Lok Sabha Question No. 395 (STARRED), answered on 2016-08-12
Subject: Development Funds for States
Ministry: FINANCE
Asked by: REKHA ARUN VERMA, HARI MANJHI

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF EXPENDITURE PLAN FINANCE-I DIVISION

## LOK SABHA STARRED QUESTION NO. 395

TO BE ANSWERED ON FRIDAY, 12 th  AUGUST, 2016/ 21SRAVANA, SAKA 1938

## Development Funds for States

## †*395. SHRIMATI REKHA VERMA: SHRI HARI MANJHI:

Will the Minister of Finance be pleased to state:

- (a) whether  the  Union  Government  provides  funds  to  the  State  Governments under  various  heads  for  the  development  of  States  and  if  so,  the  details thereof;
- (b) whether  any  mechanism  has  been  put  in  place  to  monitor  the  expenditure from the said funds, if so, the details thereof along with the manner in which the said mechanism functions; and
- (c) if not, the reasons therefore?

## FINANCE MINISTER

(SHRI ARUN JAITLEY)

(a) to (c): A statement is laid on the table of the House.

## ANSWER

## Statement referred to in reply to part (a) to (c) of Lok Sabha Starred question no. 395 due for answer on 12.08.2016

(a) The Union Government provides funds to State Governments in the form of Grants-in-Aid and Loans & Advances. The Grant-in Aid includes Central Assistance for State Plans and non-plan grants as provided in Union Budget each year keeping in  view  national  priorities  and  overall  development  of  the  States.  Further,  the devolution from divisible pool of Central Taxes is also made to States as per vertical tax  devolution  formula  and  inter-se  share  of  respective  States  recommended  by Finance Commissions for the development of States.

Funds provided by the Union Government during 2014-15 and 2015-16 under the Major  Heads  '3601-  grants-in  Aid  to  State  governments'  and  '7601-Loans  and Advances' alongwith devolution of taxes & duties are given in the table below:

Rs. in crore

| Year      |   Devolution of Taxes |   Grant-in-Aids |   Loans and Advances |   Grand Total |
|-----------|-----------------------|-----------------|----------------------|---------------|
| 2014-15*  |                337808 |          329734 |                11940 |        679482 |
| 2015-16 ^ |                506193 |          306129 |                12504 |        824826 |

^(Provisional & Un-audited)

(b) and (c) Plan Funds flow to the States under Central Assistance for State Plan (CASP) as per the Scheme Guidelines of the respective Ministries for development of  the  States.  The  programmes  of  Central  Government  meant  for  development  of States have inbuilt mechanism to ensure proper utilisation of funds received by the State  Governments.  The  concerned  State  Governments  and  Central  Ministries review  and  monitor  implementation  of  Schemes  to  ensure  effective  utilisation  of funds and further instalments of grant-in-aid is based on utilization certificate for the amount already released. For the loans from Multilateral Development Banks passed to  State  Governments,  strict  monitoring  of  disbursement/  project  is  done  through Tripartite  Review  Meeting  and  State  Review  Meetings.  Public  expenditure  is  also subject to independent audit.

Further, Public Finance Management System (PFMS) is envisaged to establish an on-line financial management information and decision support system for tracking of funds  released  under  all  plan  schemes  of  Government  of  India  and  real  time reporting of expenditure at all levels of programme implementation through treasury and bank interface.

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