Smart City funds lying unutilised with states | Latest News India - Hindustan Times

Smart City funds lying unutilised with states

Hindustan Times, New Delhi | By
Nov 26, 2017 09:32 AM IST

Under the smart city programme, 60 cities were selected between January and September 2016 and another 30 this June.

Most of the 90 cities selected for the smart city programme have not spent the money given to them by the Narendra Modi government since the signature urban overhaul project was launched in June 2015.

An upcoming smart city project in Kolkata.(File Photo)
An upcoming smart city project in Kolkata.(File Photo)

India plans to have 100 smart cities by 2022 and the central government has released Rs 9,824 crore since 2015-16 to the selected cities as its share to spend on

State governments are supposed to provide matching funds to complete the projects, which are meant to change the way urban India lives — from overhauling a city’s public transport system and providing uninterrupted power and water supply to internet connectivity, e-governance, modern healthcare and better education.

But a major chunk of central funds is lying idle with state governments. There are instances of the special purpose vehicle (SPV) — the entity set up each city to execute the projects — investing the money in sweep accounts to earn more interest, a government official told Hindustan Times, asking not to be identified.

Sweep accounts automatically transfer money exceeding a certain limit into a higher interest-earning investment option such as fixed deposits.

“This means that in most of the cities not much work has happened on projects. Only preparatory work such as readying DPRs (detailed project reports) and inviting tenders has begun. It’s a worrying trend,” another official said.

Under the smart city programme, 60 cities were selected between January and September 2016 and another 30 this June.

The Union finance ministry is worried about the idling funds.

On September 13, finance minister Arun Jaitley wrote to his housing ministry counterpart
to review the “completion of the preparatory work under smart cities mission in various states”. “It has been generally observed that large unspent balances (which have a cost to GoI) have been parked idle with the implementing agencies of various ministries/departments,” Jaitley’s September 13 letter to Hardeep S Puri says.

A housing ministry review shows state governments did not transfer the funds — either theirs or the Centre’s share — to the SPVs for most of the 60 cities selected last year. Cities such as Faridabad, Udaipur, Jabalpur are exceptions, though.

The Centre and the states are partners in the Rs 1 lakh crore urban upgrade programme launched by Prime Minister Modi. The plan envisages a contribution of Rs 48,000 crore over five years from the central government, to be matched by en equal contribution from states and municipalities.

As on October 4 this year, the Public Financial Management System (PFMS) for the smart cities mission shows that the SPVs have a closing balance of only Rs 1,797 crore, though the Centre released Rs 9,824 crore. That indicates that only some states have fully or partially transferred theirs and the Centre’s share to these entities.

Smart city SPVs have to mandatorily register with the PFMS, an electronic fund tracking mechanism started by the government last October to get real-time information on use of money across central schemes.

Till date, only 58 SPVs have registered with the PFMS.

Sameer Sharma, additional secretary (urban affairs) who is in-charge of the programme in the housing ministry, said his department has raised the matter with the states.

“We have told the states that unless they utilise the first instalment, we won’t release the next tranche,” he said.

According to Sharma, another major issue is the delay in releasing payments by the states.

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