Narada News Exclusive: SC imposes riders on legislators' Local Area Development funds

In the noise over the note ban, this important judgment has been buried by the media, but its import has many bearings in the government�s and the common man�s fight against black money.

Narada News Exclusive: SC imposes riders on legislators

The Member of Parliament Local Area Development funds (MPLAD) and the MLA LAD may face the process of checks and balance. The Supreme Court has held that the funds given to a scheme would be executed only by a government body. Although this is in the context of the Uttar Pradesh MLA LAD funds, by interpretation it would be applicable to all such funds.

In the noise over the note ban, this important judgment has been buried by the media, but its import has many bearings in the government’s and the common man’s fight against black money.

Often the MP and MLA LAD funds have been misused or underused giving credence to the allegations of corruption and commissions to middlemen and the MP or MLA concerned. An MP gets Rs three crores a year to sanction this public money to a project in his constituency, which is his local area and hence the nomenclature “Local Area Development” fund. It may include a school or a hospital, a road or water supply pipeline in his constituency. The MP/MLA concerned can also sanction this to an NGO working in areas like literacy, awareness etc. but often such funds are diverted to NGOs run by the MPs/MLAs kith and kin with obvious and ulterior motives.

However, the case in hand relates to MLAs of the Uttar Pradesh state legislative assembly, in which a bench of Chief Justice of India (CJI) T.S.Thakur, Justice D.Y.Chandrachud and Justice A.M. Khanwilkar, in a judgement, has said that “The role of the elected representatives would be to recommend the work of a developmental nature in their constituencies within the budget allotted under the Vidhayak Nidhi Scheme,” but its execution would be by a government body. This, now, may curb such MP or MLA allocating or sanctioning the funds to NGOs run by their friends and relatives. However, even from a state body, such MPs and MLAs can still take “commissions” allegedly going on nowadays up to 35 percent. The Apex Bench said that “The feasibility of the work, estimate of funds, selection of the implementing agency and supervision of work must be independently determined by a nominated authority or body of the state government.”

The judgment has come on a petition by an NGO Lok Prahari seeking to put an end to the misuse of funds under the Vidhayak Nidhi Scheme by many MLAs in Uttar Pradesh. But by implication, it is applicable all over India as what the Supreme Court settles is the law for the entire country.

This petition also made the allegation that the MLAs of UP sanctioned the amounts to institutions promoted by their kith and kin or acquaintances and not for the general good of the public.

The Apex Court said that “Panchayati raj institutions in rural areas and municipal bodies in urban areas may be considered as preferred implementing agencies.” This would or could put a full stop to legislators sanctioning the funds to institutions run by their kith and kin, friends and acquaintances. The court also directed that “sufficient safeguards should be provided to ensure against conflicts of interest such as the allocation of funds to institutions controlled by an elected representative or a member of his or her family”.

These MPLAD funds were introduced in 1993 by the then prime minister P.V.Narasimha Rao who escaped a no-confidence motion with allegations of bribes to the members of parliament of the Jharkhand Mukti Morcha (JMM) party, came to be known, then, as the JMM bribery case. In this case, only the Apex Court held that not only taking bribe but also giving is a crime. Till then only bribe-takers were punished and not givers.

Now with this judgment, some transparency of such funds could be expected as the court said safeguards should also include “financial transparency, such as proper supervision of work, monitoring quality and timely completion besides procedures to ensure proper audit and utilization of funds”. But the bottom line is an MP or MLA could still “deal” with a “government body” proposed for execution of the scheme and do, what they call in the northern part of India “Setting”.