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Mandi Board stares at loan repayment default as Centre withholds RDF

The Mandi Board had been pinning hope on the Rural Development Fund (RDF) to the tune of Rs 2,880 crore for last three procurement seasons pending with Centre.

Punjab is already cash starved. With GST compensation regime coming to an end, the government had to scrape the bottom to pay salaries to its staff. (Representational)

The Punjab Mandi Board has found itself in a piquant situation with not enough funds in its kitty to pay an instalment of Rs 900 crore due in December against the loan it had taken during the previous Congress regime for debt waiver to farmers. The Board may now approach the already fund starved state government to make the money available for paying the instalment.

The Mandi Board had been pinning hope on the Rural Development Fund (RDF) to the tune of Rs 2,880 crore for last three procurement seasons pending with Centre. The Centre, however, has withheld the RDF while asking the Punjab government to consider rationalising the statutory charges on the foodgrain it procures.

The Mandi Board had raised a loan of Rs 4,000 crore for debt waiver to farmers announced by then chief minister Capt Amarinder Singh.

“We were hoping that the Centre would pay us the money after Chief Minister Bhagwant mann met Union minister Piyush Goyal on August 8. The Union Minister had promised that the RDF issue would be sorted. It appeared that he had accepted a major demand of the state to release Rs 1760 crore of outstanding RDF pending at that time. But that did not happen. Now, another Rs 1,120 crore in RDF has been added to the pending amount for the Kharif procurement season that concluded recently,” a senior functionary said.

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The Centre’s move to withhold the RDF has come as a double whammy for the state government. Earlier, it had asked Pinjab to amend its Rural Development Act so that it the state was not able to spend the RDF on loan waivers or other such schemes and is used only for infrastructure development. The Centre had also reduced the RDF from 3 per cent to 2 per cent. That time Amarinder had reacted sharply to the development by saying that it was a unilateral decision and the Centre should allow the state its levies.

“If finance department fails to bail Mandi Board out, it will default on loan repayment. There is no money. The Mandi Board will write to Chief Minister Bhagwant Mann to make the funds available,” the functionary added.

Punjab is already cash starved. With GST compensation regime coming to an end, the government had to scrape the bottom to pay salaries to its staff.

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Ahead of calling on Goyal, Mann had said that the meeting would not only get the state Rs 1720 crore but Rs 2880 crore as the minister had agreed upon several other demands of the state.

The CM had claimed that besides RDF, the Union Minister had also accepted his request to revisit the decision to peg the reimbursement of interest payments to Punjab at the interest rates available to FCI. He had said that the Union Minister appreciated the stand of the state government that it would never be able to get loans at interest rates available to FCI, which is backed by the sovereign guarantee of the Union.

The CM had also said that the minister asked his officials to assist the state in getting cheaper Cash Credit Limits for the annual procurement of foodgrains. This decision was to save the Punjab government an unnecessary financial burden of Rs 1000 crore annually.

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Mann had also taken up the matter of inadequate reimbursement of expenditure incurred by the state government for procurement of wheat a couple of months back. He had said that the Union Minister positively responded to his request to reconsider the rates allowed for labour and gunny / PP bags and asked the officials of the Union Food and Public Distribution Department to reconcile these figures with the officials of the state government at the earliest.

First published on: 01-12-2022 at 09:46 IST
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