Criteria for allocation of funds to the States under the ARWSP w.e.f. 1.4.99 are as under: :

The allocation of Central Assistance under the ARWSP is subject to the matching provision/ expenditure by the States under the State Sector MNP. Releases under the ARWSP would not exceed the provision for Rural Water Supply made by the State Governments under their MNP. The shortfall in actual expenditure under the MNP vis-à-vis expenditure under the ARWSP during the previous year shall be deducted from the last installment of the ARWSP funds for the current financial year. The allocation of central assistance under the ARWSP for a financial year would be communicated to the States/UTs at the beginning of the financial year.

These are dynamic figures and allocations for the subsequent years will be made based on the data on items on 2.5 (c), (d) and (e) above as on 31st March of the previous year. This can vary subject to changes on (c), (d) and (e) above on an annual basis

The funding pattern for Sub Mission projects taken up after 1-4-1999 will be in the ratio of 75:25 by the Central and State Governments. No separate funds will be released for this purpose. Upto 20% of the ARWSP funds released to the States can be used for these projects

A fixed amount (of about 5%) of annual central plan allocation is earmarked for Rural Water Supply in DDP areas in Andhra Pradesh, Gujarat, Haryana, Himachal Pradesh, J&K, Karnataka and Rajasthan without the condition of the States providing matching provisions under their MNP. The share of these States will be determined in proportion to the number of NSS habitations without safe source.

Up to 15% of the funds released every year under the ARWSP to the States/UTs may be utilised for operation and maintenance of assets created, subject to (i) ceiling of matching grant provided by the States out of the MNP provision and (ii) the approved norms already circulated to all the States/UTs. The funds earmarked for operation and maintenance of assets is not to be permitted for creation of capital assets.

The State/UTs are required to earmark and utilise at least 25% of the ARWSP funds for drinking water supply to the SCs and another minimum 10% for the STs. Where the percentage of SC or ST population in a particular State is considerably high warranting earmarking/utilisation of more than stipulated provisions, additional funds can be utilised. As a measure of flexibility, States may utilise at least 35% of the ARWSP funds for the benefit of SCs/STs, particularly in those states where SC/ST coverage is less than the coverage of the general population.

Diversion of funds earmarked for the SC/ST Sector to other sectors is not permitted. In cases wherein the States have achieved substantial coverage of SC/ST habitations and, do not have sufficient SC/ST population left out so as to utilise 35% of the ARWSP and the MNP allocations, such States may be allowed by the Rajiv Gandhi National Drinking Water Mission, to incur lower level of expenditure on the coverage of SC/ST habitations, on a case to case basis, in consultation with the Ministry of Social Justice and Empowerment and the National Commission for SC/ST. In such cases, States are required to submit separate proposals giving detailed justification for availing of such relaxation.

The State Governments may list out the SC/ST habitations separately and their coverage may be monitored as a distinct component of the programme.