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UP banks on finance institutions to fund development projects

Yogi government has been looking for loans from public financial institutions to fund development projects.

lucknow Updated: Nov 27, 2017 13:02 IST
Umesh Raghuvanshi
Umesh Raghuvanshi
Hindustan Times, Lucknow
UP banks,Finance institutions,Development projects
Yogi government has been looking for loans from public financial institutions to fund development projects.(HT File Photo)

When chief minister Yogi Adityanath demanded Rs 10,000 crore from NABARD for development projects last week, he probably had resource crunch on top of his mind.

The Yogi government has been looking for loans from public financial institutions to fund development projects as a large chunk of state’s own resources are being used to implement the loan waiver scheme for farmers.

“We need Rs 10,000 crore for rural infrastructure and irrigation projects. The state government will return this amount to NABARD,” the CM said during his meeting with NABARD chairman Harsh Kumar Bhanwala last week.

In another interaction with a delegation from the Asian Development Bank here on Friday, Yogi discussed projects like construction of “maha mandis” (large markets) with modern facilities to ensure that farmers get remunerative price for their produce.

ADB will prepare a detailed project report keeping in view the prevailing conditions and need of farmers.

While approving Rs 36,000-crore farm loan waiver scheme, the state cabinet – in its first meeting presided over by chief minister on April 4 –decided to float farmers’ relief bonds to provide funds for the scheme.

The government later decided to fund the loan waiver scheme from its own resources when the idea of relief bonds was not found to be workable.

Besides getting assistance from NABARD and ADB for development projects, the state government also has sought loan from HUDCO and other public finance institutions.

A government order (GO) issued on June 7 gives details of the decision to take a loan of Rs 16,580 crore from public sector financial institutions in 2017-2018 to fund development schemes.

The GO said the loan would be taken from HUDCO, NABARD, Rural Electrification Corporation and Power Finance Corporation for construction of roads, upgradation of highways, construction of expressway, urban development projects, rural housing schemes and strengthening of power distribution network.

“The state government has taken loans from financial institutions in the past. However, this is for the first time that such a high amount is being taken from these institutions,” said a senior officer on condition of anonymity.

As loan waiver scheme has put an additional burden of about Rs 36,000 crore on the state’s resources, the government recently asked various departments to release funds to construction and implementing agencies only for use in next two months.

As some of the departments released funds in bulk ignoring finance department’s directives, a reminder was sent to senior officers of all major departments earlier this month.

First Published: Nov 27, 2017 13:02 IST