Ministry revises MPLADS rules (UPSC Current Affair)

Relevance: GS2 - Government Policies and Interventions for Development in various sectors

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Why in the news?

Recently, The Finance Ministry has ordered amended guidelines at a time when MPs have been requesting for an increase in the MP Local Area Development Scheme (MPLADS) budget.

What are the new changes proposed in MPLADS?

• All interest profits from money disbursed for central sector initiatives are required to be remitted to the consolidated fund of India.
  • any income earned on the $5 million annual funds granted to each MP under MPLADS must be returned to the government.

What was the Procedure until now?

According to the 2016 MPLADS guidelines, interest on the fund was deposited to the MPLADS account and might be utilized for development projects.

What is a Member of Parliament Local Area Development Scheme (MPLADS)?

• The MPLADS is a Government of India-funded Central Sector Scheme.
• The scheme was established in 1993 to allow MPs to construct long-term assets in their constituencies based on local needs.
• The scheme's goal is to give MPs the ability to recommend developmental projects.
• The focus is on the development of long-term community assets in areas such as drinking water, public health, sanitation, and roads.

What are the salient features?

• Every MP (both Lok Sabha and Rajya Sabha members) is entitled to recommend spending Rs. 5 crores on development projects every year under the plan.
  • The money would be distributed in two installments of Rs.2.5 crore each.
• MPs can suggest work in their constituency (in the case of the Lok Sabha) or anyplace in the state where they were elected (in the case of Rajya Sabha)..
• The funds given under the scheme are not renewable.
  • if monies for a given year are not spent in that year, they will be carried over to succeeding years if they are eligible.
• The district authority has the jurisdiction to review work eligibility, approve the money, designate implementing agencies, and oversee the plan on the ground.

What are the Implementing agencies?

What is the impact of COVID-19 on MPLADS?

• The Cabinet resolved in April 2020 not to operate MPLADS for FY 2020-21 and 2021-22 to manage the health and negative effects of covid 19 in society.
• The Ministry of Finance was given this amount to manage the effects of the Covid 19 epidemic.
• Later, in November 2021, it was decided to reinstate MPLADS for the remainder of FY 2021-22 and prolong it through 2025-26.

What are the Issues and Challenges with MPLADS?

Misuse of funds

• According to reports, MPs were frequently channeling the money back to their own hand-picked contractors or trusts.
• Misusing MPLAD funds to promote private businesses or organizations' commercial activities is also a significant violation of the standards.

Conflict of Interest

According to the 2nd ARC, the schemes "seriously weaken the notion of separation of powers, as the legislator immediately becomes the executive,"

CAG Observation on MPLAD

• Weak financial management, poor ministry oversight, poor quality and, at times, inadmissible work, and suspicions of fraud and corruption
• Prohibited work selection ( prohibited in guidelines)
• The work was not documented according to the rules, and the dates were either not included or were utterly incorrect.

Public Account Committee’s (PAC)’s Observation

• In its 55th report, PAC noted that total expenditures show a considerable deficiency in fund uses each year.
• The committee also stated that there is no adequate monitoring mechanism in place.

What is the way forward?

• After adequate data validation, all completed or ongoing projects should be submitted.
• At various levels, accountability for maintaining records should be prescribed and checked.
• Both at the ministry and at the state level, a solid and regular internal audit system should be implemented right away.
• Despite the odds, this program has come a long way and is contributing positively to making a difference in society.
• In May 2010, a five-judge bench of the Supreme Court concluded that the notion of separation of powers had not been violated because the role of an MP in this issue is advisory.
• The executive organ's Panchayats and Municipalities are in charge of doing the real work.
• The need of the hour is to assure adequate monitoring of all developmental projects by requiring grass-roots engagement.

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