Haryana’s plea to GoI to release funds for Panchayati Raj Institutions in one installment

By Haryananewswire

CHANDIGARH, JAN 16

 Haryana Government today urged the Central Government  to consider the possibility of release of funds to the Panchayati Raj Institutions in one annual installment instead of the present two installments so as to make the size of release substantial for each Panchayati Raj Institution.

          The  Finance Minister, Mr Harmohinder Singh Chattha who was speaking at the pre-budget consultations meeting of Finance Ministers of States and Union Territories presided over by Union Finance Minister,Mr P.Chidambaram  in New Delhi today  also suggested some measures to further improve the coverage and implementation of Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS).

           He said that keeping in view the increase in cost of raw materials, the limit of allocation for material component, including for semi skilled and skilled wages and transportation costs, should be enhanced to atleast 50 per cent. Similarly, for better implementation of the scheme, personnel or technical support needs to be strengthened, particularly at the level of Gram Panchayats.  Therefore, the limit of the administrative expenditure should be increased from the present six per cent to 10 per cent. Use of limited specified machinery such as Road Rollers   for compaction of earth in case of rural connectivity may be considered to be allowed for ensuring durability of the assets, with the condition that the machinery should not displace manual labour.Payments of wages under MGNREGS for own labour in construction of houses under the Indira Aawas Yojana (IAY)may be considered to facilitate availability of additional amounts to meet the rising costs.  The banks should adopt more liberal approach in granting loans under IAY.

           He said that the districts of Mewat, Jhajjar and Rewari being socially, economically and literacy-wise backward in Haryana,they might also be covered under Backward Regions Grant Fund Programme (BRGF) Scheme, in addition to Sirsa and Mohindergarh districts in 2013-14.Also, the normative cost for construction of each Anganwadi Centre should be revised from Rs. 4.50 lakh to Rs. 8.50 lakh per Anganwadi Centre. 

           The credit flow to minority communities is steadily increasing in the state as depicted by the outstanding advances of Rs. 6161.11 crore to 4,91,981 beneficiaries at the end of September 2012 as compared to
Rs. 5142.93 crore to 3,63,498 beneficiaries, thereby registering a growth of 20 per cent in the amount. However, in the Mewat district with a predominant Muslim population, the banks need to step up financing since the number of accounts is virtually static over the last one year. Similarly in the second minority district of Sirsa, the outstanding advances to minority communities have reduced by 12 per cent at the end of September 2012, as compared to September 2011.

           He also urged  that National Backward Classes Finance and Development Corporation (NBCFDC), National Minorities Development and Finance Corporation (NMDFC), National Handicapped Finance and Development Corporation (NHFDC), National Scheduled Caste Finance and Development Corporation (NSCFDC), National Safai Karamcharis Finance and Development Corporation (NSKFDC) should be   asked to relax the norm of the recovery of term loan to 70 per cent from existing 100 per cent as such a recovery is practically not feasible.

           The State of Haryana has always been a front runner in introducing tax reforms and the state whole heartedly supports and appreciates the initiative taken by the Government of India and Empowered Committee for introduction of GST. However, being a net producing state, Haryana will incur huge revenue loss on account of zero rating of CST under the GST dispensation and accordingly, under the GST regime, State should be compensated by the Union Government on long-term basis. Further, more transparency is needed in the entire process of processing of compensation claims that will be filed by the states and for that purpose there should be an independent body comprising of representatives from various states working in close coordination with the Empowered Committee.

           The issue of CST compensation is more important for our State because the proportion of CST revenue vis-a-vis the total tax revenue of the state is very high for Haryana being a net producing state. Last year, the state had suffered a loss of Rs. 3100 crore on account of reduction in the rate of CST from four per cent to two per cent and for the current year, the loss would be to the tune of Rs. 3500-3600 crore. Such a loss will have a crippling effect on the state finances unless the state is compensated for the loss in respect of the previous financial year as well as the current financial year.Though a subcommittee has been constituted to look into the CST compensation issues, yet he said that he would emphasize that the aforementioned calculation error can be and should be rectified ahead of the common issues that the States are raising.

          He said that the Government of India has recently initiated a scheme for the financial restructuring of distribution power utilities   to generate confidence in the financial institutions to restructure the short-term liabilities of these utilities. This restructuring has put a tremendous financial stress on state governments. The Government of India should increase its contribution to the restructuring cost. The consumers face the prospects of rising power tariff on account of higher input costs of coal, railway freight charges and payment of fixed costs on idle capacity owing to short supply of coal.

           He said that as the Government of India is about to launch PMGSY-II under  which the cost sharing is proposed to be taken up on 50:50 basis between the State Government and the Central Government, instead the PMGSY II be implemented on 25:75 cost sharing basis between the State   and the Central Government.

            The criteria for allotment of funds under the scheme “Central Road Fund” was based on 60 per cent  Fuel Consumption and 40 per cent  geographical area till the year 2009-10, when it was revised to 30 per cent% fuel consumption and 70 per cent  geographical area. As a result, the allocation for Haryana reduced from Rs. 87 crore to Rs. 57 crore. Since Haryana is contributing a sizeable amount because of its higher fuel consumption, the old criteria should be restored.