New Delhi: India’s efforts to develop backward regions, including those hit by Maoist insurgency, could be hamstrung as states hardly used the grants allotted in 2009-10 for these areas.

Less than 20% of the Rs3,323 crore released in the previous fiscal for development projects under the Backward Regions Grant Fund—to be used by village councils and municipalities—were spent, the panchayati raj ministry said.

Photograph: Harikrishna Katragadda / Mint; Graphic: Naveen Kumar Saini / Mint

The data is till mid-March.

All the states together used merely Rs662 crore, or around 20% of the total grants released under the development component of the fund. In 2008-09, 78% of the money had been used, and in the year earlier, nearly all of it was used.

Last fiscal, no state except Uttar Pradesh and Andhra Pradesh used even half the amount released to them, the ministry’s data shows. Worse, 18 states did not use any of the funds released under the development grant.

The backward regions fund, designed to correct regional imbalances in development, has two components—capacity building and development grants.

The grants are given to 250 backward districts, each getting Rs10 crore as minimum allocation, and the remaining by population and area.

State governments are required to determine norms for further allocation of the fund to village councils and municipalities.

Delayed release of funds by the states to the implementing agencies and delays in receiving the annual plans of the districts could be among the reasons for poor utilization, the ministry said.

The states, particularly those hit the most by Maoist violence, however, say the insurgency caused the delays in using the grant for development.

“We are unable to utilize the funds because of the Naxals in the region. The Naxals have been disturbing all kinds of developmental activities, including construction of roads, buildings and bridges. In such situations, the utilization of funds is very difficult," said N. Baijendra Kumar, spokesperson of the Chhattisgarh government. “So it is wrong to say that the states are not utilizing the funds."

Chhattisgarh, along with Bihar, Jharkhand, Orissa, West Bengal and Andhra Pradesh, has seen the worst of the Maoist rebellion.

The budgetary allocation for the 250 districts under the backward regions fund, which stood at Rs4,670 crore in 2009-10, is proposed to be increased to Rs5,050 crore in 2010-11.

An expert said there was little focus and effort on what the panchayats, or village councils, can actually do.

“One of the possible reasons for poor performance in these areas could be that there were panchayat elections in many states, in fact, many big states, last year. This meant that for nearly six-eight months, people lost interest in development activities," said Yamini Aiyar, senior research fellow and director of the accountability initiative at Centre for Policy Research, a think tank. “But more importantly, what has happened is that the whole panchayat focus has diminished of late."

According to her, in the area of rural development, the entire focus is on the national rural employment guarantee scheme that ensures 100 days of work a year to a member of all poor rural households.

“There is very little pressure on the system for implementing other schemes," Aiyar said.

Liz Mathew contributed to this story.