Cuts in funds may hit rural housing scheme, says Jairam Ramesh

NEW DELHI: The government’s social sector expenditure is poised to rise sharply in the current quarter, but severe cuts in allocations of funds have jeopardised key programmes such as the rural housing scheme, rural development minister Jairam Ramesh told the finance minister.

The allocation for the rural development department has been cut drastically from . 73,175 crore to . 52,000 crore, which Ramesh said would derail the inclusive growth initiatives championed by UPA chairperson Sonia Gandhi.

“Both prime minister and you have spoken about the need for fiscal consolidation but not at the cost of our social priorities and not at the cost of programmes that are the anchors of inclusive growth,” Ramesh told P Chidambaram and Manmohan Singh in a note.

With elections in key states such as Karnataka, Madhya Pradesh, Chhattisgarh, Rajasthan due to be held this year, and the general elections about 14 months away, there is concern that reduced allocation for programmes aimed at the rural poor could have adverse electoral impact.

The allocation for the rural development ministry in the 2012-13 Budget was to the tune of Rs 73,175 crore. During the budget allocation exercise, this amount was tentatively reduced to Rs 53,742 crore. However, in early January, the rural development department was informed of a further downward revision, this time the allocation was fixed at Rs 52,000 crore.

The reduction comes even as expenditure in key rural development programmes such as rural housing scheme or Indira Awas Yojna is picking up. Demand for the rural housing scheme has been picking up and Ramesh has asked that budget estimate of Rs 11,075 crore for the scheme be restored. The minister has argued that the reduction of Rs 1000 crore in the programme’s allocation would mean that 2.5 lakh houses will not be built under the Indira Awas Yojna, a scheme “where satisfaction levels are already low.”

Ramesh has also asked that the finance ministry revisit its ceiling of expenditure in the last quarter—moving away from a scheme wise ceiling to an overall ceiling for the department. “Allow variations in respect of certain schemes so long as the overall expenditure for the demand as a while is withing the prescribed limit for the last quarter,” Ramesh urged the finance minister.