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P. Devarajan

THE Rural Infrastructure Development Fund (RIDF) operated by Nabard seems to have failed its mandate and "Nabard has little incentive to improve the situation.''

That is the finding of a research paper published by Alice Albin Morris and Sebastian Morris in the recently released India Infrastructure Report 2003. A sampler is the Audit Report (Civil) on RIDF in Rajasthan for the year ended March 31, 2001. Nabard sanctioned 179 schemes under RIDF I to VI, of which 76 were completed: 40 on time and the rest with delays of one to three years. Of the remaining 103 incomplete schemes, 50 were scheduled for completion by March 2001 and Rs 103.32 crore expended. A test check showed some unfinished schemes being shown as completed. An advance of Rs 9.45 crore for 55 schemes was received from Nabard during 1998-2000 with the sum credited to internal debt of the State government. About Rs 9.10 crore was not spent for the purpose meant and diverted to service the ways and means position of the State government.

Nabard seems to have little stake and the authors write, "Independent of whether the projects were delayed or completed, or even if they were quite uneconomical, Nabard could look forward to debt and interest service.... State governments showed a tendency to treat the disbursements under the RIDF as treasury transactions rather than being project related (though on paper they were)... The fiscal and transparency implications of the RIDF are quirky.'' States borrow from RIDF being cheaper to those picked from the market by way of loans. Nabard seems to have taken little or no risks "and probably did not even really worry about the project and its performance since the money was guaranteed by the State governments' by means of irrevocable letters of authority executed by the States' and registered with the RBI.'' But State Governments' have been defaulting on salaries and pensions leave alone guarantees; there are only a few, if at all, with cash surpluses. The RIDF funds are cheap at 8.25 per cent and the scheme is meant to step in with funds for States to improve rural infrastructure. Going by the research paper, the original intention has not even been approximated. With about Rs 30,000 crore in the kitty, RIDF could have helped build roads and schools in villages apart from acting as a good drought relief measure in States like Rajasthan.

Nabard's annual reports talk of the projects being reviewed at quarterly meetings of a high power Committee in each State under the Chief Secretary or Finance Secretary. The authors wonder "whether roughly 10,000 projects per State can in any way be meaningfully reviewed except on aggregate terms,'' and conclude, "the RIDF too fits in with the ritualisation of evaluation and monitoring that is widespread in government today.'' In 1999-2000, RIDF funds were provided to Panchayati Raj institutions, SHGs and NGOs to facilitated building village infrastructure such as small bridges, primary school building, primary health service centres, seed farms, cold storages and the rest. To date only Rs 1,737.77 crore (10.32 per cent) out of a total of Rs 16,835.57 crore under RIDF I to VII has been lent for private initiatives.

And again none is sure of the work quality.

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