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Cash-starved Punjab agri marketing board: As central funds dry up, loan repayment a big burden
Punjab state agricultural marketing board known as Mandi board is in a fix, as an installment of loan pay back of ₹ 1,000 crore is to be paid to the financial institutions and banks by December 31, but the board’s coffers are empty.
Punjab state agricultural marketing board known as Mandi board is in a fix, as an installment of loan pay back of ₹ 1,000 crore is to be paid to the financial institutions and banks by December 31, but the board’s coffers are empty.
According to the Board officials, a loan to the tune of ₹ 3,976 crore was raised by pledging future accruals, particularly rural development fund (RDF) for the state government’s debt waiver scheme launched in 2018 by the previous Congress party government when Capt. Amarinder Singh was the chief minister. But, the past three procurement seasons - two of kharif (paddy) and one of rabi (wheat) the Centre has not paid RDF accrued on the food grains procurement by the state agencies on food corporation of India (FCI) on behalf of the Centre for public distribution in the country.
The Centre owes state ₹ 3,050-crore out of which pending RDF is major chunk ( ₹ 2,872 crore) and remaining goes pending against the mandi fees head. Atleast ₹ 1,100 crore RDF each of paddy procurement (2021 and 2022) and ₹ 650 crore of the wheat procurement (in 2022) goes unpaid by the Centre, leading to a severe financial crunch for the state government.
State’s rural development board headed by the chief minister as its ex-officio head decides the usage of the funds, which majorly involves development in the rural parts of the state and on farmers’ welfare. It also maintains 66,000 kilometers rural road network of the state through this funds that support the food grains procurement.
In the absence of funds, loans raised by the board are piling up and development works, particularly in the rural areas of Punjab, have come to a halt.
The worries of the once cash-rich board, which funded a variety of expenditures of the state government, are mounting as the Union food and public distribution ministry is in no mood to release the funds anytime soon. As a result, loans to the tune of ₹ 4,000-crore, including ₹ 350-crore in interest, have piled up for the board.
According to a senior officer in the board, who was not willing to be named, an alert has been sounded to the state’s finance department as the last installment paid in the month of June was also paid from the state government coffers.
In 2021 ahead of the rabi (wheat) procurement, the Centre had reduced the RDF charged by the state from 3% to 2% and before the paddy procurement in the same year 2021, the RDF release was halted as the state government was asked to amend the Punjab Rural Development Act so as to make usage of RDF purpose specific.
The state government has amended the act, however, in a communication sent to the state government last month the Union Minister for Consumer Affairs, Food and Public Distribution Piyush Goyal asked the state to restrict the statutory charges (RDF and other accruals) as the matter to pay these charges to the state were being examined. Despite repeated reminders from the state government, there is no headway into the matter.
