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Abhijit Sen, Noted development economist and Planning Commission member interviewed by Sanjib Kr Baruah

Noted development economist and Planning Commission member Abhijit Sen talks about how government funds find their way into insurgent hands, and why the government is unable to check this.

There are a number of reports that suggest that development funds are landing in the wrong hands. What are the various aspects of fund diversions?

It's a well-reported fact that public money is finding its way into the hands of extremists. There is a system of contracts and tenders, and contractors cannot work in such situations unless they dole out some to such elements be it in the Naxal areas in central India, or Kashmir, or in the Northeast.

Without paying off, there is grave risk to life. So contractors build in, to whatever the contract rights offer, a chunk that is meant for these elements.

There are various aspects to fund diversion. One is corruption. Now corruption does take place irrespective of whether insurgency exists or not. They are independent of each other. Most extremist-affected areas have their own problems. Firstly, no official wants to go there and they try and wriggle out of such a situation. These are also treated as punishment postings. Moreover, the not-so-good officials are often posted there. There is a qualitative and quantitative issue. There is a basic shortage of people there and certainly a shortage of the best people.

Secondly, there is the related issue of inefficiency of the government mechanism whether in terms of expenditure or in terms of service delivery. This leads to inefficiency in the way in which government money is spent. Extremists are able to get a chunk of the public money because they have to allow some of the things to take place as their writ runs large in many of these areas.

Has the Planning Commission ever recognised this issue?

I am not aware if the agency has participated in sustained development or complete discussions on this matter. But very recently when we were considering a new scheme for backward tribal areas or areas that are affected or can potentially be affected by extremist elements, this issue did crop up.

But this is essentially a governance problem and involves the entire gamut of government machinery. We did select about 60 districts that would get more money and the conditionality for that would be the governmental aspect.

Several states seem to be in a desperate hurry to claim more funds in the name of fighting extremism...

Which is one of the reasons why we were reluctant to form such a scheme on the basis of the Naxal-affected districts. Our choice of districts would have to fulfill five criteria — backwardness, significant tribal populations, fair amount of forest cover, etc. These criteria cannot be changed by state governments.

How is the government monitoring these funds?

There is a lot of variation but by and large it is not good. As far as the central government is concerned, a lot of it ends with what is called a utilisation certificate (UC). Somebody has to certify that the money released from the public exchequer was utilised properly. So long as it is received, the government assumes that the work has been completed.

There is also an audit mechanism. But the ground reality is something else. Just as the Centre is happy to get an UC and is not really asking questions, the state governments are also happy to get something documentary in nature saying that the money has been spent, without actually verifying how it is spent. No questions are asked. There is a lot hanging on trust and obviously that trust has been betrayed somewhere along the line.

Moreover, in the last decade or so, the Panchayati units have more access to developmental funds. And without trained personnel or an effective accounting protocol, a lot of undesirable things are happening. It's like the proverb — once there's honey, the bees also gather — so more money is being siphoned off. And it's become a serious problem

So how does one set up effective administration in the remote areas?

In the Northeast and Kashmir, things are somewhat different. The states' politics have evolved there. Compromises like ceasefires with various insurgent outfits do happen. One doesn't demand definitive accountability nor does one bother about too many things. The Army is also involved. There are many complaints that the Army itself is responsible for a lot of corruption.

In tribal central India, governance has not evolved with that kind of history. The first step will be administrative. The state governments will have to set up some degree of order, address specific tribal problems such as sale of minor forest produce, liquor contracts.

More substantive steps can follow such as improving connectivity, infrastructure, health facilities, posting the right people, perking up the public distribution system, etc. But there are inherent dangers. To improve connectivity, you have to build roads, and who do you offer the contract to? It is a vicious circle.

What do you think about the multiplicity of Special Plans for such areas?

We are getting too many Special Plans. I am not entirely happy about it.