Why gift Rs 4,000 cr to our MPs? Time to scrap MPLADS

On All Fools Day this year, our MPs would have obtained the wherewithal to make bigger fools out of us. Rs 5 crore each - to be exact.

Effective 1 April, the government has allocated nearly Rs 4,000 crore of taxpayers' money to members of Parliament to spend on their pet projects. Each MP will now get Rs 5 crore to spend instead of the earlier Rs 2 crore - which was bad in itself.

 Why gift Rs 4,000 cr to our MPs? Time to scrap MPLADS

Is MPLADS the right use of public money? Reuters

In a year in which government finances are in bad shape, the UPA will be pouring another Rs 2,370 crore down the creek, up from the earlier Rs 1,580 crore annual spend on MPLADS - the Member of Parliament Local Area Development Scheme.

MPLADS, which is Money that our Parliamentary Lads (and Lasses) can fool around with, is institutionalised, legalised, soft corruption. It is wrong in principle and performance.

It is one thing to pay MPs well to keep them from temptation (they have, anyway, awarded themselves hefty pay hikes a year ago), quite another to give them this kind of annual pocket money to spend in their constituencies and indirectly buy votes.

While it would be unfair to criticise all the spending as a waste-many MPs did use the funds wisely for welfare schemes-the question is whether the government should be subsidising their political interests.

Under the scheme, MPs can ask district collectors in their constituencies to take up works upto the value of their entitlement-i.e., Rs 5 crore from this April. MPs from the Rajya Sabha can recommend projects in the states they represent. Even nominated members-Anglo-Indians and people representing professions like the arts and culture-get the same benefit.

Over the last 18 years that the scheme has been in force, it has got more bad reviews than good. Study reports have found that MPs were often using the money to channel it back to their own hand-picked contractors or trusts. This benefits them in two ways: they can execute public works to favour their constituencies, and they can also profit from it if by using their own contractors or trusts to do the job.

The Comptroller and Auditor General (CAG), in a review of the scheme for two time-periods - 1993-97 and 1997-2000, observed that not only had the implementation of the scheme not improved, it had gone from bad to worse. According to Frontline magazine, CAG criticised the scheme's "poor utilisation of funds, poor monitoring by the ministry, poor quality and, at times, inadmissible work, and suspected fraud and corruption".

Worse, funds were released without verifying what they would be used for, and often there was no documentation to suggest that any work had been done at all. In other words, MPs may have simply swiped the money. CAG, which surveyed 111 sample constituencies, discovered that there was no documentation on how Rs 161 crore was spent. And remember, this was the result from a sample that covered less than a sixth of our honourable MPs.

Says the Frontline report of 2004: "The CAG also found out that even where there were documents to support execution, in 33.12% of the cases the implementing agency did not refund the "unspent" money. Misreporting of financial progress, mostly with inflated cost estimates; irregular clubbing of work under MPLADS with other inadmissible projects; diversion of funds to other projects, work for commercial and private purposes (prohibited under guidelines); and irregular sanction for repair and maintenance, were the other irregularities that the CAG report highlighted. It also pointed out that money was spent on religious places (Rs.74.12 lakh) and memorials, which is not permissible under the guidelines."

Five years later, did things improve? Not quite. A review done by Nabard Consultancy Services, in 2008 did show some improvements, but the basic problems remained. Here's a sample comment on one constituency (Surat): "Majority of the sample works (86%) of cost above Rs 5 lakh each were recommended to trusts/societies.... The above pattern of majority of the bigger projects being allotted to trusts/societies shows biased distribution." In other words, the money may have gone back into the pockets of trusts created by the MP himself.

In other places, the selection of the implementation agency for some projects (Raigarh, Bhopal, Ghaziabad, Almora) was done by the MPs themselves. Again, the hint is that the money went to favoured contractors or to themselves.

It is thus time to scrap the scheme and put the money to better use. Here's why and how:

• Unfair advantage: If parliamentary democracy is about creating a level field, giving sitting MPs money to play around with tilts the field against other potential parliamentarians. This is clearly an unfair advantage given to sitting MPs.

• Double jeopardy: If we accept that government projects anyway involve waste and corruption, giving money to MPs is double waste and double corruption. Digging wells or small roads or sanitation facilities is the job of government. So why give money to MPs? To have corruption in two places?

• Legalised bribery: One look at the origins of MPLADS tells you why it was launched in 1993 by Narasimha Rao. Under pressure from restive party MPs who were beginning to worry about the adverse effects of reforms on their re-election prospects, Rao instituted the scheme to keep them in line. It was like a bribe paid by the exchequer. Though it was given to all MPs, the core motivation was to keep Congress party MPs in line. Now, of course, everyone MP loves it.

• Increasing scope: From Rs 5 lakh per MP in 1993, the money went up to Rs 1 crore the next year and then to Rs 2 crore in 1998, when Vajpayee was trying to govern with skittish MPs in tow. Now, with politics again in flux, the money has gone up to Rs 5 crore.

• The money has better uses: For Rs 4,000 crore, it should be possible to publicly fund the entire election exercise at the level of constituencies. The Rs 5 crore now spent on MPLADS could be given to the top three contestants in each constituency based on their percentage share of vote, with 10% as the threshold.

While Rs 5 crore split two or three ways is not enough in these inflationary times, it is not too low either. An intelligent candidate can maximise bang for the buck by the use of digital media and cost-effective publicity techniques in rural areas.

Moreover, once political contributions to parties get fully legitimised (they are already legal, but few bother to pay because business houses find it more cost-effective to bribe ministers directly), more money can be spent by the party in a constituency.

MPLADS is a scheme that has outlived its sell-by date. The money is best used to clean up our electoral system, the funding of which is the primary cause of political corruption. By scrapping Money for our Parliamentary Lads, we can not only root out this legalised form of corruption, but take long-term measures to clean up election funding.

Scrapping MPLADS and replacing it with constituency-level electoral funding will do more than Lokpal to wean our politicians away from corruption.

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Updated Date: Dec 20, 2014 05:12:11 IST


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