Neha Sakhuja

The recently declared Backward Regions Grant Fund (BRGF) may not be up for implementation in November as declared by the Union Ministry of Panchayati Raj. The hitch: most of the states have failed to set up district planning committees (DPCs), a mandatory requirement to avail funds under the scheme. Funds will be transferred to the district directly from the ministry based on district development plans drawn by panchayats and DPCs, and approved by state governments.

This is the first Union-level development scheme to be implemented directly through Panchayati Raj institutions and is being seen as an experiment in fiscal decentralisation.
Of the 27 states eligible to receive funds under BRGF, 11 are yet to constitute district planning committees.

In effect, 130 backward districts will lose out on funds. The worst affected will be 36 districts in Bihar, 34 in Uttar Pradesh, 13 in Andhra Pradesh and 12 in Maharashtra. Other states where DPCs are yet to be constituted are Arunachal Pradesh, Gujarat, Haryana, Jharkhand, Punjab, Tripura and Uttaranchal. Bihar has a special Rs 1,000-crore package under the scheme.

An impressive backdrop

At the Chief Ministers’ Conclave in Nainital on September 23, 2006, Prime Minister Manmohan Singh announced that the BRGF of Rs 3,700 crore for 250 districts under the ministry of Panchayati Raj would “become the single biggest instrument for effecting participatory planning at the local level.” Earlier, in August 2006, the Cabinet Committee on Economic Affairs (CCEA) had approved the establishment of BRGF. The BRGF project is to be implemented over the 11th Five Year Plan period (2007-2012). It aims at catalysing development in the backward regions of the country.

A sum of Rs 250 crore per annum at the rate of Rs1 crore per district from the BRGF has been earmarked for capacity building, and the balance is an untied development fund. The BRGF includes all districts where the National Rural Employment Guarantee Programme is implemented and all the districts mentioned in the Inter Ministerial Task Group Report on Backwardness. The BRGF, first conceptualised in May 2004 under the Common Minimum Programme of the ruling United Progressive Alliance, aims at addressing the creation of productive assets in backward states.

A preliminary report highlights the thrust areas and includes physical infrastructure, governance and agrarian reforms. It extends to converge, through supplementary infrastructure and capacity building, the substantial existing development inflows into these districts as part of a well conceived, participatory district plan. The BRGF will be implemented through Panchayati Raj institutions and in districts with well-formulated district plans.

Giving details of the scheme, Union Minister for Panchayati Raj Mani Shankar Aiyar noted that under the constitution, all funds will have to be routed through the state and proper provisions will have to be made in the guidelines to ensure that the funds under the scheme reach the districts without any diversions. These guidelines will be prepared in consultation with state governments.

The approach paper for the 11th Five Year Plan -- Towards faster and more inclusive growth -- identifies these districts as characterised by rain-fed agriculture or extensive land degradation, poor infrastructure and connectivity, and low human development indicators. Many of these districts also have large tribal populations where problems of tribal rights in forest areas have remained unresolved.

Lack of economic development in many of these districts has led to social problems, perception of alienation and neglect, which have deteriorated into an adverse security environment that discourages development. These problems have led to the rise of Naxalism in many districts, which now poses a severe internal security threat. It is important to remember that while many of these districts are in states that are lagging behind in development, some are also to be found in better performing states such as Maharashtra, Andhra Pradesh and Karnataka .

What it entails
The mechanics of the fund are being worked out but it has generated much debate among policy-makers and analysts in terms of its effectiveness and the likely guidelines for its operations. Apparently there was a tussle between the Planning Commission and the Panchayati Raj ministry regarding the guidelines for the fund. The ministry wanted only a miniscule portion of the fund -- Rs 250 crore -- for a specific head, primarily capacity building, and the untied development fund to promote decentralisation in panchayats.

However the ministry wanted the fund to address the “crisis in agriculture” by allowing farmers to acquire agricultural equipment among other measures. The final guidelines have been subjected to discussion between the ministry and the Planning Commission, and will be made public soon.

The backward districts will also get Rs 2,500 crore at the rate of Rs 10 crore a district as untied funds to the Panchayati Raj institutions. The remaining Rs 1,000 crore will be distributed among districts on the basis of their population and area. The preliminary guidelines allow a maximum of four per cent of the untied funds available to each district to be used for recruiting or hiring staff by the Panchayati Raj institutions.

But they add that this allowance will not be a permanent feature and the Panchayati Raj institutions will have to ensure that they are able to raise revenues to pay for these personnel within five years of the launch of the scheme . The 27 states where the BRGF scheme will be launched will have to constitute a state-level body to look at the requirements of capacity building in their states.

The role of the Centre will be limited to one member from the ministry being part of that body. The scheme mandates the constitution of DPCs to avail funds under BRGF. Districts where DPCs are absent will not be able to avail these funds.

A bad precedent
Prior to the introduction of the BRGF scheme, the government had in 2003 (under the 10th Five Year Plan) introduced the Rashtriya Sam Vikas Yojana (RSVY). This was operational in 100 districts, in addition to 32 districts affected by Left wing extremism.

RSVY had three components:

1) Special plan for Bihar,
2) Special plan for the Kalahandi-Balangir-Koraput (KBK) districts of Orissa, and
3) The Backward Districts Initiative (BDI) .

The government released grants amounting to Rs 1,089.12 crore in early 2006 to the RSVY districts. The scheme will be wound up in 2006-07 after which BRGF will come into effect. In order to ensure a smooth transition, the 147 RSVY districts will be covered by BRGF.

An amount of Rs 45 crore plus the existing monitoring fee will be released to each of them under the guidance of the Planning Commission. (see Table 1: Flow of funds during the project period)

(See Table2)

Table 2: Backward Districts Initiative- Release of Funds as on 05.09.2006
 

No.	State/ District	Total amount to be released (Rs in Cr.) (2003-06)	Total amount released (Rs in Cr.) (2003-06)	Cumulative expenditure reported by the State Govts. (Rs. In Cr.) (2003-06)
1	Andhra Pradesh	450.00	180.00	108.48
2	Bihar	945.00	442.50	244.54
3	Jharkhand	720.00	405.00	271.64
4	Madhya Pradesh	450.00	390.00	295.79
5	Chattisgarh	360.00	225.00	161.24
6	Orissa	225.00	97.50	48.61
7	Uttar Pradesh	945.00	480.00	302.29
8	West Bengal	360.00	157.50	97.47
9	Maharashtra	405.00	180.00	96.02
10.	Total	=SUM(ABOVE) 4860.00	=SUM(ABOVE) 2557.50	=SUM(ABOVE) 1626.08
Source: Based on Data provided by The Planning Commission of India, September 2006.

It would be interesting to analyse how BRGF, mandated to address regional imbalances, fares compared to its predecessor, RSVY. The mid-term appraisal of the 10th Five Year Plans recommended a greater emphasis on human development indicators for identification of target regions and districts. It called for elimination of minimum normative gaps in local area developments, in physical infrastructure, in social attainments in health and education, and land productivity. Unlike past practices, tripartite agreements or contracts between central, state and local governments should be entered into to encourage appropriate state-level policies that will improve regional balance . 7

1.http://www.indianexpress.com/sunday/story/13324.html

2.http://pib.nic.in/release/release.asp?relid=19785

3.http://www.indianexpress.com/story/15137.html

4.http://164.100.150.131/budget/aplan/sector/ch3.pdf

5.http://pib.nic.in/release/release.asp?relid=19759&kwd

6. Refer to Summary: BDI

7.http://planningcommission.nic.in/midterm/midtermapp.html