Centre withholds Rs 10,000-cr funds | chandigarh | Hindustan Times
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Centre withholds Rs 10,000-cr funds

The cash-strapped Punjab government is set to suffer another financial setback. The union finance ministry, while releasing a Rs 8,000-crore tranche of the cash credit limit (CCL) for paddy procurement in the current kharif season, has made it clear that the rest (Rs 10,000 crore) would be released only when the state government settles previous accounts of the CCL with the Food Corporation of India (FCI).

chandigarh Updated: Oct 17, 2014 12:51 IST
Gurpreet Singh Nibber

The cash-strapped Punjab government is set to suffer another financial setback. The union finance ministry, while releasing a Rs 8,000-crore tranche of the cash credit limit (CCL) for paddy procurement in the current kharif season, has made it clear that the rest (Rs 10,000 crore) would be released only when the state government settles previous accounts of the CCL with the Food Corporation of India (FCI).

In previous procurement seasons, the state government reportedly diverted about Rs 1,750 crore of the CCL sent by the Centre for procuring foodgrains for its atta-dal scheme.

A communiqué sent on October 10 to the state’s principal secretary, finance, Manmohan Sachdeva, a joint director-rank officer of the department of expenditure of the union finance ministry has conveyed that “before seeking permission for the next CCL advance, the state government should endeavour to close old CCL accounts in consultation with the FCI.”

He added, “…the latest position of the crop account should be furnished before seeking further consent for availing the CCL.”

Crucial order

A copy of the order was also sent to the Reserve Bank of India (RBI), which releases the CCL. The RBI had cleared the CCL of Rs 18,000 crore for Punjab and the union food ministry had also given its consent to the release of the entire funds. But the union finance ministry’s order would have a bearing on the release of procurement funds.

The CCL tranche arrived 10 days after the procurement season began on October 1. In previous seasons, the CCL payment used to coincide with the start of the season. Sources said the matter was delayed at the level of union finance minister Arun Jaitley, delaying procurement as well.

It is learnt that the Centre wants Punjab to adopt discipline in fiscal management, especially regarding funds for foodgrain procurement. An official told HT on the condition of anonymity that Punjab had also diverted procurement funds in decentralised procurement in the previous rabi season in which the Centre asked the state to spend from its own funds to procure and supply wheat under the public distribution system, and later got money reimbursed from the Centre.

Public distribution

Five state procurement agencies procure foodgrains on behalf of the Centre, covered under the minimum support price. These agencies procure paddy in the kharif season and wheat in the rabi season, which is handed over to the FCI for public distribution across the country.

“So far, the Punjab government has not contacted us, nor is there any communication from the Centre for the FCI. Normally, states don’t consult the FCI to settle its accounts,” FCI deputy general manager Aseem Chhabra told HT.

The state government, instead, has claimed that Rs 25,000 crore are to be recovered from the Centre. “It is good that the union finance ministry has asked us to settle accounts with the FCI. There is hope that we will also make huge pending recoveries, but the condition imposed by the Centre that the next instalment of the CCL would not be released till the settling of accounts with the FCI is not justified,” said a top officer of the state food and civil supplies department, adding that “with Rs 8,000 crore, only 5.5 lakh tonnes of paddy would be procured, while the total paddy arrival expected in the current season is 120 lakh tonnes.”

Sources said Punjab food and civil supplies minister Adesh Partap Singh Kairon was in New Delhi, meeting top functionaries of the finance and food and civil supplies departments, so as to ensure that funds for procurement are not stopped.