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Poor funds use threatens urban mission projects

With more than a dozen states failing to utilise funds for implementing urban infrastructure projects under the government’s Jawaharlal Nehru National Urban Renewal Mission, it seems unlikely that the flagship programme will see any increase in resource allocation in the coming budget, reports Moushumi Das Gupta.

business Updated: Feb 18, 2010 22:37 IST
Moushumi Das Gupta

With more than a dozen states failing to utilise funds for implementing urban infrastructure projects under the government’s Jawaharlal Nehru National Urban Renewal Mission (JNNURM), it seems unlikely that the flagship programme will see any increase in resource allocation in the coming budget.

In the last budget (2009-2010), Rs 11,653.62 crore was allocated under JNNURM of which only 33 per cent has been utilised till December 2009. The programme, implemented by the Union Urban Development (UD) Ministry, was launched in 2005 for a seven-year period. As part of the programme, the Central government provides upto 50 per cent of funds to states for undertaking urban infrastructure project. Availing the Centre’s share of funds is linked to certain mandatory reforms like implementing e- governance, rationalising stamp duty among others, that the state has to carry out.

If recent indications are anything to go by, sources in UD Ministry say that not only will the budgetary allocation to the programme not see any increase, it can also be reduced.

The government recently shot down the UD Ministry’s proposal seeking a $5 billion loan from World Bank for carrying out urban reform projects under JNNURM. The Department of Expenditure cut the loan amount to $1 billion.

Another recent UD Ministry proposal to include 28 more cities under JNNURM was rejected by the Cabinet. Till date, 65 cities are part of JNNURM.

“Many states have failed to implement the mandatory reforms and as a result have not been able to avail of funds from the UD ministry. We can’t release funds to a state just like that. They are linked to reforms,” Union UD secretary M Ramachandran said.

The ministry is worried as the seven-year duration of the programme expires in 2012 and unless its term is extended, states would lose out on central allocation for urban reforms.

“Time is running out. We are concerned that if states do not come forward with project plans, the very purpose of launching JNNURM would be defeated,” said Saugata Roy, minister of state for urban development.