In a recent development, the Ministry of Finance has revised the rules of the Member of Parliament Local Area Development Scheme (MPLADS). The changes mean that the interest that accumulates from the funds will now be transferred to the Consolidated Fund of India (CFI). Previously, the interest was added back to the MPLADS account and utilized for developmental projects.
Understanding the Consolidated Fund of India
The CFI comprises all the revenues received by the Indian Government from various sources. These include taxes such as Income Tax, Central Excise, and Customs, as well as non-tax revenues related to governmental business operations. The Consolidated Fund is constituted under Article 266 (1) of the Indian Constitution.
The fund also includes all loans obtained by the government, whether sourced domestically through treasury bills (internal debt), or internationally from foreign governments and global institutions (external debt).
The CFI is significant as it finances all government expenditure. However, funds cannot be withdrawn without the Parliament’s approval.
Exploring the Member of Parliament Local Area Development Scheme
Launched in December 1993, MPLADS is a Central Sector Scheme. Its main objective is to facilitate MPs in recommending works of developmental nature focusing on creating durable community assets in areas such as drinking water, primary education, public health, sanitation, and roads among others, with an emphasis on their constituencies.
Since June 2016, MPLADS funds have been applicable for the implementation of schemes like Swachh Bharat Abhiyan, Accessible India Campaign (Sugamya Bharat Abhiyan), Water Conservation via rainwater harvesting, and Sansad Aadarsh Gram Yojana.
The implementation process of MPLADS begins with MPs recommending works to the Nodal District Authority, which is responsible for carrying out the eligible works and maintaining records. Each year, MPs receive Rs. 5 crore in two equal instalments, and these funds are non-lapsable.
The allocation rules differ for Lok Sabha MPs and Rajya Sabha MPs. Lok Sabha MPs recommend projects to the district authorities of their constituencies, while Rajya Sabha MPs can utilize the fund in the state that elected them. Nominated members from both houses may recommend works anywhere in the country.
Identifying Issues with MPLADS
Despite its goal of promoting participatory development, MPLADS has been criticized for multiple issues. For instance, the Comptroller and Auditor-General (CAG) of India has pointed out instances of financial mismanagement and inflated expenditure reports.
The scheme also lacks any statutory backing, which means it is subject to the fluctuating interests and priorities of the governing authorities. Additionally, there are no indicators to measure the level of participation.
MPLADS’ design also contravenes certain constitutional principles. It infringes on the domain of local self-governing institutions which conflicts with Part IX and IX-A of the Constitution. Further, it entangles MPs in executive functions, thereby conflicting with the Doctrine of Separation of Powers.
