UP government is likely to restore the limit of the state contingency fund to Rs 600 crore. A bill to this effect is likely to be introduced in coming monsoon session of the state legislature. In the beginning of the current fiscal 2015-16 the limit of the SCF was Rs 5,400 crore which was increased to Rs 6,000 crore
The limit was increased to meet the contingent expenditure for providing relief to the farmers hit by the unseasonal rains in March-April. Since the state legislature was not in session in April an amendment ordinance was promulgated by the state Governor for increasing the limit of the SCF to Rs 6,000 crore.
In May this year the state cabinet had also approved a proposal to meet the expenditure for financing the relief work for the quack hit Nepal from the SCF .This was for the first the state government had decided to finance the relief operations in a neighbouring country from the SCF. However negligible drawl were made from the SCF for Nepal relief operations and major drawls were made for extending financial relief to the farmers whose standing Rabi crop was damaged by the unseasonal rains in March-April.
The SCF was set up in 1950 vide an act of the state legislature RsRsUP Contingency Fund Act 1950, with the drawl limit of Rs 50 crore. The SCF at the disposal of the state government empowers it to draw money from the fund to meet the unforeseen expenditure without the prior approval of the state legislatures since the legislature is not in session. The approval of the state legislature is mandatory for both to either expand or reduce the limit of the SCF.
The limit and the drawls from the SCF has always been a contentious issue during the successive Samajwadi party governments. The state governments across the country and also in UP adopt the SCF route to finance the arbitrary expenditures from the state exchequer only to escape the scrutiny by the state legislature and accountability towards the elected body. During the previous government headed by Mulayam Singh Yadav in 1993 and later in 2003, the SCF limit was arbitrarily increased to 1,200 crore and heavy drawls were made by the state government to finance the sanction of grants from the CM discretionary fund by the than chief minister Mulayam Singh Yadav. The CAG had taken strong exception to hike in SCF without assigning any cogent reason.
The finance department sources said with the NITI Ayog (National institution for transforming India) repeatedly emphasizing the state governments for improving the discipline in over financial administration and expenditure and for the lack of any credible reason to retain the limit of Rs 6,000 crore the state government has decided to restore the SCF to its original size of Rs 600 crore.