NABARD’s RIDF has disbursed Rs 1 lakh crore towards rural infrasÂtrucÂture including roads, but as CK Gopalakrishna, the bank’s Chief GeneÂral ManÂager & Chief Vigilance Officer, tells Janaki Krishnamoorthi, underperÂforÂmance of the assets is a worry.
What is the procedure in allocation for Rural InfraÂsÂtructure DeÂveÂÂlopment Fund (RIDF)?
Government of India anÂnouÂnced in 1995-96 the scheme for setting up a fund to be operationalised by NABARD, and so RIDF was set up that year by way of deposits from scheduled commercial banks opeÂrating in India, to the extent of shortfall in their agricultural lending. Since then, the scheme has continued with substantial allocations in the succÂessive Budgets. NABARD has partnered many state goveÂrnments in creating rural infrastructure.IniÂtially, the manÂdÂate was to support projects in irrigation. Substantial investments had been made but which could not be completed owing to resource constraints. Over the years, the coveÂrage under RIDF has been made more broad-based in each tranche.Currently, 31 sectors are being financed. IrriÂgation, rural roads and bridges are the main ones.
What has been the annual fund allocation so far?
The Union Budget allocation has gradually increased every year from Rs 2,000 crore in 1995-96 (RIDF I) to Rs 18,000 crore for 2011-12 (RIDF XV II). A separate window was created under RIDF in NABARD for four years from 2006-07, with a corpus of Rs 18,500 crore for partly funding the rural roads and bridges components of PMGSY. Thus the aggregate allocations have reached the level of Rs 152,500 crore. RIDF lends finance to state governments with a rate of interest of 6.5 percent and a repayment period of seven years.
What is the pre-sanction process followed by NABARD for sanctioning of loans to state governments from RIDF?
Subsequent to the announcement of the corpus in the tranche of RIDF every year, GoI approves the list of eligible activities for project formulation by the state government to be financed under the tranche. Projects received from various departments through the Finance Department of the state governments, are sanctioned by the Sanctioning Committee of the Board of NABARD after detailed technical, financial and economic appÂraisal of the projects. The size and spread of the projects is large, involving implementation of three years or more. Loans are released by the respective regional offices of NABARD on a reimbursement basis after satisfactory comÂpletion of the prescribed formalities and progress in impleÂmentation of the individual projects.
On receipt of specific reÂquest for the purpose of procurement and supply of materials, we grant mobilisation advance up to 30 percent of the loan amount.
How many projects have been sanctioned under RIDF?
As on 31 March 2011, the cumulative number of projects sanctioned under RIDF stood at 444,162 with a total RIDF loan of Rs 121,800 crore. The total financial outlay related with these projects stood at around Rs 158,000 crore while disburÂsements have crossed Rs 100,000 crore.
What are the major problems you have observed in construction of roads and bridges?
The projects are implemented by various departments of the state governments. Cost and time overruns are the major issues observed. These issues occur largely due to pre-sanction delay, non-availability of land, low absorption capacity of the implementing agencies etc.Another major issue obserÂved is the lack of maintenance of the structures after comÂpletion. A proper mechanism to maintain the assets creÂated is yet to be stabilised in majority of the places resulting in the under-performance of the asset as well as reduction in its life. Lack of sufficient funds, non-availability of areas for raising the resources for maintenance, the under-utilisation of beneÂficiary community in upkeep of the asset are major reasons.
What are the steps initiated by NABARD to overcome these issues?
To avoid pre-sanction delays, administrative approvals have been made a pre-condition by us for submission of projects. For quick sanctions, we are coordinating with state goverÂnments to make suitable modifications in their procedure. We also ask state governments for periodic revision of their schedule of rates, which help in real estimation of the project cost and minimisation of tender excess.For projects with large outlays, we insist on third-party project management for effective implementation of the works.Our existing monitoring mechanisms are also being suitably modified for reducing the time and cost overruns in the projects.
We are also presently analysing the various mechanisms available for proper upkeep of the assets created. Local self government is the vital player in maintenance of these assets in rural areas. We are initiating steps to coordinate the mainÂtenance process with them. In PMGSY projects, maintenance is made a part of project component and the executing agency is asked to maintain the asset with built-in funds from the project cost.
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