The Hindu : National : Panchayati Raj Ministry prepares software to aid transfer of funds

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Sunday, Dec 03, 2006
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Panchayati Raj Ministry prepares software to aid transfer of funds

Special Correspondent

NEW DELHI: The Union Panchayati Raj Ministry has prepared a software to maintain databases of bank accounts of all Panchayati Raj Institutions (PRIs) to facilitate the transfer of funds through banking channels, preferably electronically. Once the data is entered, money can be transferred directly to the 2,40,000 PRIs from the State's Consolidate Fund.

Karnataka has already implemented this system, using the fast expanding electronic network of banks to transfer funds from the State treasury to individual panchayats.

Here, the State Government sends 12th Finance Commission funds and its own untied statutory grant to all panchayats directly from the State Department of Panchayati Raj through banks without any intermediary. The arrangement involves six nationalised and 12 gramin banks, in which all 5,800 panchayats at all levels hold accounts. This has reduced the time taken for funds to reach each panchayat from two months to 12 days.

The Ministry of Finance has indicated its willingness to work with the Panchayati Raj Ministry towards developing a consensus on adoption of this tool kit, across Central ministries and State Governments.

The 12th Finance Commission has recommend that a sum of Rs. 20,000 be made available as grants to the State Governments between 2005-2010 to augment the Consolidated Fund at State level to facilitate the supplementing of the financial resources placed at the disposal of the panchayats.

The Union Finance Ministry has also mandated that these funds must invariably be transferred to panchayats within 15 days of their being credited to State Consolidated Fund.

The Finance Ministry guidelines also make it clear that grants will not be released to a State where elections to the panchayats have not been held, each State Finance Secretary would be required to provide a certificate within 15 days of the release of each instalment by the Government certifying the dates and amounts of local grants received by the State from the Government, and the dates and amounts of grants released by the State to the PRIs.

In the case of delayed transfer to the PRIs from the State, an amount of interest at the rate equal to the Reserve Bank of India rate has to be additionally paid by the State to the PRIs, for the period of delay.

It is also intended that funds for panchayats under the Backward Regions Grant Fund will be transferred from the Consolidated Funds of the States to their panchayats through the bank transfer mechanism.

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