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Wednesday, October 21, 2020

Haryana Corona Relief Fund: More net gain if govt keeps donations in state treasury instead of banks: Khemka

Till now, the Haryana Corona Relief Fund has received a little over Rs 246 crore, while Rs 96 crore has been spent on relief work.

Written by Sukhbir Siwach | Chandigarh | June 12, 2020 1:11:26 pm
haryana news, haryana corona relief, corona relief fund haryana, khattar corona, covid relief fund Till now, the Haryana Corona Relief Fund has received a little over Rs 246 crore, while Rs 96 crore has been spent on relief work.
(Express photo/Amit Mehra)

Senior IAS officer Ashok Khemka has suggested that the state government keep public donations made to the Haryana Corona Relief Fund in the treasury and not as a separate fund in banks, adding that the latter would result in “net gains” for the government.

Till now, the Haryana Corona Relief Fund has received a little over Rs 246 crore, while Rs 96 crore has been spent on relief work.

The Haryana government has formed a committee headed by the Chief Minister Manohar Lal Khattar to administer the relief fund. Apart from the chief minister, who currently also holds the finance portfolio, five senior officers have been made members of the committee.

The government has decided to keep the funds in nationalised as well in private banks. Sources said that a nationalised bank, where most of the corona relief fund has been parked, is offering 2.7 per cent as rate of interest for a savings account while the private bank offers interest at the rate of 3.5 per cent.

But Khemka, in a recent communication with the chief minister, has suggested to keep the funds in a state consolidated fund, which is also called state treasury.

“Many times the government borrows money from different agencies even at the interest rate of 8 per cent for different projects. If the funds are kept in the state treasury, for whatever period, the government would not have to borrow this much money at the rate of 8 per cent. On the other hand, the government will get just 2.7 per cent from the savings accounts of the nationalised bank where most of the money has been parked. There is a clear cut difference of 5.3 per cent in the rate of interest. There will be a loss of Rs 7-10 crore annually if the funds are parked as a private account, instead of the state treasury,” said an official.

On his part, Khemka, in the communication, pointed out, “.donations to the fund are solicited by advertisements paid out of the state consolidated fund. All donations received in the Haryana Corona Relief Fund therefore form part of the State Consolidated Fund ipso juris.”

The officer also said that there won’t be a requirement of any legislative sanction to withdraw the money from the consolidation fund because “it can be operated like an ordinary bank account” being a public account under Article 266 (2) of the Constitution.

However, Haryana Additional Chief Secretary (finance) TVSN Prasad said that “instead of rate of interest, spirit of the public is more important in such matters”.

“We have to take the confidence of the public into account. We have appealed to them to donate so that assistance can be offered to the persons who are adversely affected by the pandemic. We maintained a separate account to keep the relief fund instead of keeping it in the treasury because we want to give a strong message that the entire money received under this fund will be spent for the relief related tasks only. If this money was mixed with other funds in the state treasury it would not have sent a positive signal,” Prasad told The Indian Express.

Prasad also claimed that “there is no significant gap in the rate of interest being offered by banks where we have deposited the money and the rate of interest paid by the government for borrowings.”

“We borrow money even at the rate of interest of 4 per cent,” said the additional chief secretary. Sources say the rate of interest on borrowings faces fluctuations keeping in view the scenario of the financial world. Furthermore, the rules drafted for the corona relief fund mention that “the accounts shall be duly audited once a year or at such short intervals, as may be required, by an auditor appointed by the state government”.

However, Khemka has pointed out that “the (corona relief) fund will be subject to CAG audit”.

“From a financial perspective (too), the CAG (comptroller and auditor general) audit will save unnecessary expenses in engaging an external auditor,” Khemka mentioned in the communication.

Prasad said, “We don’t have any problem in getting the account audited by CAG. In fact, I have already sent a communication to the officers of CAG in this regard. We will go ahead keeping in mind their point of view on it.”

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