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Rationale

Rationale for Earmarking 10% of Annual Budgets by Central Ministries for the North Eastern Region

 

 

 

 

What is 10% GBS for NER?

 

Earmarking 10% of their Annual Plan Budgets by Central Ministries for the North Eastern Region is a bold step by the Union Government to address the development deficit of the NER.  10% of the Annual Plan Budget of 52 Ministries of the Union Government is earmarked every year for spending in NER since 1998-99 even though the NER has 7.9%  (2,62,179 sq. km out of 3287263 sq. km) of India’s land mass and 3.76% (4.55 crore out of 121 crore) of population as per Census 2011. 

 

In October 1996, the Central Government announced “New initiatives for the North Eastern Region” outlining number of measures for its development.  One of these was the policy decision to earmark at least 10% of Plan Budget(s) of the Central Ministries/Departments for the development of NE States.  A preliminary exercise undertaken by he Planning Commission in consultation with the various Ministries / Department revealed that the expenditure on the North East by some Union Ministries during 1997-98 fell short of the stipulated 10% of the GBS for that year.   Planning Commission thereafter explored the possibility of creating a Central Pool of Resources for the North East out of the unspent amount of stipulated 10% of GBS to support infrastructure development projects in the North East.

 

Since 1998 – 1999 all Ministries/ Departments of GoI (except a few specifically exempted ones) are earmarking at least 10% of their annual budget, less allocation for externally aided schemes and local or event specific schemes /projects for expenditure in the North Eastern Region.  At present, there are 53 non-exempted Ministries / Departments which earmark funds for the NER (including the Ministry of Railways and the newly created Department of Pharmaceuticals).

 

The unutilized portion of the funds earmarked by the non-exempted Ministries is surrendered at the close of each financial year in the Non-Lapsable Pool of resources which is being maintained on a Performa basis by the Budget Division of the Department of Economic Affairs, Ministry of Finance.

 

Size of the Pool

 

The estimated balance in the Notional Non-Lapsable Pool in April, 2011 is Rs.8417.32 crore.

 

Accruals and Releases

Details of accruals to the Notional Non-Lapsable Pool since 1998-99:
S.No. Year Accrual to Non-Lapsable Fund (Rs. crores)
1 1998-99 1189.85
2 1999-2000 1571.78
3 2000-01 1440.60
4 2001-02 1603.84
5 2002-03 1339.70
6 2003-04 657.24
7 2004-05 663.35
8 2005-06 1960.12
9 2006-07 1311.08
10 2007-08 1761.03  
11 2008-09 2009.16  
12 2009-10 1705.70
13 2010-11 [M/Fin.yet to confirm accounts]
  total 17213.45

 

 

Releases under NLCPR Scheme since 1998-99:

 
Sl.No. Year Release under NLCPR Scheme (in Cr. Rs.)
1 1998-99 106.34
2 1999-2000 409.96
3 2000-01 309.25
4 2001-02 491.57
5. Expenditure of NEC debited to NLCPR during 1998-99 to 2009-10 1605.38
6 2002-03 550.00
7 2003-04 550.00
8 2004-05 650.00
9 2005-06 679.18
10 2006-07 689.83
11 2007-08 636.00
12 2008-09 650.00
13 2009-10 668.62
14 2010-11 800.00
  Total 8796.13

 

Cumulative accrual to the Notional Non-Lapsable Pool [till 2009-10]

 

Rs. 17213.45 cr

Cumulative releases under NLCPR Scheme [till 2010-11]               

Rs.   8796.13 cr

 

Estimated Balance in the Notional Non-Lapsable Pool 

Rs. 8417.32 cr [est.]

 

How is the Pool Used?

 

Ministry of DONER implements two Plan schemes to utilise the accumulated pool of non-lapsable resources for the NER:

  • Non-Lapsable Central Pool Resources (NLCPR)
  • Non-Lapsable Central Pool Resources – Central (NLCPR-Central)

Ministry of DONER monitors the expenditure of the 10% GBS of the non-exempted Ministries.

 

 

Budget Circulars of Ministry of Finance regarding Lump sum Provision for North Eastern Region and Sikkim :-

 

1/GBS/CO-Ordination/2012-DoNER

Ministry of DoNER

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Budget Circulars of Ministry of Finance regarding Lump sum Provision for North Eastern Region and Sikkim – Circulars issued by Budget Division of Department of Economic Affairs since 2001 are annexed.
 

Brief on the procedure for providing funds for development of North Eastern Region and Sikkim under ‘Plan’ expenditure in Statement of Budget Estimates and Detailed Demands for Grants:

 

  1. In accordance with the decision of the Government all Ministries / Departments unless specifically exempted from doing so are to make a Lump sum provision of  10% of  their central plan allocation for projects / schemes for the benefit of North Eastern Region and Sikkim. The provision made for the Lump sum amount should be in accordance with the Budget Division letter of 28.01.00.
  2. The Lump sum provision of projects / schemes for North Eastern Region and Sikkim should be made under the Major Heads ‘2552’ for revenue expenditure and ‘4552’ in case of capital expenditure under ‘plan’ side. These are shown as lump sum provisions in the Statement of Budget Estimates(SBEs)and Detailed Demands for Grants of the respective Ministry/Department, initially. Such sums are subsequently re appropriated to the functional heads of accounts for the purpose of incurring the expenditure. Reappropriations from the lump sum provision from the Major Heads ‘2552’ and ‘4552’ are carried out with the approval of Secretaries of respective Ministry/Department, who have, been delegated powers for this purpose through Finance Ministry’s D.O.No.2(66)-B(CDN)/2001 dated 12.6.2001.
  3. As per Office Memorandum F.No.2 (66)-B(CDN)/2001( Vol II) dated, 13th Sep, 2002 :
    ----“ It is important to make a realistic assessment of revenue and capital provision at the Budget formulation stage itself since reappropriation from revenue to capital and vice versa is not within the powers of the Ministries and will call for a supplementary provision. The practice of making provision for North Eastern Region and Sikkim should not be done under any other major head.”                              ---------“At the revised estimate stage, the lump sum provision should be 10% of the revised plan amount and depicted accordingly in SBEs.” ----“ with a view to maintaining uniformity across Ministries/Departments it has been decided that all Ministries/ Departments at the RE stage indicate lump sum provisions as 10% of the central plan RE amount unless exempt from making provisions for the region.”----
    “In some Ministries/Departments there are large savings being reported under Major heads 2552 and 4552 at the end of the year on account of inadequate expenditure in the region. It is impressed upon all Ministries/Departments that expenditure in the region should be in conformity with the 10% requirement as has been laid down.”

    “Instances of reappropriations being proposed from lump sum provision in the North Eastern Region and Sikkim to Other Projects/Schemes outside the region have been received in this Ministry ( MOF ). It is reiterated that such proposals will not ordinarily be entertained in this Ministry. Expenditure should be undertaken on project/schemes in the region itself.”
  4. Copies of the Ministry of Finance Budget Division’s circulars on Lump sum Provision for NER are annexed herewith.
     

Budget Circulars of M/o Finance on 10% GBS[PDF](1.42 MB)
 

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Economic Adviser