Members of Parliament are set to get a 150% hike in their local area fund but they may lose control over administering the scheme.
Finance minister Pranab Mukerjee announced a hike of MP local area development fund from Rs 2 crore to Rs 5 crore while stating the scheme was not perfect.
The Comptroller and Auditor General has pointed out poor quality work and diversion of funds for other works as major discrepancies in administering of the scheme, which has been controversial since beginning. Mukerjee received the CAG report recently.
Left parties and some legal experts had opposed the scheme saying the MPs job is to frame laws and polices and implementing them was job of the executive. Recently, the Supreme Court upheld the scheme saying the MPs just recommend the project and does not impinge on functions of the executive.
To make the scheme in tune with court judgment, the ministry of statistics and Programme Implementation has drafted new guidelines, which ask the MPs to select a project from a shelf of projects prepared by district authority and make third party inspection and audit mandatory.
The MPs will not be allowed to allocate projects that benefit trust or societies, where they have conflict of interest, and spending for betterment of scheduled castes and tribes is likely to be increased.
Although Planning Commission had cited financial constraint, Mukerjee approved the hike because of overwhelming demand, which would mean additional financial burden of Rs 2,370 crore in addition to existing annual budget of Rs 1,500 crore. The MPs will be able to allocate the additional money from the financial year 2011-12.
MPs cutting across party lines welcomed the decision even though Bihar chief minister has scrapped similar scheme for legislators in the state.
"It will give an opportunity for many projects which are low in the priority of the district but are useful for the development of the area," said BJP MP Murli Manohar Joshi. HRD minister Kapil Sibal said that the decision would help the common man.
The scheme was launched in 1993-94 with an amount of Rs 5 lakh per MP, which was increased to Rs 1 crore a year later. The last increase was of Rs 2 crore in 1998-99.