The 13th Finance Commission has recommended the creation of a District Innovation Fund in each district. The objective of the fund is to increase the efficiency of existing capital assets by filling vital gaps in public infrastructure projects that are near completion. Is the Fund being utilised in the way intended? In this Note from the Field, a PMRDF working with the district administration of Kalahandi in Odisha provides a perspective.

What is District Innovation Fund (DIF)?

The District Innovation Fund is a scheme that has been recommended by the 13th Finance Commission based on the premise that innovation can help accelerate the efforts of administration to reach out to the people and make public service delivery more efficient. The objective of this Fund is to fill vital gaps in ongoing public infrastructure projects that are due for completion. Hence, investing small amounts from this Fund into nearly completed projects can give immediate returns. Under the DIF, each district would get Rs 1 crore in two instalments between 2011-2012 and 2015-2016. At least 10% of the costs of a project for which the Fund is used need to be funded by the citizens or NGOs to ensure that projects are demand driven and there is a sense of ownership among the people.

How is it distinct from other grants?

Most government schemes /funds have strict guidelines that do not leave any scope for innovation. This does not work so well in a diverse country such as India wherein the dimensions of problems vary significantly across states and over time. The DIF is designed to address this issue. The following features distinguish the DIF from other government funds:

• DIF is highly flexible. The funds can be used as per the needs of a particular district. 
• DIF can fund the use of technology in districts and hence, help in making   administration more accountable, transparent and efficient. 
• It can be converged with any other government scheme.
• DIF can enable better utilisation of existing capital assets by filling in financial gaps in completion of nearly completed projects
• If a district comes up with a very innovative idea, unutilised funds from another district can be allocated to implement the idea. This brings in competitiveness in the process of innovation. 
• The requirement of 10% funding from the citizens or civil society organisations has made the Fund people centric.

Why is it needed?

Even though there is no dearth of funds available to the district administration, there are usually strict guidelines associated with the funds. The DIF is flexible and can accommodate innovative, new ideas of the administration to address specific problems of their district.

How is it being used in your district?

The fund has not been used so far. A few projects have now been approved for funding. The projects recommended for approval are not as innovative as expected.

If the fund is not being utilised, then why?

As per the guidelines, a District Level Monitoring Committee (DLMC) recommends the project proposals to the High Level Monitoring Committee (HLMC), which then sanctions the projects. The projects recommended by the DLMC at Kalahandi are not too innovative, and hence not in keeping with the spirit of the DIF. Hence, the list has been pending with the HLMC since a long time.

Moreover, there is a lack of awareness regarding the DIF. This may have prevented innovative ideas from coming to the fore.

How do you suggest it should be used? What do you hope to achieve? How?

• There is barely any use of technology in the district administration in Kalahandi. The DIF can be effectively used for this purpose.
• The DIF can also be used to fund equipment that would enable better connectivity and communication in remote areas. 
• There is a need to spread awareness regarding the DIF among the various line departments of districts. Success stories ought to be documented and publicised to give the district administration officials a better sense of how to utilise the Fund. This will also enable replication of success stories, where possible. State or national level platforms for experience sharing should be created..

Have you implemented any of these suggestions?

PMDR Fellows at Kalahandi are planning to use money from the DIF to spread awareness regarding various government schemes through community radio. It is hoped that through this medium, the people of the district will also be able to convey their views to the administration, and the government will become more accessible and accountable.

The District Collector has passed on the proposal to the DLMC, which in turn has sent it to the HLMC. The response is awaited. An issue is that the proposal requires the recruitment of a technical person for processing and analysing of information. The guidelines are not clear on whether or not the DIF can be used for recruitment.