The Centre has revised the norms for utilisation of money under various central sector scheme (CSS) including MPLADS.


What are the proposed changes?

  • All interest earnings from the funds released for each central sector schemes, shall mandatorily be remitted back to the consolidated fund of India.
  • Any interest accrued on the ₹5 crore annual funds that are allotted to each MP under MPLADS has to be deposited back to the Centre.
  • As per the MPLADS guidelines of 2016, the interest accrued on the fund used to be added to the MPLADS account and could be used for the development projects.


About the scheme

  • Under the Member of Parliament Local Area Development Scheme, every MP is entitled to ₹5 crore a year, adding up to ₹3,950 crore for the 790 members.
  • The fund is to be utilised for “creation of durable community assets and for provision of basic facilities, including community infrastructure, based on locally felt needs”.
  • This money does not directly go to the account of the MPs. They can only recommend works. Thereafter, it is the responsibility of the district authorities to sanction, execute and complete the works within the stipulated period. More money is released only on receipt of the completion certificate.
  • The Ministry of Statistics and Programme Implementation monitors the scheme.


When was the scheme started?

It was launched during the Narasimha Rao Government in 1993 with the grant of ₹50 lakh a year to each MP. This sum was increased to ₹1 crore during 1994-95. The third revision to ₹2 crore happened in 1997-98. The United Progressive Alliance Government in 2011-12 raised the annual entitlement to ₹5 crore. There have been regular demands from MPs across party lines to increase the amount further.


How does it work?

  • Each Lok Sabha member has to designate a district as the nodal district. The District Magistrate is responsible for handling the funds and monitoring the projects sanctioned under the scheme.
  • A Lok Sabha member can recommend works in his constituency alone, while a Rajya Sabha member can use the funds for works anywhere in a State.
  • In case of a natural calamity, the MPs from non-affected areas in both Houses of Parliament can recommend works estimated at a maximum of ₹25 lakh a year in disaster-hit places.


What are the controversies?

  • The scheme was first challenged in 1999 by Jammu and Kashmir National Panthers Party chief Bhim Singh and an NGO, Common Cause. They alleged that in the absence of any guidelines, the funds were misused by MPs.
  • In 2005, a sting operation showed some MPs allegedly demanding money from contractors to award work for projects under the scheme. The exposé led to the expulsion of members from both Houses.
  • In 2006, the scheme made the headlines because of the allegations that a Trust run by the family of the then Election Commissioner, Navin Chawla, got funds under the scheme.
  • Finally, on May 6, 2010, the scheme’s constitutional validity was upheld. The Supreme Court said in its judgment that mere allegations that the funds were prone to misuse could not be the ground for scrapping the scheme. However, it suggested improvements to the scheme.