Business, India, Stories

(Mis)using the MPLAD funds since 1993 – Analysis on MPLADS fund Utilization


“Many of the systematic weaknesses affecting the implementation of the MPLAD had persisting since its inception 17 years ago. The lapses were brought to the notice of the ministry by the CAG in two earlier performance audit (1998 and 2001). Submission of Action Taken Notes on the report on 2001 after a lapse of 8 years (2009) speaks volumes about the monitoring methods” – CAG report in 2010-2011. 


The MPLADS or the Member of Parliament Local Area Development Scheme was introduced in 1993 to enable MPs to create durable assets based on local requirements in their constituencies. This scheme is governed by the guidelines issued from time to time. The annual allotment to each MP was Rs 2 crore in 1998-99 and it was increased to Rs 5 crore per annum a few years ago.

In other words, the MPLADS was brought in to enable and empower the MPs to develop their own constituency based on the local need & requirement. However, the reality is different. Previous experience shows that MPLADS are underutilized and when they are utilized, they are often abused and mis-used. The CAG audit reports on the performance of MPLADS in 2001 & 2011 shed light on what is wrong with the scheme.

How is it implemented?

The Ministry of Statistics & Programme Implementation(MoSPI), Government of India is the nodal department responsible for policy formulation and release of funds under the scheme. The state nodal departments are responsible for the supervision and monitoring. The district authorities (DAs) are responsible for work scrutiny, cost estimation, identification of the implementing agency(IA) and transfer of funds. The scheme mandates that Panchayati Raj Institutions be preferred as the IA.

MPLADS Fund Utilization - How is it Implemented

CAG Audit Report of 2001 – Major Findings

The scheme was first reviewed by the CAG in 1998 and then in 2001 & 2011. The major findings of the 2001 report are as follows:

MPLADS Fund Utilization - CAG Findings of Major Lapses

Major Lapses in MPLADS as per the CAG Audit Report of 2010-11

The CAG report of 2010-11 identified major lapses in the scheme. Some of those lapses are explained in detail below.

1. Selection of Prohibited Works

As per the scheme guidelines from November 2005, all works which meet the local community, infrastructure & developmental needs are permissible except those prohibited under the guidelines. However, it is observed by the CAG that in 100 sampled districts in 29 States/UTs, an expenditure of Rs 73.76 crores was incurred in the period 2004-09 on 2340 works which were not permitted under the scheme guidelines.

MPLADS Fund Utilization - Prohibited Works

The chart below shows the statewise expenditure on prohibited works of more than a crore rupees.

MPLADS Fund Utilization - State wise expenditure on Prohibited Works

2. No Dates & Invalid Dates

The works were not documented as per the guidelines and in most cases either the dates were not entered or were completely invalid. Some of the dates entered were before January 1993 when the scheme did not even exist. The chart below shows the number of works where either dates were not entered or the dates entered were invalid.

MPLADS Fund Utilization - Works without Dates or Invalid Dates

3. Handing over of Assets & Assets not put to use

The scheme guidelines mandate that as soon as a work was completed, it should be transferred to the user agency and be put to public use. In the 7 States/UTs studied, out of the 15049 sample works created during 2004-09, handing over or taking over of assets was not on record for 14828 works. In other words, 98.53% of the works created had no record of handing over to the user agency. In six of the seven States/UTs, none of the works had any record of handing over or taking over.

MPLADS Fund Utilization - Handing over of Assets

4. Utilization of the Funds

The year wise position of utilization of total funds available during the year (sum of the opening balance, funds released during the year & interest accrued on unspent balance) suggests that the expenditure was even less than the opening balance & interest earned in each year. The CAG also pointed out that the release of funds was not regulated on the basis of fund availability with the DAs.

YearTotal funds available with DA’s (in Rs Crore)Expenditure Incurred during the year (In Rs Crore)


MPLADS Fund Utilization - Funds Available vs Expenditure Incurred

CAG Recommendations

Based on all the findings, the CAG came up with a set of recommendations that would ensure that the MPLADS would fulfill its intended objective. The important recommendations made are

  • The details of all works executed or in progress should be uploaded after proper data validation. The data uploaded should be periodically reconciled with the works completion reports received from the DAs.
  • The ministry should establish a reliable system of data capture of releases, actual expenditure, unspent balances, works sanctioned, works completed etc and its consolidation at different levels.
  • The ministry may strengthen its internal controls as well as monitoring mechanism and establish a system responsive to the known shortcomings. Accountability for maintenance of records at various levels should be prescribed and monitored.
  • The meeting of the monitoring committee at the state level should be convened at least once in a year with wider participation of MPs to enhance accountability of DAs.
  • The DAs should regularly inspect MPLADS works under progress along with the MP concerned and maintain an inspection register to record the findings. All works with an estimated cost of Rs 5 lakh and above should be inspected by the DA.
  • A robust and regular internal audit system should be immediately put in place both at ministry and at the state level.

What about the the current numbers?

As of Mar 2nd 2015, a total sum of Rs 1792.5 crores has been released for the year 2014-15. This includes funds released for both Rajya Sabha & Lok Sabha MPs. If the MP’s have been paying attention to the audit reports and its recommendations, may be these reports will look much better in the future.

Data Sources:


About Author

Suresh is a software professional based in NY and firmly believes in giving back to the society not as charity but as our responsibility.