Funds crunch hits development schemes

N.J. Nair

No decision yet on the proposed development fund for local bodies

State has offered to provide part of cost

Curbs by Centre affect resource mobilisation

THIRUVANANTHAPURAM: While the State government remains undecided on a proposal to float the Kerala Local Government Development Fund to support the development initiatives of civic bodies, acute funds crunch is impeding the smooth implementation of the Urban Infrastructure Development Schemes for Small and Medium Towns (UIDSSMT) in 10 municipalities and a Corporation in the State.

Official sources told The Hindu that a sum of Rs.316.84 crore was sanctioned by the Centre for taking up various infrastructure development projects in Thrissur Corporation, Neyyatinkara, Attingal, Punalur, Changanassery, Pathanamthitta, Alappuzha, Chalakkudy, Perinthalmanna and Payyannur municipalities.

Based on the local needs, all of them have identified drinking water, sewerage, solid waste management and other development projects as per the guidelines of the scheme. The scheme stipulates that 80 per cent funds would be provided by the Centre and the remaining 20 per cent should be borne by the municipality or the corporation. Unlike in the case of works executed by the State Public Works Department, the guidelines have also stated that the funds cannot be apportioned for acquiring land at market price or bearing the additional expense incurred due to cost escalation of construction materials after commencing the works.

Considering the financial crisis and constraints faced by the civic bodies in raising funds, the State government has offered to provide 10 per cent of the estimate cost. Still, raising the remaining 10 per cent itself is a tough proposition for local self-government institutions. The curbs imposed by the Union government on raising funds from cooperative, nationalised and commercial banks and floating bonds have sealed the scope for resource mobilisation at the local level. The Kerala Urban and Rural Development Finance Corporation which gives financial assistance for development projects too is reeling under shortage of funds. It could not meet even Kochi Corporation’s request for a loan of Rs.152 crore, sources said.

In spite of the shortage, the government has not taken any step to float the fund which was proposed to be jointly owned by the government and the LSGIs. The fund was expected to source money from the government and also tap the capital markets at lesser rates. The fund which was meant to lend only to LSGIs was also proposed to have a project development facility. Further delay in taking a decision on the fund would affect the development ventures of LSGIs, sources said.

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