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Study finds uneven utilisation of funds for important central government schemes in districts

January 17
19:30 2020

More attention is required to better the quality of fund utilisation for various important schemes across sectors as there is skewed distribution of expenditure across quarters and uneven utilisation of funds in districts.

The Centre for Budget and Governance Accountability (CBGA) and Tata Trusts conducted a two-year project focusing on fiscal governance reforms needed at the district level.

It is focused on 10 social sector schemes – Sarva Shikshya Abhiyan (SSA), Mid-Day Meal (MDM), National Health Mission (NHM), Integrated Child Development Scheme (ICDS), Swachh Bharat Mission-Grameen (SBM-G), National Rural Drinking Water Programme (NRDWP), Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), National Social Assistance Programme (NSAP), Pradhan Mantri Awas Yojana (PMAY) and Pradhan Mantri Fasal Bima Yojana (PMFBY) – in across four districts in the states of Odisha, Maharashtra, Jharkhand, and Andhra Pradesh.

The study has found that expenditure done in the the first quarter of the financial year is very low for all schemes.

Districts were found to have utilised the largest share of funds in most centrally sponsored schemes (CSS) during the second or fourth quarters of the financial year, with some exceptions though.

However, capacity issues, staff shortages and monitoring mechanisms have not received adequate priority in the process of implementation of schemes. Fund-absorption capacity varied across blocks, with tribal blocks reporting very low fund utilisation rates.

The study attempts to suggest ways to improve fund flow and utilisation in development schemes across five different sectors, such as, agriculture and allied activities, education, health and nutrition, rural development, and social security and welfare.

The study has found that schemes like SSA, ICDS, MGNREGS, NSAP, SBM-G and NRDWP were performing well in terms of fund utilization.  There remains scope for improvement in schemes like MDM and NHM in some districts.

“Fund utilisation rates in schemes such as ICDS, SSA, MGNREGS, NSAP, NRDWP and SBM-G exceeded 85 per cent (i.e. actual expenditure as a proportion of total funds available in a year) during the financial years 2017-18 and 2018-19,” the study said.

It also said that the extent of fund utilisation across schemes and districts is not uniform even within these well-performing schemes.

Delays in flow of funds, rigid scheme guidelines, staff shortages and capacity issues, and transparency and accountability issues have affected the quality of utilisation.

“… 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,” said Subrat Das, Executive Director, CBGA.

The study has found that while funds under most of the CSS are routed through state treasury, they still bypass the district treasury. When CSS funds get routed through the district treasury system, funds can be tracked down to beneficiaries on a real-time basis.

It suggests that primers and manuals can be prepared in regional languages in order to facilitate better understanding of the objectives of the schemes , target groups, and coverage. District administrations should prepare these scheme specific primers and manuals.

“The treasury system should generate MIS (management information system) reports on various aspects of the district treasury operation so that comparability and consistency of data can be improved. A treasury dashboard should be an inbuilt feature of the online treasury management system which can facilitate public interface,” the study suggested.Get access to India’s fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code “GETPRO”. Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.

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