The finance ministry is likely to agree to a proposal from the power ministry to give it about another Rs 2,000 crore this year by diverting a substantial part of the revised estimate (RE) allocation for the Rural Infrastructure Development Fund (RIDF) to the public sector, Rural Electrification Corporation.
The proposal has been made by the power ministry to garner funds for its ambitious programme for rural electrification to connect at least 62,000 villages by the end of the 10th Plan in 2007. While the power ministry has also made a strong pitch for a substantial hike in the total plan allocation for the ministry in this fiscal to hasten power reforms, the finance ministry is unlikely to be able to meet that part of the requirement.
The plan is based on the fact that a substantial part of the RIDF remains unutilised every year, which is then redeployed for other purposes during the preparation of the revised estimate around December. Prabhu has said that it will be a better alternative to put the sum under REC to ensure that it is used for rural electrification instead. REC is the nodal public sector company under the power ministry for expediting rural electrification. Its total plan support for this fiscal is unchanged at only Rs 460 crore.
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For instance, in the Union budget for this year, a sum of Rs 5,000 crore has been sanctioned for the seventh tranche of RIDF, yet in the sixth tranche while the total sanctioned sum was Rs 4,633 crore the actual disbursement was only Rs 960 crore. So far, the government has sanctioned Rs 23,000 crore under the RIDF scheme. The cumulative disbursements till March 31, 2001 stood at Rs 9,251 crore which is about 40 per cent of the total sanction. The RIDF is channelised through the National Bank for Agricultural and Rural Development (Nabard).
But, if implemented, the two ministries will have to work out if the RIDF repositioning with REC will mean any change in the way Nabard administers the fund.
However, the reallocation will be welcome to the finance ministry, which has been able to make an additional allocation of just Rs 1,471 crore in the supplementary budget this year, without any new allocation for power. The ministry feels that with revenue collection dipping dismally, there is hardly any prospect for allocating any fresh investment for any sector in this fiscal and certainly not the additional Rs 1,500 crore that power ministry has been clamouring for towards its public sector companies.