The Uttar Pradesh government has rejected a central welfare scheme claiming the funds being provided to implement it were inadequate, top government sources said.
A pilot project for the scheme, the Pradhan Mantri Adarsh Gram Yojna (PMAGY) - intended for the integrated development of villages with more than 50% scheduled caste population - will now be shifted to Himachal Pradesh.
The Mayawati government has said the allocated budget per village in the scheme was much lower than what it spends on its Ambedkar villages, under a similar project.
The Centre had announced the PMAGY a year ago and decided to implement pilot projects in five states - UP, Bihar, Rajasthan, Tamil Nadu and Assam.
The Centre initially identified 1,000 villages, 225 of them in UP, for implementation of the PMAGY during 2010-11. Each identified villages was due to get funding of Rs 10 lakh in addition to allocations under other poverty alleviation schemes.
The state government, however, has told the Centre it was implementing its own scheme - the Dr Ambedkar Gram Vikas Yojana for development of SC- dominated villages.
The state was spending around Rs 1 crore per village compared to which the Centre's Rs 10 lakh was paltry, it said.
Chief secretary Atul Gupta wrote several times to the ministry of social justice and empowerment and the Planning Commission saying the allocation should be enhanced, sources said.
In response, the Centre last month decided to shift the pilot scheme to Himachal.
"We spend around Rs 2,000 crore on integrated development of SC dominated villages every year. The amount being offered by the Centre was far too small to make any difference," Balvinder Kumar, principal secretary (social welfare) said.