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Fund utilisation challenges hit central schemes: Tata Trusts report

Sonal Khetarpal     January 17, 2020

Fund utilisation levels under various Centrally Sponsored Schemes (CSS) are satisfactory. However, challenges related to staff shortages, capacity, transparency and accountability in public financial management remain, finds the Tata Trusts report on fiscal governance.  

The Budget Trails by Tata Trusts and Centre for Budget and Governance Accountability (CBGA) is the result of a two-year project that analyses bottlenecks in fund utilisation at district level across 10 development schemes. The idea was to develop a roadmap for fiscal governance reforms required to ensure improvement in resource absorption. Poornima Dore, Head of Data Driven Governance at the Tata Trusts said the study is an attempt to understand fund-flow mechanisms and factors that can enhance the district's ability to utilise its potential as a local-level planning and implementation authority.

While information of budgetary resources and its utilisation is available and accessible at the Union and state levels, that does not hold true for district and sub-district levels. To monitor performance of schemes at district level, the District Development Coordination and Monitoring Committee (DISHA Committee) was instituted in August 2016. Yet, problems of resource absorption in social-sector schemes and challenges around data remain. This directly impacts common citizens or beneficiaries of programmes, as quality of services gets affected due to poor utilisation of funds. Budgetary resources flow into a district through five channels - treasuries; Societies; Member of Parliament Local Area Development fund; District Mineral Foundation Trust (DMFT) fund created in tribal-dominated districts, and Direct Benefit Transfers to beneficiaries.

During the period of analysis (2017/18 and 2018/19), districts have shown improvement in fund utilisation under various CSS which suggest resource-absorption capacity has become better. Fund utilisation rates in Sarva Shikshya Abhiyan (SSA), Integrated Child Development Scheme (ICDS), Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), National Social Assistance Programme (NSAP), National Rural Drinking Water Programme (NRDWP), Swachh Bharat Mission (SBM) exceeded 85 per cent during the years. However, fund utilisation across schemes and districts is not uniform even within these well-performing schemes.

Major challenges are how capacity issues, staff shortages and monitoring mechanisms have not received adequate priority in implementation of schemes. The reasons for poor utilisation were: Delays in flow of funds, rigid scheme guidelines, staff shortages and capacity issues, and transparency and accountability issues have been found to be the most important factors affecting the quality of utilisation. The analysis of factors causing under-utilisation of funds in CSS is based heavily on the perception and insights shared by implementing officers in the project districts.

Commenting on the report, Abhijit Sen, Former Member 14th Finance Commission & Planning Commission said, "This exercise emphasises the need for good quality sub-district data which is key to improve decision making at the district level. Additionally, it is pertinent for the Centre to empower districts to ensure better development outcomes."

Subrat Das, Executive Director, CBGA said "Given the limited public resources available to government and competing demands from a large number of sectors, India cannot afford constrained utilisation of the available budgets in any sector. Hence, it is pertinent to identify the factors constraining fund utilisation in important schemes and address those through coordinated policy measures by the Centre and States."

The report recommends awareness and enhancing community participation to overcome issues related to rigid scheme guidelines, to strengthen Budget Information Architecture at the District Level to Improve Transparency and Accountability, Streamlining Fund Flow Mechanisms for expediting Fund Utilisation in Development Schemes amongst others.

The schemes it looked at are SSA, Mid-Day Meal (MDM), National Health Mission (NHM), ICDS, SBM, NRDWP, MGNREGS, NSAP, Pradhan Mantri Awas Yojana, Pradhan Mantri Fasal Bima Yojana and Rashtriya Krishi Vikas Yojana in Balasore and Bolangir (Odisha), Chandrapur in Maharashtra, East Singhbhum in Jharkhand, and Krishna in Andhra Pradesh.

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