1. The North Eastern Region (NER) comprises of eight States viz. Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura. The development concerns of these States are pursued through their respective Five Year and Annual Plans as well as those of the Union Ministries and Central Agencies. In addition, projects of inter-State nature in the Region are funded through by the North-Eastern Council (NEC), which has a separate additional budget for the purpose.
2. The North East has essentially depended on Central funding for development works. All the States in the NER are Special Category States whose Development Plans are centrally financed on the basis of 90% Grant and 10% Loan. Further, the Special Category States are allowed to use up to 20% of the Central Assistance for Non-plan expenditure.
3. Despite the fact that the per-capita plan outlays of the NE States have, over a period of time, been considerably higher than the national average, the States still rank significantly below the national average in so far as the development of infrastructure is concerned. In terms of per-capita State Domestic Product or other development indices, such as Power, Length of Roads or Hospital Beds, the North-East ranks well below the national average. Though the literacy levels are higher than the national average, vocational training and entrepreneurial skills remain weak areas.
4. As the benefits of economic development have yet to steadily accrue to the Region, efforts have been initiated in this direction in the recent past through various supportive measures. In October 1996, the then Prime Minister announced "New Initiatives for North Eastern Region" and stipulated that at least 10% of the Budget(s) of the Central Ministries/Department will be earmarked for the development of North Eastern States. A preliminary exercise undertaken by the Planning Commission in consultation with the various Ministries/Department revealed that the expenditure on the North East by some Union Ministries during 1997-98 fell short of the stipulated 10% of the GBS for that year. Planning Commission thereafter explored the possibility of creating a Central Pool of Resources for the North East out of the unspent amount of stipulated 10% of GBS to support infrastructure development projects in the North East.
5. A proposal was mooted by the Planning Commission to the Cabinet for constitution of such a Central Pool of Resources. The Cabinet approved the approach, in principle, on 15th December,1997, observing that the creation of the Central Resources Pool would require Parliamentary approval and would have to await constitution of the Twelfth Lok Sabha. The Central Pool therefore, could not be constituted in 1997-98.
6. Following the Lok Sabha elections earlier in the year 1998, the matter relating to creation of the Central Pool of Resources was pursued in consultation with the Ministry of Finance. The Prime Minister convened a Meeting of the Chief Ministers of the North Eastern States on 8th May 1998 when, inter alia, it was indicated that a Non-lapsable Central Pool of Resources for the funding of specific projects in these States would be created. The relevant paragraph from the Prime Minister's speech reads as under:
"We are examining the feasibility of creating a Central Pool of Resources (CPR) which, in turn, will give critical additional support for an accelerated implementation of projects in the entire region. This pool, created from the unspent balance of the allocated expenditure of 10% of the budgets of the concerned Central Ministries, could well amount to around Rs.1500 crore annually."
7. This commitment of the Government was also reflected in the Speech of the Finance Minister while presenting the Union Budget for the year, 1998-99. The relevant paragraphs from the Budget Speech are reproduced below:
"Furthermore, it has been decided that a non-lapsable Central Resources Pool will be created for deposit of funds from all Ministries where the plan expenditure on the North Eastern Region is less than 10 per cent of the total plan allocation of the Ministry. The difference between 10 per cent of the allocation and the actual expenditure incurred on the North Eastern Region will be transferred to the Central Pool, which will be used for funding specific programmes for economic and social upliftment of the North Eastern States."
8. Further, as part of the budget proposals 1998-99, it was announced that: "It has been decided that all Central Ministries/Departments should earmark at least 10% of their budget for specific programme of development in the North Eastern Region. To the extent of shortfall in the utilization of this provision by any Ministry/Department (except some exempted ones) according to this norm, the amount would be transferred to a new Reserve Fund in the Public Account titled 'Central Resource Pool for development of North Eastern Region'. Presently, a token provision of Rs.1 crore is being made for transfer to the fund. In Budget 1997-98, such short provision was assessed to be about Rs.1,600 crore. A similar exercise for analyzing the provisions in Central Plan specific to the North Eastern Region in Budget 1998-99 would be carried out and the Resources Pool would be enhanced at Revised Estimates stage to the extent of shortfall from the 10% norm."
9. The Union Budget 1998-99 was voted and passed by Parliament. With that, the Non-lapsable Central Pool of Resources was constituted with approval of Parliament.
10. In the conference of Governors and Chief Ministers of the North Eastern States and Sikkim held in January 2000 at Shillong the Prime Minister stated the objectives of the Non-lapsable Central Pool of Resources. The relevant paragraph from Prime Minister's Speech is:
"My Government has also created a pool of non-lapsable funds for the North-East and Sikkim. This pool, meant for funding development projects in these States, will fill the resource gap in creation of new infrastructure, which is a top priority concern of the Union Government.…"
11. The broad objective of the Non-lapsable Central Pool of Resources scheme is to ensure speedy development of infrastructure in the North Eastern Region by increasing the flow of budgetary financing for new infrastructure projects/schemes in the Region. Both physical and social infrastructure sectors such as Irrigation and Flood Control, Power, Roads and Bridges, Education, Health, Water Supply and Sanitation - are considered for providing support under the Central Pool, with projects in physical infrastructure sector receiving priority.
12. Funds from the Central Pool can be released for State sector as well as Central sector projects/schemes. However the funds available under the Central Pool are not meant to supplement the normal Plan programmes either of the State Governments or Union Ministries/ Departments/ Agencies.
Institutional arrangement to Administer the NLCPR Funds.
13. During the year, the institutional arrangements for administering the Non-lapsable Central Pool has been streamlined. The guidelines to administer the Pool have been revised. The Committee to administer the Non-Lapsable Central Pool of Resources has been reconstituted. The reconstituted Committee is headed by Secretary, Ministry of Development of North Eastern Region and has representation from Ministries of Finance, Home Affairs and Planning Commission. Financial Advisor to the Ministry of Development of North Eastern Region has been included as a member. Representatives of Union Ministry/Departments, whose proposals are to be considered in a particular sitting for funding under NLCPR, are also invited.
14. For identification of projects under Non-Lapsable Central Pool of Resources, States are asked to submit, before the beginning of the financial year, a prioritized list of projects with a short write up on each project. The earlier practice of receiving projects throughout the year directly from the various state departments concerned has been stopped. Now the Planning and Development Department of the state concerned is the nodal department for NLCPR and that department is DoNER's interface with all other departments of the state. The priority accorded by the state to the projects in the 'priority list' is only a suggestive and the Committee scrutinizes the projects in the lists in order to identify and finally retain the suitable projects for detailed examination. In examining the priority, the committee is, inter-alia, guided by considerations such as:
Projects of economic infrastructure is given priority;
- In the social sector, priority to drinking water supply and other health and sanitation projects;
- Projects in Autonomous district Council (VIth Schedule of the Constitution) is given priority;
- Past performance of a state in implementing projects in the particular sectors to which the projects belong is also considered;
- The overall utilisation and absorption of funds by a particular state in the past years also guide the overall quantum of projects to be undertaken for that state in a year.
15. Detailed Project Report(s) for such retained projects are then prepared by the state concerned. These project proposals are thereafter examined in consultation with the concerned Central Ministry/Department. The recommendations/views, thus received are place before the Committee to administer the Non-Lapsable Central Pool, which considers the proposal and accords approval.
16. After approval of the Committee, funds are sanctioned and released by the Ministry of Development of North Eastern Region on submission of an implementation schedule. Subsequent releases are made only after receipt of Utilisation Certificate of earlier releases.