Central government releases Rs 13,000 crore from Contingency Fund for Pradhan Mantri Awas Yojana -Gramin

Tags: National Economy/Finance Government Schemes

The Union Finance Ministry has authorized release of Rs 13,000 crore from the Contingency Fund of India to meet the additional financial demand for implementing the Government of India's flagship Pradhan Mantri Awas Yojna-Gramin (PMAY-G) programme in 2022-23. This amount is in addition to the Rs 20,000 crore allocated for the programme in the Union Budget 2022-23.

Reason for such unusual step 

The Government of India under the PMGY-G has set a target of building 52.78 lakh houses under the scheme in 2022-23.

In the first seven months (April-October 2022), the Union Rural Development Ministry has utilized Rs 16,785 crore which is about 84 per cent of the Rs 20,000 crore under the PMAY-G scheme. 

With several states demanding extra funds for construction of rural houses, the Union Rural Development Ministry had approached the Ministry of Finance way back in June for additional allocation

Funding pattern of the PMAY-G and Central government share 

Under the PMAY-G scheme, the government provides financial assistance of Rs 1.20 lakhs per beneficiary for construction of houses in rural areas in plain areas and in the North East and Hilly areas the assistance amount is Rs 1.30 lakhs per beneficiary.

The financial assistance shared between the Center and the States are as follows:

• In the plain areas the ratio of the Center and States is 60:40.
• In the hilly areas (8 Northeastern states, Himachal Pradesh and Uttarakhand) the ratio of the Center and States is 90:10.
• In the Union Territories the centre’s share is 100%.

PMAY-G and financial obligation of the Central Government for the remaining period 

• The Narendra Modi government when it came to power in 2014 changed the name of the Indira Awas Yojana to Pradhan Mantri Awas Yojna-Gramin (PMAY-G) and it was re- launched on 20 November 2016.
• It set a target of providing “Housing to All” for rural areas to eligible beneficiaries by 2022 which was later extended to 2024. A total of 2.95 crore houses were to be constructed under the scheme.
• According to the government a total of 2.02 crore houses have been built till 15 August 2022.
• The government has set a target to build 52.78 lakh houses in 2022-23 and 57.34 lakh houses in 2023-24.
• According to the estimates of the Union Ministry of Rural Development which is implementing the scheme, a Central share of Rs 48,422 crore would be required to complete the target of 52.78 lakh houses in 2022-23. 
• However only Rs 20,000 crore was allocated in the Budget 2022-23. Thus the Union Rural Development Ministry asked the Union Finance Ministry to release the additional fund otherwise it will not be able to release the Centre’s share of the fund to the state government and the scheme will not be able to achieve the target.

Why Release of Funds from Contingency Fund?

• In the Union Budget the government mentions how much money is allocated to a Union Ministry and for which purpose.  If the ministry’s need for funds is more than those allocated in the budget then permission of the Parliament is needed. 
• For this purpose a supplementary demand for grants is brought before the Parliament requesting for extra funds. The Parliament authorizes the extra expenditure by passing the supplementary grants.
• In this case the Parliament's next winter session is expected to start in December 2022. The Rural development ministry wanted the extra fund now so that the scheme can achieve its target in time. The Finance Ministry agreed and released the fund from the 
• Contingency fund of India.

What is the Contingency Fund of India?

• Article 267 of the constitution provides for a Contingency Fund of India for the central government and for each state government. Parliament can set the fund for the Government of India and the concerned state legislature set up for its state government.
• The Contingency fund of India was set up under the Contingency Fund of India act 1950.
• Its corpus was increased from Rs 500 crore to Rs 30,000 crore in 2021-22. This fund is used to meet unforeseen expenditure like natural calamities etc.
• The Secretary, Ministry of Finance manages this fund on behalf of the President of India. There is no need for prior approval from the Parliament to spend the money from the Contingency Fund of India.

Union Minister for Finance: Nirmala Sitharaman 

Union Minister for Rural Development: Giriraj Singh