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How MPs misuse their MPLADS funds

Last updated on: July 30, 2013 18:29 IST

Public Money, Private Agenda -- The Use and Abuse of MPLADS by A Surya Prakash provides a comprehensive look at the Members of Parliament Local Area Development Scheme, which was launched 20 years ago in 1993. The scheme began with an allocation of Rs 1 crore per annum per MP. It has now been raised to Rs 5 crore.

Since inception, MPLADS has been mired in controversy with many citizens questioning the rationale for such a scheme. Critics slam the scheme and say it breeds corruption and violates the principle of separation of powers. MPs say the scheme is a godsend because it enables them to ‘give’ something tangible to their constituents.

The scheme has not only survived these protests, but has seen a five-fold increase in its corpus. It has also got a stamp of approval from the Supreme Court. Since colossal sums of public money are spent every year on MPLADS -- Rs 4,000 crore per annum -- there was a felt need for a wide-ranging look at how the scheme is implemented across the country.

A Surya Prakash, a perceptive Parliament watcher and author of What Ails Indian Parliament (1995), attempts to address this need as he delves deep into MPLADS and offers the first comprehensive, independent and incisive analysis of this controversial scheme. 

The book throws up some worrying trends in the implementation of this scheme. This includes gross violation of the guidelines of the scheme by many members; MPs investing these funds in private trusts and societies created by them; recommending projects that are prohibited; insisting on choosing the implementing agencies and handing over the cheques to them; wanting to control payments to contractors; and constantly resisting transparency and accountability.

The Comptroller and Auditor General has examined this scheme thrice and the government has sponsored independent surveys to assess the scheme. On each of these occasions, the auditors and surveyors have expressed concern over lack of supervision at the district level and gross violation of guidelines by MPs. But, there is no sign of credibility measures to set matters right.

The book is published by RUPA. 

Public Money, Private Agenda – The Use and Abuse of MPLADS

The book says that despite the Supreme Court judgment certifying to the constitutional validity of the scheme, some scepticism in regard to the working of MPLADS is in order, especially in view of the opinion of the Lok Sabha Committee that probed the MPLADS scandal, the opinion of the Comptroller and Auditor General of India, the legitimate concerns expressed by Era Sezhiyan and J M Lyngdoh and the available evidence about the misuse of the scheme by many MPs and the cases of corruption.

Excerpts from the book:

Examples of violation of guidelines by MPs:

“Assets” allegedly created under the scheme “could not be traced” by the surveyors; construction of community halls etc within religious places in gross violation of guidelines; construction of shopping complexes to promote private enterprise; diversion of computers bought for schools to commercial enterprises; supply of computers to private educational institutions; community centres built with MPLADS funds being commercially let-out by the beneficiary agencies; and repeat expenditure on a length of road via MPLADS after the very same contract has been “executed” under MLALADS – a similar constituency development scheme for state legislators.

A NABCONS (NABARD Consultancy Services) survey has thrown up disturbing facts. A brief recall of some of these cases would be in order. The guidelines prohibit MPs from identifying the implementing agency because this is seen as the root cause of corruption. Yet, district authorities often come under pressure to appoint an IA of the MP’s choice.

The auditors found evidence of MPs recommending IAs in nine states and Union territories. In five selected districts the auditors found that over 25 per cent of the works sanctioned were executed by private agencies, and strangely, when MPs recommended works for NGOs, clubs and educational institutions, the beneficiary institutions were themselves appointed as the IAs for the projects. The CAG also found that contracts were awarded without adopting standard tendering processes. Another irregularity was the absence of financial sanction and administrative approval. Auditors found that 26 per cent of the works were executed without sanction in four states that were surveyed by them.

The auditors have also come up with evidence which establishes fraud. Some samples of state- and district-level records showed misappropriation of funds in some states including West Bengal, Jharkhand, Bihar and Mizoram. School classrooms which were “constructed” by village education committees were nowhere to be found. An FIR had to be lodged with the police about the missing classroom! In Jharkhand a company took an advance of Rs 8 lakh for installing solar water pumps and vanished. In Bihar, officials of the National Rural Employment Programme were duping the government by claiming MPLADS funds for roads already constructed.

In Sikkim, funds from this scheme were used to construct anti-erosion bunds and walls to protect the private property of the MP and his relatives. Of 22 works sanctioned, all but one related to private property and in a dozen cases the contractors were also the beneficiaries. But, the biggest area of misuse is allocation of these funds to trusts and societies, often controlled by the MPs themselves. In ten states, the CAG found that funds in excess of the prescribed ceiling per society or trust had been released. In seven states, auditors found that 145 ineligible societies and trusts were given funds. Finally, the accounts are not audited regularly.  The auditors found 40 such districts. Strangely, the accounts of one DA (District Authority) in Jammu and Kashmir and one DA in  Lakshadweep had not been audited since the inception of the scheme in 1993!

Actually, some of the cases discussed by the surveyors, which show blatant misuse of the scheme, warrant criminal investigation. Field reports which speak about public money having gone down the drain on works which were never executed are too serious for any agency or institution to gloss over. Similarly, diversion of crores of rupees from this fund to the coffers of private trusts, societies and NGOs, or to effect improvements in private property or to further the business interests of individuals, are infringements that warrant severest action. Each of these instances constitute a betrayal of trust by the MPs who recommended these works and in effect amount to gross misuse of public funds. The response of the parliamentary committee on MPLADS to all the evidence that was placed before it is disturbing. It had nothing to say on these aspects of the NABCONS survey.

This raises the question as to whether people can rely on parliamentary committees to discipline members and protect public interest. If these instances do not stir the conscience of parliamentarians, what will? Further, if such apathy is the standard response of Parliament, can we continue with a scheme that puts so much money in the hands of MPs?

Surya PrakashIt must also be noted that the government has not taken any initiative to create the administrative infrastructure to monitor the scheme at the district level. Instead, it has raised the fund per MP per year to Rs 5 crore. Since the outgo from fiscal 2011-12 will be close to Rs 4,000 crore per annum, stricter enforcement of accountability norms both at the level of the MP and the district administration is an imperative. Side by side, Parliament will have to ensure greater vigilance to prevent MPLADS from becoming a moneymaking machine for unscrupulous public representatives.

MPLADS therefore deserves only a qualified thumbs-up. Since the Supreme Court has categorically and unequivocally declared that the scheme is constitutionally valid, it would be inappropriate to challenge the vires of the scheme all over again at this juncture. Instead, there is need to mount pressure on Parliament to ensure that MPs adhere to the guidelines. The Union government must have the gumption to withhold funds to all MPs who fail to comply with the guidelines. There is also need for 100 per cent transparency in the allocation of these funds and accountability in regard to implementation of the projects recommended by members.

Finally, it must be said that even though the scheme is constitutionally valid, there will be no moral sanctity for its continuance if members of Parliament do not adhere to the scheme’s guidelines. Often, MPs tend to be rather brazen in violating the guidelines. It is as if they are throwing a challenge to the government and asking it to do whatever it can. Now that the government has announced a humongous increase in the annual allocation for the scheme, it cannot shirk the responsibility of ensuring strict compliance with the guidelines.

As everyone knows and as successive audit reports establish, noncompliance with guidelines is the starting point of corruption. Therefore, if MPs lack the  discipline to conform to the guidelines, MPLADS must be scrapped.

Images: (top) The book cover and (below) author A Surya Prakash