The Hindu Business Line : Proceeds from education cess — Dedicated fund for primary education to be set up

PUTTING to rest all doubts on whether the monies collected from the 2 per cent education cess imposed in this year's Union Budget will actually go towards financing primary education, the Finance Ministry has decided to set up a dedicated non-lapsable fund for the purpose.

The fund, called `Prathmik Shiksha Kosh,' will be created and maintained by the Department of Elementary Education and Literacy in the Ministry of Human Resource Development - similar to the Central Road Fund (CRF), to which the entire proceeds of the Rs 1.50 cess on petrol and diesel accrue.

The receipts from the education cess would get credited to this fund and be utilised "solely and exclusively for elementary education, including Sarva Shiksha Abhiyan (SSA) and Nutritional Support to Primary Education (Mid-Day Meal Scheme)."

According to Finance Ministry officials, the fund will be non-lapsable and receipts from the education cess will be available on a rollover basis for the purposes of financing elementary education and the mid-day meal scheme.

The Government has budgeted a total sum of Rs 4,910 crore to be mobilised during the current fiscal alone from the 2 per cent education cess levied on all Central taxes.

In his Budget speech, the Finance Minister, Mr P. Chidambaram, had assured that "the whole of the amount collected from the cess will be earmarked for (primary) education, which will naturally include providing a nutritious cooked mid-day meal."

At the same time, the Budget had not provided for any `ring-fencing' mechanism to ensure that the revenues raised from the cess are used solely for the intended purpose.

The concern also sprung from the fact that the overall budgeted Plan outlay for elementary education during 2004-05 was Rs 5,752.53 crore, only Rs 533 crore higher than the revised estimate of Rs 5,219.47 crore for 2003-04.

Within this, the outlays for the SSA and the Mid-Day Meals scheme were slated to rise from Rs 2,732.32 crore to Rs 3,057.08 crore and from Rs 1,375 crore to Rs 1,675 crore, respectively.

Thus, the additional outlay proposed for elementary education this year (about Rs 533 crore) stood way below the budgeted mop-up of Rs 4,910 crore through the 2 per cent cess.

"By creating the dedicated fund, we have, in a way, assured taxpayers that the monies collected from the cess will go towards its intended purpose. Also, since the fund is non-lapsable, there would be no worry that the money that is not spent in a particular year can still find use in the following year," officials said.