Funds for centrallly sponsored schemes should go directly to the blocks and panchayats, instead of being routed through state and district exchequers, the Centre has proposed.
According to the new proposal, blocks and panchayats would raise the bills for implementation of a scheme to a designated nationalised bank which will release the funds and seek reimbursement from the Centre later.
The new mechanism, proposed by the rural development ministry and to be applied for the rural job scheme MGNREGA, is aimed at getting around the problem of “unspent funds” reported by states every year.
According to ministry’s estimate a third of the funds released to the states remain unspent thus adversely affecting the implementation of its schemes.
“The ‘release’ of funds is taken as expenditure in government accounts, whereas the real objective of the schemes and programmes is to reach the intended beneficiary. The problem of funds released by central government, but parked at various implementation levels and the resultant ‘unspent balances’ is a challenge for sound fiscal management,” a note on the new system sent to states said.
The new system, according to the note, will ensure timeliness in the release of funds as per the real requirements, reduction in delays of funds flow and eliminate unutilised funds. It will also ensure greater accountability and transparency of fund flows leading to empowerment of citizens, and reduction in corruption.
The current system, said a ministry official, suffered from inefficiencies including administrative bottlenecks, and archaic file-based, cheque-issue system; lack of transparency regarding the eligibility for release of funds; and parking of funds at different levels.