A rural Development Ministry proposal to increase the proportion of expenditure on administrative and associated activities under the National Rural Employment Guarantee (NREG) scheme was today approved by the expenditure and finance committee. This means that expenditure on administrative costs in the scheme will now be raised from the current two per cent to five per cent of the total budget in each state.

A similar proposal to raise the proportion of administrative expenses to six per cent was taken to the Cabinet by the rural development minister Raghuvansh Prasad Singh two months back but opposition from Lalu Prasad and Sharad Yadav meant that it could not be approved. The Cabinet was not willing to allow more than four per cent for administrative expenses, which was not acceptable to the minister. The matter was then referred to the expenditure and finance committee for its suggestion.

The move was opposed by the Planning Commission too, which was of the view that the allowed limit has been the standard for similar kind of programmes in rural development. But the ministry argued that the experience of implementing NREG so far indicated that a larger proportion was required for administrative expenses.

Officials have justified the higher expenditure on two counts. They say that the NREG requires stricter standards of vigilance for implementation using online monitoring system, which includes Monitoring and Information Systems (MIS). This requires training and capacity building across all districts.

The second factor that will sooner or later add to the costs are the provision under Section 22 of the NREG Act which recommends the government to provide welfare facilities for workers alongside the works taken under the scheme. If this provision is to be met the government will have to spend money on providing creches and several other requirements. These additional expenses were never required for earlier rural development schemes.

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