The Centre has proposed to set up a Rural Development Flexi- fund, RDF of 40 thousand crores rupees to ensure better targeting and focused projects on State specific priorities. It will be placed before Cabinet for its approval soon.

Addressing a joint press conference with Planning Commission Deputy Chairman Montek Singh Ahluwalia in New Delhi, Rural Development Minister Jairam Ramesh said that the RDF will be available as an additional amount that can be spent either on existing Centrally sponsored Schemes or on new projects proposed by the States. He said that Scheme will be operational from next fiscal year.

Mr. Ramesh said that it will also send a powerful signal about the Central government's deep commitment to cooperative federalism as many States were demanding greater flexibility in spending on government's schemes. Mr. Ramesh said that central government will give 70 percent of RDF that will be 28 thousand crore rupees. Rest 30 percent amount will be borne by the State governments. Briefing about the details of the RDF, he said it would provide inter-scheme flexibility to States among the Centrally sponsored schemes of the Ministry of Rural Development, Drinking Water and Sanitation.

The Minister said in 12th Five Year Plan, the total allocation for drinking water and sanitation is more than double than the previous plan. Noting that mal-nutrition in the country is due to poor sanitation Mr. Ramesh said 35 thousand crores will be spent on sanitation out of one lakh crore rupees allocated for this purpose. Rest 65 thousand crore rupees will be given for rural drinking water.

In a reply to a question, Mr. Ramesh denied that Mahatma Gandhi National Rural Employment Guarantee Act, MGNREGA has negative impact on agriculture sector. He said 70 percent of the work given under MGNREGA is spent in off season of farming activities.