In a bid to provide states greater say in formulating social sector programme, the rural development ministry on Thursday proposed setting up a flexi-fund of R40,000 crore of which 70% will be contributed by the Centre during 12th plan period.

The Rural Development Flexi-Fund (RDF) would be available to states as an additional allocation that could be used on existing centrally sponsored schemes of rural development and drinking water and sanitation industries or on the new projects designed by respective states.

This fund will be available to states from the next financial year till the end of 12th five year planning March, 2017.

“This is one major departure from the past. It is one of the major demands of the state governments. Rural development programmes today are a prisoner of national guidelines. They do not give adequate flexibility to the states,” rural development minister Jairam Ramesh said.

He said the flexi-fund will become operational from 2013-14 and ?if the economy picks up growth momentum, which we are confident it will, the size of the flexi-fund may in fact go up,? he noted. ?The fund is focussed on incentivising innovation in service delivery, building sustainable rural infrastructure and greening of rural India,? Ramesh said.

?We should give the maximum flexibility. But this is an issue which will ultimately go for the Cabinet approval,” Planning Commission deputy chairman Montek Singh Ahluwalia said at a joint press meet with Ramesh.

Many of the state governments have been demanding pruning of the centrally sponsored schemes so that more budgetary allocation could be made to states for schemes designed to fit the specific states needs.

Bihar chief minister Nitish Kumar, while demanding reduction in central schemes, had come up with the ?one size of shoe cannot fit everyone? argument. ?Every state has its own requirements and necessities and the schemes should be launched in accordance with the requirements of a state,?

Ramesh said the 12th plan proposes an allocation of around R4,90,000 crore for the rural development ministry and R100,000 crore for the ministry of drinking water and sanitation.

“For the first time, the centrality of the drinking water and sanitation has been recognised. In the 12th five year plan, the rural drinking water supply and sanitation sector, the total allocation has been proposed is more than double what was the allocation in the 11th five year plan”, he said.