India is sitting on unspent foreign assistance worth Rs 78,000 crore and paying commitment charges to the World Bank and the Asian Development Bank (ADB) for not using the sanctioned amount.
“Since the external assistance is precious and commitment charges are being paid by the government, initiatives need to be taken to address the issues being faced by... sectors for not utilising available funds,” the Comptroller and Auditor General (CAG) said in its report that was tabled in Parliament recently.
“As on March 31, 2008, unspent committed external assistance was of the order of Rs 78,037 crore,” the report said, adding the government during 2007-08 paid a commitment charge of Rs 124.54 crore for undrawn assistance, mainly to the World Bank and the ADB.
The commitment charges, which are paid on the amount of principal rescheduled for drawal on later dates, points to “continued inadequate planning resulting in avoidable expenditure”, the report added.
Inadequate utilisation of foreign assistance assumes significance in view of declining foreign exchange reserves, which slipped by over $60 billion during the current year. Efforts are being made by the government at the cost of fiscal prudence to boost the economy reeling under the impact of global financial meltdown.
According to the CAG report, 35 per cent of the unspent foreign assistance amounting to Rs 27,300 crore pertains to projects in the urban development and road sectors.
The sectors such as agriculture, environment and forestry, power, water supply and sanitation account for 30 per cent of the undrawn balance during 2007-08.
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The report further said that within the energy sector, the unspent assistance amounts to Rs 4,995 crore.
Even the health sector, it added, “has not been able to utilise the external assistance of Rs 4,815 crore committed for various projects despite the fact that the sector requires large funds for providing minimum health facilities in rural areas”.
Following the global financial crisis, India’s foreign exchange reserves depleted by $60 billion since March 31, 2008, to $250 billion, as on February 13.
In order to boost the economy, the government came out with two stimulus packages and raised the public expenditure by 20 per cent during the fiscal to Rs 9 lakh crore, resulting in a fiscal deficit of 6 per cent of the Gross Domestic Product (GDP), against 2.5 per cent envisaged originally in the budget for 2008-09.