Friday, March 22, 2013

Sanctioned, Allocated & Released!


During the ongoing Budget Session of the Indian Parliament, numbers linked to three words are a source of much angst and analysis -- sanctioned, allocated and released.

Most often, 'sanction' refers to the amount of money notionally set aside by the Planning Commission of India towards implementation of its "Five Year Plans". Once a sanction has been made, the Ministry of Finance uses it as a reference number while 'allocating' budget for each activity listed its annual plans.

Now, allocation is linked to the extent of utilization. So the amount that is finally released for work on the ground may be a fraction of what was originally sanctioned by the planners.

Take for instance a flagship scheme which goes by the unweildy acronym - JNNURM. This is the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), created to 'encourage reforms and fast track planned development of identified cities'. In all, 73 cities were identified across India, and the Planning Commission 'sanctioned' Rs. 66,085 Crores (~$13 billion) for a period of seven years (2005-11).

Since 2005, the actual money allocated through the annual budgets passed by the parliament has been 73 percent -- Rs.47,967 Crores ( ~$ 9.5 billion). Allocations have fallen short of targets mainly because many states could not put in place, a set of four "mandatory reforms' -- (1) Implementation of decentralization measures as envisaged in the 74th Constitution Amendment, (2) Reform of the Rent Control Act and rationalization of stamp duty, (3) Repeal of the Urban Land Ceiling Act, and (4) Enactment of public disclosure law and community participation law.

All states have initiated these reforms but none have implemented them fully. Oddly enough, Tamil Nadu, which has the lowest rate of reform-implementation at 25% has the highest number of completed projects at 68%!

According to a CAG report submitted last year (28 Nov., 2012), only 17 percent of sanctioned projects under urban infra, have been implemented (231 of 1298). The record is even worse for housing projects: 22 of 1517 projects -- just one percent!

So, in the final reckoning, only Rs. 32,934 (less than 50%) of the original money sanctioned has been 'released' for completed projects between 2005-2011.

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LINKS / REFERENCES:

* Ministry of Urban Development - Home Page - http://jnnurm.nic.in/state.html

* JNNURM Overview -- http://jnnurm.nic.in/wp-content/uploads/2011/01/PMSpeechOverviewE.pdf
- selected cities (7+28+28) - page 14

* PRS Blog -- Status of JNNURM (7 Dec., 2012) - http://www.prsindia.org/theprsblog/?p=2330
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