The ₹4.80 Crore District Livelihoods Allocation
A district in Rajasthan receives ₹4.80 crore under a state rural livelihoods head for the coming year. The Collector's note fixes three conditions: at least 45 per cent of the total must go to Scheme A (farm-based livelihoods); Scheme B (livestock) may not exceed 30 per cent of the total; and administrative and monitoring cost may not exceed 12 per cent of the total. The CEO, Zila Parishad, tables this proposal, all figures in ₹ lakh: A 200, B 160, C (non-farm enterprises) 58, administration 62 - total 480. Scheme A's unit cost is ₹1,800 per beneficiary, and the department's covering note claims A will cover 12,000 beneficiaries. Separately, last year's audit found that 96 of the district's 248 gram panchayats had spent less than half their allocation by the end of December, while 21 panchayats had overspent and requested reallocation.
1. Test the proposal against each of the three conditions and against the department's own beneficiary claim. Then construct the maximum compliant allocation.
Read the worked answer
Testing the proposal (total ₹480 lakh)
- Administration: cap = 12% of 480 = ₹57.6 lakh. Proposed 62 lakh = 12.9% → breach.
- Scheme A: floor = 45% of 480 = ₹216 lakh. Proposed 200 lakh = 41.7% → breach.
- Scheme B: ceiling = 30% of 480 = ₹144 lakh. Proposed 160 lakh = 33.3% → breach.
Beneficiary check. ₹200 lakh ÷ ₹1,800 = 11,111 beneficiaries, not 12,000. To actually serve 12,000 at ₹1,800, A needs 12,000 × 1,800 = ₹2,16,00,000 = ₹216 lakh - which is exactly the 45% floor. So the department's own claim is arithmetically inconsistent with its own budget line; the floor is not an arbitrary rule, it is the minimum the target requires.
Maximum compliant allocation
- Administration: ₹57.6 lakh (at the cap).
- Scheme A: ₹216 lakh (at the floor).
- Scheme B: ₹144 lakh (at the ceiling).
- Scheme C: 480 − 57.6 − 216 − 144 = ₹62.4 lakh.
Every condition is satisfied at the boundary; the CEO must re-submit on this basis, and the ₹4.4 lakh trimmed from administration plus ₹16 lakh from B must be shown as reallocated, not merely deleted.
2. The audit shows weak absorption capacity in 96 panchayats. How should the compliant allocation be phased so that compliance does not become unspent money? Give a numeric trigger.
Read the worked answer
Compliance on paper and absorption on the ground are different tests, and only the second delivers livelihoods. The allocation above is compliant; it is not yet deliverable.
Phasing design
- Release Scheme C (₹62.4 lakh) in two tranches: 60% in the first quarter, the balance only on evidence of use.
- Trigger: the second tranche releases only if at least 60% of the first tranche is utilised by 30 September, with utilisation certified by the gram panchayat and verified by a sample check of at least 10% of works.
- Reallocation rule: unspent balances from panchayats below 50% utilisation are surrendered at the 30 September review and reallocated first to the 21 overspending panchayats, whose demand is demonstrated rather than projected - capped so that no panchayat's share rises above twice its normative entitlement.
- Protect the floor: Scheme A's ₹216 lakh must not be raided for reallocation, because it is already the statutory minimum and the beneficiary target depends on it.
Reasoning. The audit's finding is a capacity signal, not a corruption signal; it says the bottleneck is at the panchayat level. Front-loading money into weak panchayats converts a compliance success into a surrender at year-end, which is the worst outcome. Tranche-linked release keeps the total compliant while matching the cash flow to demonstrated absorption, and the twice-entitlement cap prevents the correction from simply concentrating funds in a few strong panchayats.