Members of Legislative Assembly are approached by their Constituents, quite often, for small works of capital nature to be done in their Constituencies. Hence, there was a demand from MLAs that they should be able to recommend works to be done in their Constituencies. Considering these suggestions, the Finance Minister announced in the Budget Speech on the 13th of July 2001 that a Special Development Fund would be constituted in the State on the pattern of M.P Local Area Development scheme for the MLAs. It was also announced that a total amount of Rs.35 Crores would be set apart for the schemes selected by the MLAs at the rate of Rs.25 lakhs per MLA per year.
Accordingly in G.O (P) No.1234/2001/Fin dated 29/10/2001 Government have formulated the scheme and approved the guidelines for its implementation. The above amount has been enhanced to 50 lakh per MLA per year from 2003-2004 financial year onwards. In G.O (P) No.236/2005/Fin dated 21/05/2005 the amount has been enhanced to Rs.75 lakh per MLA per annum. Accordingly the corpus of the Fund was also enhanced from Rs.70.50 crore to Rs.105.75 crore per annum.