Centre threatens to treat laggard states’ grants as loans

Centre threatens to treat laggard states’ grants as loans
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First Published: Mon, Mar 19 2007. 04 40 AM IST
Updated: Mon, Mar 19 2007. 04 40 AM IST
States lagging on irrigation projects, that have already missed deadlines and exceeded budgets, risk having the Central grants funding these projects turned into loans. This is the threat the Union government is using to get defaulting states in line.
The Centre funds part of the cost of these projects through grants to the states. The accelerated irrigation benefit programme (AIBP), which oversees these, was created in 1996-97 to work on 200 irrigation projects worth Rs20,000 crore. Until 2004-05, the assistance from the Centre was in the form of loans. That year, the Centre converted its funding into a mix of loans and grants. In 2005-06, it moved entirely to grants to encourage the states to complete the projects faster. Till now, 4.5 million acres have been covered under AIBP.
“The Centre is now considering giving an ultimatum to the state governments that if they don’t complete the component of the project against which the grant has been given, the entire amount of grant will be converted into loan,” said an official at the ministry of water resources, who did not wish to be identified.
He added that the ministry would wait for the states to fall in line in four-five months, and then take a decision. Rather than relying on information from the states on the status of these projects, the Centre uses remote-sensing technology (terrestrial observation and survey using satellites).
“Remote-sensing methodology is helping the Central Water Commission (CWC) officials monitor the projects,” said the ministry official.
CWC has already started reviewing the progress of the Upper Krishna project in Andhra Pradesh and a project over the Teesta river in West Bengal. In 2007-08, such monitoring will be extended to 50 more projects across the country.
“Grants under AIBP should, henceforth, be on a turnkey basis with a penalty and incentive clause to encourage timely completion,” said an expert in the Planning Commission.
Grants from the Centre cover between 25% and 90% of the cost of irrigation projects, depending on the states concerned; it is 90% for special-category states such as northeastern states, Himachal Pradesh and Jammu and Kashmir.
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First Published: Mon, Mar 19 2007. 04 40 AM IST