The impressive Plan funds absorption rate projection by local self-government institutions (LSGIs) during the previous financial year was due to the routing of the lion's share of development and maintenance funds for non-productive purposes.

Official statistics pegged the total Plan expenditure of grama panchayats at 79.30 per cent, block panchayats at 82.86 per cent, district panchayats at 71.80 per cent, municipalities at 79.12 per cent, and Corporations at 79.03 per cent. The overall expenditure as on March 31 was 83.17 per cent. The government and the local bodies had described it as a major achievement and challenged the critique that the projected utilisation rate was inflated and substantial sums were diverted for fruitless ventures.

LSGIs are bound to spend at least 80 per cent of the development and maintenance funds apportioned to them, failing which, the shortfall would be deducted from their future allocation.

An order issued on March 1 brought down the mandatory expenditure limit to 70 per cent. Another order issued on April 16 further lowered the limit to 60 per cent citing various reasons, including lack of time in Plan preparation and selection of beneficiaries. The Piravom by-election was cited as one of the main reasons for bringing down the absorption rate.

Official sources told The Hindu here that the civic bodies had routed about Rs.100 crore from their development fund during the last lap of the year to the Kerala Water Authority (KWA) as drinking water cess arrears of public taps. This amount was cleared under a one-time settlement scheme.

Contribution of civic bodies to the Social Security Mission was made obligatory. Sanction was accorded for releasing funds to the mission. This direction came as a blessing in disguise to a majority of LSGIs to empty their kitty which should otherwise have been used for developmental purposes.  The Ernakulam district panchayat alone is understood to have made a contribution of Rs.50 lakh to the mission.

Another direction was to dole out funds to provide infrastructure facilities to accord deemed university status to the Kerala Institute of Local Administration (KILA). 

Such massive diversion of the development and maintenance funds for other purposes is pointed out to be in contravention of the basic tenets of decentralised planning, governance, and development. Though elected members were saved of the trouble of preparing projects, selecting beneficiaries, and executing projects in a flawless manner, it deprived large sections of the benefits due to them and also flouted the purpose of devolving funds and powers to the grassroots level, sources said.