DISCUSSION
On the So-called Fund
Misutilisation under MP-LADS
Mohinder Kumar
This response to the article
“A Scrutiny of the MP-LADS
in India: Who Is It For?” by
Rupayan Pal and Aparajita Das
(EPW, 9 January) criticises the
authors’ arguments on the
misutilisation of Lok Sabha
members’ local area development
fund. It argues that interpretation
of cumulative data is marked by
unqualified and biased statements
and considering the extant norms
and guidelines of the scheme,
since Lok Sabha MPs are not a
fund controlling, sanctioning or
reviewing authority, any
reference to fund utilisation
under the scheme should be
applicable to all stakeholders like
the district authority or state
nodal department.
Mohinder Kumar (nabcons@nbard.org) is with
NABARD, Mumbai.
102
T
his is a response to the article by
Rupayan Pal and Aparajita Das on
“A Scrutiny of the MP-LADS in
India: Who Is It For?” (EPW, 9 January
2010). I find the conclusions drawn by au-
thors on fund accumulation and “misutili-
sation” by the Lok Sabha (LS) Members of
Parliament (MPs) under the Member of Par-
liament Local Area Development Scheme
(MP-LADS) as impressionistic and invalid.
We take a close review of the given data to
present a holistic approach to the study of
fund utilisation under the MP-LADS.
Missing Links
The authors’ arguments on their perceived
misutilisation of fund by LS MPs are based
on cumulative data. Due to non-availability
of annual fund utilisation data, authors were
constrained to use cumulative the data.
That is understandable; but the interpreta-
tion of given data is marked by unqualified
and biased statements, which are difficult
to accept. Considering the extant norms
and guidelines of the scheme, my view is
that, since LS MPs are not a fund control-
ling, sanctioning or reviewing authority
under the MP-LADS, any reference to fund
utilisation under the scheme should be ap-
plicable to all stakeholders, more particu-
larly the district authority (DA) or state
nodal department (SND), instead of target-
ing, without facts, elected representatives
who are just entrusted with the responsi-
bility of sending recommendations to DA
based on felt needs of the local people.
The authors, while focusing on “accumu-
lation” of amount unspent by LS MPs in their
paper, have missed correlating this pheno-
menon with the relevant clause on fund re-
lease under the scheme guidelines as also
with the norms and procedures adhered to
by implementing agencies (IAs) for execu-
tion of projects under the scheme. The
cumulative “amount unspent” and held with
DA does not necessarily imply: (1) amount
june 19, 2010
accumulated; (2) not recommended by LS
MPs to DA; (3) done with political motives;
(4) in violation of guideline on fund release;
and (5) to be interpreted without consider-
ing the role of the agencies involved in
project implementation.
Exclusive Dependence on
Cumulative Data
In order to highlight critical missing links in
the analysis of authors, I have prepared
Table 1 based on the information given in
Table 2 of their article. My Table 1 makes it
explicit that authors’ analysis of cumulative
data on entitled amount (unspent) per LS MP
was based on the assumption that the first
and second instalments of Rs 1 crore each of
the entitled amount of each MP under the
MP-LAD fund had been fully released each
year during the first three and a half years
of the 14th LS by the Ministry of Statistics
and Programme Implementation (MOSPI),
government of India (henceforth ministry),
in the savings bank account of DA as per the
Clauses 4.1, 4.2 and 4.3 of the extant guide-
lines of the scheme given in GoI (2005).
Since yearwise information on release of in-
stalments is not given, it is difficult to ana-
lyse the annual dynamics of funds released,
amount available and amount spent by DAs
through IAs (not by LS MPs).
It is made explicit in Table 1 (p 103) that
full release of instalments (entitled amount)
had been made by the ministry to DA’s sav-
ings bank account each year strictly as per
the scheme guidelines, implying that DAs
were adhering to the Clauses 4.3(i), 4.3(ii)
and 4.3(iii) of the scheme guidelines on
fund release, viz, submission of utilisation
certificate (UC) and audit certificate (AC) for
previous year’s amount, to the ministry. So,
prima facie, we do not see any valid reason
in the authors’ argument on accumulation
of funds done by LS MPs with a political mo-
tive during the initial two and a half years
of their tenure to ensure re-election.
Had there been an accumulation of fund
by LS MPs during the first two and a half
years in violation of scheme guideline,
which enabled LS MPs to block the flow of
recommendations to DA, the ministry would
not have released 100% amount of biannual
instalments each year to the DA’s account.
To win elections, if that is the perceived
vol xlv no 25 EPW Economic & Political Weekly
 DISCUSSION
Table 1: Year-wise Release of Fund to District Authority Account Amount Available and Amount Unspent paper not only a bit far-stretched, but mis-
for 14th LS MPs (Amount Rs crore)
Annual Amount Per LS MP Cumulative Amount Per LS MP
placed also. The norm for release of the
Financial Year* As Per Guidelines Unspent Available to Spent Unspent second instalment of an MP’s fund specifies
Instalment Released Entitled DA as on
No to DA on that the DA ensure that “the unspent bal-
I: May 2004-31 March 2005 1 NA 1.00 NA NA NA NA ance of funds of the MP concerned is less
2 NA 1.00 NA NA NA NA than rupees one crore”. Therefore, the data
II: 1 April 2005-31 March 2006 1 NA 1.00 NA NA NA NA reported by the authors implies that cumu-
2 NA 1.00 NA NA NA NA lative amount unspent shown in Table 2 has
III: 1 April 2006-31 March 2007 1 NA 1.00 NA 31 Oct 2006 2.70 2.30
always been within or near the limit stipu-
2 NA 1.00 NA NA NA NA
lated in scheme guideline, and therefore,
IV: 1 April 2007-31 March 2008 1 NA 1.00 NA 31 Oct 2007 4.70 2.30
2 NA NA NA NA NA NA should not be termed as accumulation.
V: 1 April 2008-31 March 2009 1 NA NA NA NA NA NA From a practical point of view, the issue of
2 NA NA NA NA NA NA accumulation is more pertinent to the
*Approximately co-terminus with tenure of 14th LS. NA: Data not available.
Source: Table 2 of the authors’ paper.
accumulation of unspent balance of Rajya
Sabha (RS) MPs vis-à-vis Lok Sabha MPs.
judgment, LS MPs would rather like to spend from 46% at the end of initial two and a Does the low level of utilisation of fund by
the entitled amount at all times, be it in the half years to 33% at the end of three and a RS MPs have a relationship with their lack
beginning, middle or at the end of their half years, which the authors overlooked. of interest in electoral/vote politics? In
tenure. The authors’ argument is: why do They only reported that the unspent amount that sense, RS MPs reveal a lack of motiva-
they do it mostly at the end, with a political in absolute terms remained constant at tion for spending their entitled amount.
motive? However, there is no convincing the end of the first two sub-periods, which Similarly, underutilisation of entitled
empirical or observed evidence to this means there was accumulation by LS MPs. amount by the LS MPs (or DA) may not be
effect in their paper. The analysis also ignored that only one- termed as misutilisation, so that it does
A holistic and correct approach to the third amount unspent per LS MP would be not give the wrong impression that the use
analysis of unspent balance under MP- there during the last one and a half years of money under the fund was diverted to
LADS would require three basic inputs, of the LS MPs’ tenure. Although a declin- unintended purposes/uses or utilised for
viz, (1) annual data, (2) guidelines of the ing proportion of the cumulative amount the sectors/sub-sectors other than envis-
scheme, and (3) field level information on unspent is not an ideal state requiring even aged under the scheme guidelines.
process of implementation. None of these and uniform allocation of funds, it may not Further, authors’ mix-up on whether
three sets of information lay at the disposal be straightaway termed as accumulation MPs “recommend” or they “sanction” works,
of authors, while commenting on accumu- by LS MPs during the initial period for is quite apparent in the article (p 66). It
lation and misutilisation of funds by LS political gains. could be a mistake but list of incorrect and
MPs. If the Clause 4.3 of guideline on fund Data given in our Table 2 also show that biased reporting of facts and statements in
release from the ministry to DA and adher- cumulative amount spent per LS MP is the paper is long.
ence to the same each year by ministry is increasing, from 54% (first sub-period) to
taken as correct, then authors’ finding on 67% (during second sub-period) and 90% Practical Aspects
fund accumulation by LS MPs with political (during third sub-period) over the 14th LS Another important difficulty with the paper
motive becomes invalid and in contradic- tenure of MPs. is that there is no confirmation of their
tion with the norms and practices of entire secondary data-based findings on fund
organisational structure of the scheme. Concepts, Norms and Practices “accumulation” and “misutilisation” with
At the conceptual level, what actually should the field level primary data collected from
Holistic Approach to Explaining be called underutilisation of funds in the individual districts, particularly on the fol-
Unspent Balance initial years is straightaway termed as lowing areas/aspects, which are totally
Table 2 gives a more clear view of the accumulation done by LS MPs with a political ignored by authors in their paper, and which
cumulative data on fund utilisation during motive of re-election. Without prejudice to could have an impact on the annual pattern
the 14th LS tenure of MPs, as compared the intention of authors and also to the role of fund utilisation under the scheme.
to information given in Table 2 of their of LS MPs as per the norms envisaged under (1) Whether the general public approach LS
article. It depicts a declining proportion of the scheme, I regard this perceived notion MPs for works strictly within 90 days of the
cumulative amount unspent per LS MP, of accumulation which runs through the beginning of the financial year as per
Table 2: Fund Utilisation during the 14 Lok Sabha – All India Data (May 2004-April 2009) norms, or throughout the year?
Sub- Period From/To Entitled Amount Cumulative Per MP (2) Whether the LS MPs send recommenda-
period (Rs Crore) Unspent Spent
Amount % Amount % tions to DAs within 90 days of the beginning
(Rs Crore) (Rs Crore)
of financial year or tend to spread out their
I First 2½ years May 2004-31 October 2006 5.00 2.30 46 2.70 54
recommendations throughout the year?
II Middle 1 year 1 November 2006-31 October 2007 2.00 2.30 33 4.70 67
III Last 1½ years 1 November 2007-30 April 2009 3.00 1.00* 10* 9.00* 90* (3) Whether the DAs are able to scrutinise
*Assumed 90% utilisation at the end of tenure of five years (based on Table 1 of the paper). proposals, get technical estimate and give
Economic & Political Weekly EPW june 19, 2010 vol xlv no 25 103
DISCUSSION
financial sanction of works, all within 45
days of receipt of recommendations?
(4) Whether the IAs implement projects
within 365 days or the duration as specified
in the sanction letter of the DA and submit
the date of completion of project to the DA?
(5) Whether random inspection of stipu-
lated 10% of projects is done by the DA
each year?
(6) Whether regular monitoring of all
projects is done by the IAs and monthly
progress report (MPR) regularly submitted
to the DA?
(7) Whether district level monthly review
meetings of DA are held, with the participa-
tion of LS MPs being ensured by inviting
them to such meetings?
Without touching upon the above prac-
tical aspects, authors declare that “our
analysis offers some evidence of political
business cycle in spending by the MPs”.
What is referred to as “evidence” is only
their impressionistic feeling and subjective
judgment. It is commonly known that poli-
ticians and MPs in parliamentary democracy
engage in electoral politics. This is a uni-
versally accepted truth all over the world.
To win elections is a sort of teleological
project of all – politicians, LS MPs and the
government in power, which naturally
comes to them under the parliamentary form
of democratic set-up in India as elsewhere.
Instead of questioning the root cause, i e,
populism embedded in every parliamentary
form of democracy, authors have unwittingly
targeted MP-LADS along with the decen-
tralisation process, though appear them-
selves unsure of whether this is generally
true. In the process, they have contributed
to a distorted view of the MP-LADS only.
The impression created that all entities –
subnational level politicians, MPs, govern-
ments, interest groups, elites, local govern-
ment, MP-LADS, etc – form a nexus to exer-
cise “misuse” of funds and authority, needs
to be dispelled. I consider this as an exam-
ple of extreme form of thinking and some-
what nihilistic perception of authors about
the MP-LADS.
Teleology and Determinism
The connection between teleological
objective of the LS MPs, i e, winning elections
and the need for determinants of political
business cycle type of spending is not
clearly specified in the paper. When
104
winning elections is the universally mani-
fested and commonly intended goal of the
politicians as is made out in the paper based
on average (per MP) fund spending behav-
iour, how does causal determinism matter
in influencing their set goals? The ration-
ality of coexistence of teleological expla-
nation and causal determinism involved
in fund utilisation by LS MPs under the MP-
LADS is not specifically explained by
authors, though there is some connection
between the two explanations (Nachane
2003). There has to be some compatibility
between the two explanations in the
paper in order that the validity of teleolo-
gical interpretation of LS MPs’ cyclical
spending behaviour is sustained and re-
mained uncontested. I think an over-em-
phasis on teleological explanation given at
the beginning of the paper could have
been avoided.
Conclusions
A final comment: the paper unwittingly
oversignifies the political side of the devel-
opment embodied in the infrastructural
works implemented under the MP-LADS
and lends politics an autonomous character
the only to create its negative side and
ignore positive socio-economic impact of the
works at base level, thereby, presenting a
distorted view of the scheme. In the proc-
ess, it only seeks to depoliticise the MP-
LADS. I do not find it all that surprising be-
cause an overdetermination of political
“superstructure” in its independent form
has been a characteristic feature of our
social structure. Our past, present and
even future appears to be smeared in the
independent existence of politics as power.
In the words of a noted artist, “In India
politics is the highest expression of ‘will to
power’. The poor look towards the State
for succour and the State does or does not
do them justice” (Das 2010).
The global financial institutions are
putting pressure on governments in deve-
loping countries to depoliticise develop-
ment (Harriss 2004). The MP-LADS is a
fitting response to the dualistic agenda
of the World Bank to covertly promote
“anti-politics machine”, while overtly pur-
suing participatory approach to develop-
ment based on its version of social capital.
The paper incidentally gets trapped in
such a hidden agenda of depoliticising
june 19, 2010
development and unwittingly contributes
to creating an impressionistic view of the
MP-LAD fund being “misused” by the LS
MPs. Can one implicitly say that politi-
cised/poor general public is also a stake-
holder in the “misuse” of MP-LAD fund by
virtue of their promising/ensuring electoral
gains to MPs in exchange for community
works? The authors have rightly asked in
the title of their paper in respect of MP-LADS:
“who is it for?”. I think the poor public is
caught between the extremes of over-
politicised public on the one hand, and the
depoliticising agenda of the World Bank
on the other. The MP-LADS is an interven-
tion that fills a missing link between the
poor people and state, and keeps political
superstructure in correspondence with
the economic base of development.
The MP-LADS has traversed a long path
and improvised on a number of counts
since its inception in 1993-94, particularly
after 2000-01 when the last such evalua-
tion studies were conducted and selected
negative features of which are now report-
ed in the paper by authors. A number of
shortcomings observed in implementation
have been plugged and positive aspects
strengthened. The scheme symbolised a
new strategy of conscious political (public
action) orientation to the development.
Having passed through a phase of learning
during the first decade since inception,
the scheme guidelines were revised in
November 2005. The authors in their paper
have raised an issue, which is largely non-
existent. So far as their critique of politics
and decentralisation process embodied in
MP-LADS is concerned, it is done from a
narrow perspective. In French the same
word may be used to refer both to “politics”
and to “policy”: la politique (Harriss 2004).
The paper tends to obscure this identity of
politics and policy in MP-LADS.
References
Das, Soumitro (2010): “Our Right to Offend”, Hindus-
tan Times, 19 February, Mumbai.
GoI (2005): Guidelines on Member of Parliament Local
Area Development Scheme, MOSPI, New Delhi.
Harriss, John (2004): Depoliticizing Development –
The World Bank and Social Capital (New Delhi:
Left Word Books).
Nachane, D M (2003): “Causal Inference and Scientif-
ic Explanation in Economics”, Economic & Politi-
cal Weekly, Mumbai.
PEO (2001): Evaluation Report on Member of Parlia-
ment Local Area Development Scheme, Pro-
gramme Evaluation Organisation, Planning
Commission, New Delhi.
vol xlv no 25 EPW Economic & Political Weekly