP-wise saving bank accounts, scrutinise work and choose the implementing agency. Panchayati raj and urban local bodies are responsible for opening accounts, executing the work and submitting work completion reports and utilisation certificates to DAs. The ministry intimates nodal departments in states about fund releases. A committee, under the chairmanship of state chief secretary, is required to review the performance at least once in a year with DAs and MPs.
Following allegations of release of funds to non-government organisations run by relatives of MPs, the guidelines have also laid down criteria for selection of NGOs. There is also a ceiling of Rs 25 lakh on release of funds to a single NGO.
These two local bodies are also designated as preferred implementing agency, but a lot of work is carried out by private institutions. Raghunandan says works are given out to favoured contractors in connivance with officials. A former official of the Indian Administrative Service, he says a district official rarely stands up against an MP or MLA. His point is vindicated by the CAG audit, which found MPs in nine states proposed names of implementing agencies along with their recommendations.
In some cases, the implementing agency was also the user of the asset. Shambhu Dutta, general secretary, Gandhian Satyagraha Brigade, an offshoot of the Lok Sevak Sangh, one of the petitioners seeking scrapping of the scheme, says the increase in entitlement will result in an open loot by way of commissions that MPs will secure, directly or indirectly. “The average of such commissions in the last scheme of Rs 2 crore was 10 per cent. So, at the end of five years, a sitting MP shall have accumulated so much of money illegally that his rival would stand nowhere near him in terms of wealth during the elections.”
Since the release of funds is linked to utilisation, there have been instances of inflated figures of expenditure. The CAG audit found that DAs in 12 districts of Chhattisgarh, Jharkhand, Lakshadweep, Nagaland, Tripura and Sikkim reported the entire release of Rs 100.17 crore during 2004-09 as expenditure in utilisation certificates, though Rs 65.17 crore was actually spent by implementing agencies.
Khan says every scheme can have some aberrations, but that does not mean the scheme is bad. “MPs respond to the needs of people in their constituencies through this scheme. Their role, otherwise, would be limited to writing letters recommending actions,” he says. Dutta contests this, saying MPs do not have a better knowledge of what is required by the people than development departments of the government. Therefore, there is no need to authorise elected legislators to exercise any executive function. For this, an alternative mechanism exists in the form of a development department in every state government for every constituency.
