Fund Utilisation in Development Schemes have Improved Significantly, but Quality of Spending Remains a Concern

Finds a study on district budgets by CBGA and Tata Trusts

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Tata Trusts and Centre for Budget and Governance Accountability (CBGA),  hosted “The Budget Trails”, a day long consultation to share & discuss the insights from a two-year long project, which studied fund-flow mechanism at the district level, across 10 development schemes. The consultation aims to develop a roadmap for fiscal governance reforms that are needed to ensure significant improvement in resource absorption in development schemes, leading to better development outcomes.

Progress across major development schemes in India, including education, health and nutrition, water and sanitation, agriculture and rural development, livelihood, among others, remains constrained due to sub-optimal utilisation of available funds, especially at the district level. India needs to improve utilization of budgetary resources, across all levels of governance, given the limited fiscal space available to the government.

This is a first of its kind study that analyses bottlenecks in fund utilisation, at the district level, by placing a District Budget Analyst (DBA) in each of the selected district headquarters. The knowledge outputs condense the learnings from the project, highlighting challenges around fund flow, extent and quality of fund utilization, budget information architecture and shortage of human resources for effective implementation of social sector schemes.

The rigorous 2-year research project, focused on ten social sector schemes (viz. Sarva Shikshya Abhiyan (SSA), Mid-Day Meal (MDM), National Health Mission (NHM), Integrated Child Development Scheme (ICDS), Swachh Bharat Mission (SBM), National Rural Drinking Water Programme (NRDWP), Mahatma Gandhi National Rural Employement Guarantee Scheme (MGNREGS), National Social Assistance Programme (NSAP), Pradhan Mantri Awas Yojana (PMAY), Pradhan Mantri Fasal Bima Yojana (PMFBY) and Rashtriya Krishi Vikas Yojana (RKVY) in five districts across of Balasore and Bolangir in Odisha, Chandrapur in Maharashtra, East Singhbhum in Jharkhand, and Krishna in Andhra Pradesh.

Commenting on the Report, Abhijit Sen, Former Member 14th Finance Commission & Planning Commission has said, “This exercise (Fiscal Governance Reforms at District Level for Improving Fund Flow and Utilisation in Development Schemes) emphasises the need for good quality sub-district data which is key to improve decision making at the district level. Additionally, it is pertinent for the Centre to empower districts to ensure better development outcomes.”

Speaking at the launch Dr. Poornima Dore, Head of Data Driven Governance at the Tata Trusts said: “The national and state budgets have hitherto received a fair share of importance. We seek to go a step further at the district level to augment understanding around fund-flow mechanisms and factors that can enhance the district's ability to utilise its full potential as a local-level planning and implementation authority. In partnership with the District Collectorate of select districts, we have attempted to map the state of data, fund-flows and blueprint of the complex fiscal structures at the district level, while identifying best practices and select policy measures which can unlock locally relevant resources in a timely manner.”

Subrat Das, Executive Director, CBGA said “Given the limited public resources available to government and competing demands from a large number of sectors, India cannot afford constrained utilisation of the available budgets in any sector. Hence, it is pertinent to identify the factors constraining fund utilisation in important schemes and address those through coordinated policy measures by the Centre and States.”

The study found that districts have shown satisfactory levels of fund utilisation under various CSS. However, pressing challenges related to staff shortages, their capacity, transparency & accountability in public financial management, monitoring have not received adequate attention. These need to be addressed urgently. There are also concerns with respect to the quality in fund utilization across schemes. Findings reveal skewed distribution of expenditure across quarters, components and blocks, pointing towards much-needed attention to these factors in policy discourse.

The project was designed to explore a hitherto uncharted territory and has resulted in a vast body of evidence to improve the fiscal governance architecture at the district level. A number of actionable policies to address delays in fund flow, rigid guidelines, human resource issues, and accountability and transparency have been proposed by using the data and information collated from the ground.

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