For the past two years, the Punjab finance department has been unable to make the most of sanctioned funds from the National Bank for Agriculture and Rural Development (NABARD). The lackadaisical approach of the state government has hampered the pace of development works, especially in the rural development and irrigation sectors.
According to NABARD officials, the state government has been repeatedly asked to ensure proper management of finances so that Punjab can derive benefit from the schemes, but to no avail.
A senior NABARD official said in the financial year 2012-13, NABARD sanctioned Rs. 650 crore for various projects in Punjab, but the state could only withdraw Rs. 160 crore. In 2011-12, the situation was even worse. In the current financial year, NABARD sources said Rs. 495 crore had been sanctioned, of which Punjab had withdrawn Rs. 65 crore.
Referring to a project-specific funding by NABARD, the official said Rs. 37 crore were sanctioned for the kandi canal of the irrigation department in 2011, but so far, the state had got only Rs. 16 crore. No wonder the project is incomplete. "There is a long list of such examples," the official said.
"We fail to understand why Punjab is facing problems in picking up funds when all other states are doing it well," asked a senior official of NABARD, not wishing to be quoted.
"Since our funding is reimbursement-based, we don't release the next instalment until the state government submits an undertaking that funds received in the past have been spent on the project these were sanctioned for. When the state government fail to do that, the next instalment is gets blocked and the sanctioned amount goes unused," the official said.
NABARD offers soft loans at an annual rate of interest of 6.75% per annum (1.5% less than national banks) for rural development (roads and bridges), irrigation, rain harvesting, sewage treatment, drinking water and education. Soft loans are offered with a moratorium of four years.
Projections of funds for various schemes are sent to NABARD through the finance department. Funds from NABARD are also disbursed to different departments through the finance department. All projects sanctioned are 95% funded by NABARD and the rest is contributed by the state government.
Immediately after the sanction of the project, 20% of the total project cost is released as 'mobilisation advance'.
Sources in the finance department said a huge amount of NABARD funds had been routed for non-productive expenditure such as paying salaries.
When contacted, principal secretary, finance, Punjab, DP Reddy said he couldn't comment on what had happened in the past, but claimed that the state government was keen to streamline things. "Deputy CM Sukhbir Badal held a meeting on Friday for effective utilisation of funds of NABARD and other financial institutions," Reddy said. He added that the focus of the state government was on improving the canal network for irrigation through NABARD funding.