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According to news reports, the Prime Minister recently chaired a meeting with ministers to discuss an alternative plan (“Plan B”) for the National Food Security Bill, 2011 (hereinafter “Bill”). The Bill is currently pending with the Standing Committee of Food, Consumer Affairs and Public Distribution. It seeks to deliver food and nutritional security by providing specific entitlements to certain groups. The alternative proposal aims to give greater flexibility to states and may bind the centre to a higher food subsidy burden than estimates provided in the Bill. It suggests changes to the classification of beneficiaries and the percentage of the national population to be covered by the Bill, among others. Classification of beneficiaries The Bill classifies the population into three groups: priority, general and excluded. Individuals in the priority and general groups would receive 7 kg and 3 kg of foodgrain per person per month respectively at subsidized prices. Plan B suggests doing away with the priority-general distinction. It classifies the population on the basis of 2 categories: included and excluded. Those entitled to benefits under the included category will receive a uniform entitlement of 5 kg per person per month. Coverage of population Experts have suggested that the Bill will extend entitlements to roughly 64% of the total population. Under the Bill, the central government is responsible for determining the percentage of people in each state who will be entitled to benefits under priority and general groups. Plan B suggests extending benefits to 67% of the total population (33% excluded), up from 64% in the Bill. The Ministry has outlined two options to figure out the number of people in each state that should be included within this 67%. The first option envisages a uniform exclusion of 33% in each state irrespective of their poverty level. The second option envisages exclusion of 33% of the national population, which would imply a different proportion excluded in each state depending on their level of prosperity. The Ministry has worked out a criterion to determine the proportion of the population to be included in each state. The criterion is pegged to a monthly per capita expenditure of Rs 1,215 in rural areas and Rs 1,502 in urban areas based on the 2009-10 NSSO survey. Thus, persons spending less than Rs 40 in rural areas and Rs 50 in urban areas per day will be entitled to foodgrains under the alternative being considered now. Financial estimates Newspaper reports have indicated that the revised proposal will add Rs 7,000 to Rs 10,000 crore per year to the current food subsidy estimate of Rs 1.1 lakh crore. According to some experts, the total cost of the Bill could range anywhere between Rs 2 lakh crore to Rs 3.5 lakh crore (see here and here).
On March 14, 2022 Rajya Sabha discussed the working of the Ministry of Development of North Eastern Region (DoNER). During the discussion, several issues around budgetary allocation, implementation of schemes and connectivity with the North Eastern Region were discussed. The Ministry of DoNER is responsible for matters relating to the planning, execution and monitoring of development schemes and projects in the North Eastern Region. In this blog post, we analyse the 2022-23 budgetary allocations for the Ministry and discuss related issues.
A new scheme named PM-DevINE announced to boost infrastructure and social development
In 2022-23, the Ministry has seen a 5% increase in allocation from the revised estimates of 2021-22. The Ministry has been allocated Rs 2,800 crore which will be used for various development schemes, such as the North East Special Infrastructure Development Scheme and North East Road Sector Development Scheme. A scheme-wise break-up of the budget allocation for the Ministry is given below in Table 1.
One of the key highlights of the Finance Minister’s Budget Speech was the announcement of a new scheme named the Prime Minister’s Development Initiative for North East (PM-DevINE). It will be implemented through the North East Council (nodal agency for the economic and social development of the North Eastern Region). PM-DevINE will fund infrastructure and social development projects in areas such as road connectivity, health, and agriculture. The scheme will not replace or subsume existing central sector or centrally sponsored schemes. The Scheme will be given an initial allocation of Rs 1,500 crore.
Table 1: Break-up of allocation to the Ministry of DoNER (in Rs crore)
|
Major Heads |
2020-21 Actuals |
2021-22 BE |
2021-22 RE |
2022-23 BE |
% change from 2021-22 RE to 2022-23 BE |
|
North East Special Infrastructure Development Scheme |
446 |
675 |
674 |
1,419 |
111% |
|
Schemes of North East Council |
567 |
585 |
585 |
702 |
20% |
|
North East Road Sector Development Scheme |
416 |
696 |
674 |
496 |
-26% |
|
Central pool of resources for North East and Sikkim |
342 |
581 |
581 |
- |
- |
|
Others |
270 |
322 |
344 |
241 |
-30% |
|
Total |
1,854 |
2,658 |
2,658 |
2,800 |
5% |
Note: BE – Budget Estimate; RE – Revised Estimate; Schemes for North East Council includes Special Development Projects.
Sources: Demand No. 23 of Union Budget Documents 2022-23; PRS.
Allocation towards capital outlay less than demand
The Standing Committee on Home Affairs (2022) noted that the amount allocated at the budget stage in 2022-23 (Rs 660 crore) was 17% less than the demand by the Ministry (Rs 794 crore). Capital expenditure includes capital outlay which leads to the creation of assets such as schools, hospitals, and roads and bridges. The Committee observed that this may severely affect the implementation of several projects and schemes that require capital outlay. It recommended the Ministry to take up this matter with the Finance Ministry and demand additional assistance at the revised stage of the 2022-23 financial year.
Underutilisation of funds over the years
Since 2011-12 (barring 2016-17), the Ministry has not been able to utilise the funds allocated to it at the budgeted stage (See Figure 1). For instance, in 2020-21, fund utilisation in case of the North East Road Sector Development Scheme was 52%, whereas only 34% of funds were utilised under the North East Special Infrastructure Development Scheme (for infrastructure projects relating to water supply, power, connectivity, social infrastructure). Key reasons for underspending highlighted by the Ministry include late receipt of project proposals and non-receipt of utilisation certificates from state governments.
Figure 1: Underutilisation of funds by the Ministry since 2011-12
Note: Revised Estimate has been used as the Actual Expenditure for 2021-22.
Sources: Union Budget Documents (2011-12 to 2022-23); PRS.
Delay in project completion
The Ministry implements several schemes for infrastructural projects such as roads and bridges. The progress of the certain schemes has been inadequate. The Standing Committee (2022) observed that the physical progress of many road sector projects under the North East Road Sector Development Scheme is either at zero or in single digit percent in spite of release of the amount for the project. Similarly, projects under the Karbi Anglong Autonomous Territorial Council (autonomous district council in Assam) and Social and Infrastructure Development Fund (construction of roads, bridges, and construction of schools and water supply projects in the North Eastern Region) have seen inadequate progress.
Need to address declining forest cover
The Standing Committee (2021) has also recommended the Ministry of DoNER to work towards preserving forest cover. The Committee took note of the declining forest cover in the North East India. As per the India State of Forest Report (2021), states showing major loss of forest cover from 2019 to 2021 are: (i) Arunachal Pradesh (loss of 257 sq km of forest cover), (ii) Manipur (249 sq km), (iii) Nagaland (235 sq km), (iv) Mizoram (186 sq km), and (v) Meghalaya (73 sq km). The loss of forest cover may be attributed to shifting cultivation, cutting down of trees, natural calamities, anthropogenic (environmental pollution) pressure, and developmental activities. The Committee recommended that various measures to protect the forest and environment must be given priority and should implemented within the stipulated timeline. It also suggested the Ministry to: (i) carry out regular plantation drives to increase forest cover/density, and (ii) accord priority towards the ultimate goal of preserving and protecting the forests under various centrally sponsored initiatives.
Key issues raised by Members during discussion in Rajya Sabha
The discussion on the working of the Ministry of DoNER took place in Rajya Sabha on March 14, 2022. One of the issues highlighted by members was about the Ministry not having its own line Department. This leads to the Ministry being dependent on the administrative strength of the states for implementation of projects. Another issue highlighted by several members was the lack of connectivity of the region through railways and road networks which hampers the economic growth of region. The DoNER Minister in his response to the House assured the members that the central government is making continuous efforts towards improving connectivity to the North East region through roads, railways, waterways, and telecommunication.
Allocation by Union Ministries to the North East
Union Ministries allocate 10% of their budget allocation for the North East (See Figure 2 for fund allocation and utilisation). The Ministry of DoNER is the nodal Ministry that monitors and keeps track of the allocation done by various Ministries. In 2022-23, Rs 76,040 crore has been allocated by all the Ministries for the North Eastern region. The allocation has increased by 11% from the revised estimate of 2021-22 (Rs 68,440 crore). In 2019-20 and 2021-21 the actual expenditure towards North Eastern areas was lower than budget estimates by 18% and 19% respectively.
Figure 2: Budgetary allocation by all Union Ministries for the North East (amount in Rs crore)
Source: Report No. 239: Demand for Grants (2022-23) of Ministry of Development of North Eastern Region, Standing Committee on Home Affairs; PRS.
