Funds for social welfare cut drastically in revised budget estimates

Ministers write protest letters to prime minister and finance minister, saying it would greatly impact ongoing schemes

By Jitendra
Published: Thursday 14 November 2013

Funds allocation for rural jobs has been reduced by Rs 2,000 crore

The Congress-led UPA government has been harping on its pro-poor schemes in the run up to the elections early next year. But it has effected a drastic cut in budgetary allocations for social welfare schemes. The move is reportedly prompted by the urgent need to contain current account deficit (CAD) to below US $56 billion this financial year.

On Wednesday, the Union rural development minister, Jairam Ramesh, wrote to prime minister, expressing displeasure over the drastic cut in budgetary allocations for rural development in the half-yearly revised estimates (RE). “It is unfortunate that like every year, the rural development budget has been drastically cut down which would hugely impact ongoing rural development programmes,” the letter said.

Kishore Chandra Deo, minister for panchayati raj and tribal affairs, wrote to Finance Minister P Chidambaram, expressing his reservations over the decision to cut budgetary allocations for different schemes managed by the panchayati raj ministry.

The meeting for finalising revised budget estimates was held on Tuesday and chaired by the finance secretary.

According to available documents, there was huge reduction in budgetary allocation for schemes like Integrated Water Management Programme (IWMP), Pradhan Mantri Grameen Sadak Yojana (PMGSY), Mahatama Gandhi National Rural Employment Guarantee Scheme (MGNREGS), Indira Awas Yojana (IAY), Backward Region Grant Fund (BRGF) and National Rural Livelihood Mission (NRLM).

There has been drastic funds reduction for drinking water and sanitation schemes also. This is when secretary for rural development had sought an additional Rs 4000 crore for MGNREGS. In his letter to the finance ministry last month, the secretary had said that the funds allocated in the Union Budget were not enough for other rural development schemes as well. 

When contacted for his reaction on reduction in budgetary allocation, Ramesh refused to comment. It is, however, learnt the the minister is going to take stock of the situation with officials of its ministry.

“The meeting would be to assess the impact of this funds cut on the ongoing schemes and planned schemes,” said a senior official. 

Food security consideration

It is also believed that the massive funds cut is meant to prepare a corpus fund for implementing the Food Security Act. The implementation of the Act would cost more than Rs 1,00,000 crore.   

Information about the revised estimates was informally communicated to the departments of rural development, land development and drinking water and sanitation. Senior officials of these departments said the details of budgetary cuts have not been communicated yet.

A senior official of Union Ministry of Panchayati Raj said that steep reduction in BRGF would make things more difficult. “Even the committed liability of past seven months would be hard to fulfill. We can't even release funds to the states which are implementing these schemes in the districts,” said a senior official on condition of anonymity.

Even MGNREGS affected
According to sources, the budgetary allocation of Backward Region Grant Fund was reduced to a mere Rs 2,500 crore from Rs 6,500 crore.

The allocation for Pradhan Mantri Grameen Sadak Yojana has been reduced to Rs 12,700 crore from Rs 21,700 crore.

Funds allocation for UPA government's pet programme, Mahatama Gandhi National Rural Employment Guarantee Scheme, has been reduced to Rs 31,000 crore from Rs 33,000 crore.

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