With the Centre not keeping a provision to pay Rural Development Fund (RDF) to Punjab on procurement of paddy in the ongoing kharif season, it would mean a major financial blow to Punjab Mandi Board, commonly known as the richest organisation of the state government.
Amid the RDF row, CM Amarinder Singh is scheduled to meet Board officials for a review meet on Thursday. Sources said that non-payment of RDF will be a major point of discussion during the meeting.
A cash rich body, Mandi Board makes about Rs 4,000 crore annually from RDF, mandi fee and other taxes. If it does not get RDF for paddy, it would end up losing about Rs 1,100 crore and the payment towards repaying of loan would be affected.
“We get RDF of Rs 1,950 crore annually. The mandi fee charged is also Rs 1,950 crore. About Rs 150 crore come from vegetables, cotton and other crops. Since, our coffers are filled every six months, we have lot of cash at hand to help the state government. The state was able to extend a farm loan waiver to farmers worth Rs 4,000 crore only because of the Mandi Board funds,” said a functionary of the government.
The Mandi Board has an outstanding loan of Rs 2,000 crore as it had bailed out the state government by borrowing Rs 3,000 crore for rolling out debt waiver to the farmers. Sources in Mandi Board said out of about Rs 4,000 crore extended to the state government, they had borrowed Rs 3,000 crore in 2017. The board has already paid off Rs 1,000 crore out of the Rs 3,000 crore borrowed.
“We have no fixed EMI. We pay whenever we have money. And we have access to money.” said the functionary.
Waiving off debt was a major pre-poll promise of the Congress party. After coming to power, it had decided to pay off the debt of small and marginal farmers. Since then Mandi Board has paid about Rs 3,000 to the government for the scheme.
Now, the Centre has written to the state that they would scrutinise the way the government spends the RDF fund. As the fund is under scrutiny the Centre has not kept a provision for RDF in the provisional cost sheet for procurement of paddy.
The government official further told The Indian Express that the Mandi Board’s notional worth is about 70,000 km of link and village roads worth Rs 33,000 crore and mandi infrastructure worth Rs 2,200 crore. It has 3,500 employees and 1,500 pensioners.
Under the Centre’s farm laws, the state would not get RDF as well as the mandi fee. This could mean a major blow to the board. “We repair roads after six years. That does not mean that we do not have to spend money after six months. It is a consistent exercise to maintain the infrastructure. Money is required for widening of the roads, laying more link roads and village roads,” said the government official.
The issue of Centre not willing to pay RDF to the state has evoked strong reaction from various political parties in the state. The BJP has, however, stated that the Centre wanted to ensure that the RDF is spent on farmers and villages and not under spent by the government otherwise.
The RDF and mandi fee have been a bone of contention between the Centre as well as the state in the past.
According to a Mandi Board functionary: “There has been a feeling that while Centre was made to pay these taxes in the name of farmers, the successive state governments were taking political benefits from the money.”
The previous SAD-BJP government led by Parkash Singh Badal was accused of spending RDF through his signature sangat darshans. Before the 2017 election, the then government had borrowed over Rs 6,000 crore for urban development under its vote-spinning plan. The incumbent government’s debt waiver was dependent mainly of these funds paid by Centre.
The Centre had earlier demanded that the RDF should be routed through the consolidated fund so that it was budgeted. The Congress government, after coming to power in March 2017, had hiked the levies of RDF and mandi fee by one percent in November 2017. Earlier the RDF and mandi fee used to be 2 per cent. Finance Minister Manpreet Badal had said that this would help the state earn Rs 900 crore extra annually.