india's decentralisation process received yet another blow during the past fortnight. The Union ministry of finance (mof) refused to release funds directly to panchayati raj institutions (pris) and district rural development agencies (drdas) for poverty alleviation programmes in the states. The ministry has reverted to the earlier system of routing money through the Consolidated Fund of respective states. It may now take months for the funds to reach villages. At present, money is transferred within a few weeks through pris and drdas.
The delay in the flow of funds is all the more inopportune since the country is in the process of implementing its largest drought relief programme. The number of projects sanctioned under another scheme -- the drought-prone areas programme -- for 2002-2003 is 2,478. Then there are the approved outlays of the annual plan scheme of the department of rural development for 2003-2004, which amount to Rs 10,270 crore. These too may get stuck as a result of the mof's decision.
Former Union minister for rural development Shanta Kumar reportedly wrote twice to Prime Minister (pm) Atal Bihari Vajpayee in the past four months, but to no avail. It may be noted that on October 4, 2002, the pm had said: "If all political parties agree, the Union ministries of rural development, finance and law will work out a draft amendment together" (see: 'Toothless At 10', January 15, 2003). He was addressing a conference of drda project directors in Delhi, and alluding to the proposed constitutional amendments that would facilitate the direct flow of funds from the Union government to pris.
Significantly, the reversion to the Consolidated Fund system has taken place despite a National Development Council committee expressing concern about the pace of implementation of the schemes in the country.
Ranjeet Banerjee, joint secretary, mof, cites the rules with regard to fund disbursal: "According to Section 267 (a) of the Constitution, funding to all agencies and organisations should be routed through the Consolidated Fund of the State, and not directly through the drdas or implementing agencies."
Meanwhile, Wilfred Lakra, joint secretary of the Union ministry of rural development, is apprehensive about the pace of development: "The delay in releasing the first tranche of funds will hinder the release of subsequent instalments also, which would ultimately affect development. If not utilised properly, the funds can lapse towards the end of the financial year." Lakra's fears may not be misplaced.
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