The Central Government releases Special Central Assistance to various States to expedite their completion of area specific ongoing approved Schemes in order to fulfill the development agenda in Backward Region

The Central Government releases Special Central Assistance to various States to expedite their completion of area specific ongoing approved Schemes in order to fulfill the development agenda in Backward Region

The Union Government has been assisting the State Governments and providing “Special Assistance” with a view to expediting their completion of area specific Schemes.  This assistance is provided in view of the Government of India’s commitment to fulfilling the development agenda in backward region notwithstanding the fact that the State Plan Schemes including BRGF (State Component) are subsumed in larger devolution of Union Taxes and Duties to the States in terms of Recommendations of the 14th Finance Commission (FFC) and are delinked from the Union support with effect from 2015-16.

            In this regard, following the recent release of Rs.200 crore to the State of Bihar, the Central Government has decided to provide further “Special Assistance” of Rs.1129.40 crore to the State during 2016-2017 for completion of the approved ongoing projects under Special Plan for Bihar. These releases are in continuation to the release of Rs.1,887.53 crore which was made by the Central Government during the year 2015-16.  Including the present release of Rs.1129.40 crore, the Central Government has so far released Rs.6934.61 crore to the State of Bihar. The Central assistance would facilitate completion of ongoing projects such as strengthening of sub-transmission system (including capacity augmentation) in North and South Bihar, renovation and modernization of Barauni and Muzaffarpur Thermal Power Stations, construction of transmission system at Kishanganj with associated transmission lines, The release of fund would accelerate the completion of much needed power generation and transmission system of Bihar which in turn would lead to higher availability of electricity for the people of the State.

            The Central Government in order to honour its spill-over committed liability had recently released Special Assistance of Rs.367.93 crore to Odisha during 2016-17. This is the Final Instalment for funding of projects under Special Plan for the KBK districts (districts of Koraput, Bolangir and Kalahandi reorganized into eight districts). The plan had an approved amount of Rs. 1,250 crore for the 12th Plan period. The Special Plan for the KBK districts has been in operation since 2002-03. The area spreads over 47,646 sq. km. comprising mainly rural population (89.95%) with a large proportion of STs (38.41%) and SCs (16.25%) as per 2001 Census. The Schemes taken up under this are  largely for Promotion of Education among ST/SC Girls and Boys including development of playgrounds/sports activities in hostels and schools, Improvement of Inter- District roads/other major roads/Rural roads; Strengthening of Electric Supply Systems and Lift Irrigation/Deep Bore-wells/Check Dams.

            Further, keeping in mind the special needs of the State of Jammu & Kashmir, the Central Government had released Rs.1194.37 crore during 2015-16, for completely damages /severely damaged/partially damaged houses. Subsequently, during 2016-17, the Central Government has made a further release of Rs.2207.30 crore to the State of Jammu & Kashmir. This includes Rs.1093.34 for permanent restoration of damaged structure, Rs.313.96 crore for counterpart funding for Asian Development Bank-II loan under EAP projects of J&K Urban Sector Development Investment Programme (JKUSDIP) in order to complete the ongoing projects and Rs.800 crore for interest subvention on assistance for the restoration of livelihood for traders/self employed/business establishments etc. Cumulatively, the Central Government has so far released Rs.3401.67 crore to the State as Special Assistance.

            Similarly, the Central Government has used the Special Assistance to support the newly formed States Of Andhra Pradesh and Telangana. A further release of Rs.1,976.50 crore to the State Of Andhra Pradesh was made during the Current Financial Year 2016-17. The amount included Rs.1176.50 for bridging the Resource Gap arising-out of the bifurcation of the erstwhile State, Rs.350 crore for the development of 7 Backward Districts of Anantpur, Chittoor, Cuddapah, Kurnool, Srikakulam, Vizianagram, and Vishakhapatnam and Rs.450 crore as assistance to the capital city, Amaravati. These additional resources from the Central Government would enable the State to devise and implement schemes best suited for mitigation of backwardness and alleviation of poverty. In addition, grant of Rs.100 crore was released for Polavaram Irrigation Project. Further, release of Rs.1981.54 crore was made to the state through NABARD on 27.12.2016 as Central assistance for Polavaram Irrigation Project by the Ministry of Water Resources, River Development & Ganga Rejuvenation MoWR, RD & GR.

            Further, in keeping with its commitments to support the development of backward areas of Telangana, the Central Government had provided a further “Special Assistance” of Rs.450 crore to the state.  The Backward Districts which are being supported with this development fund are Adilabad, Nizamabad, Karimnagar, Warangal, Medak, Mahbubnagar, Rangareddy, Nalgoda and Khammam where the work of creating road network has been taken-up.

            The State of Tamil Nadu has also been a beneficiary of this Special Assistance. An amount of Rs. 200 crore was released to the state to resolve the issues affecting processing industry in Tirupur (Tamil Nadu), for adoption of Zero Liquid Discharge by 18 Common Effluent Treatment Plants (CETPs). This provision will help the industries to minimize pollution and it will be a step towards clean environment.

PIB

Cabinet approves the exclusion of States from the investments of National Small Savings Fund from 1.4.2016

Cabinet approves the exclusion of States from the investments of National Small Savings Fund from 1.4.2016

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has given its approval to exclude State Governments States/UTs (with Legislature) except Arunachal Pradesh, Delhi, Kerala and Madhya Pradesh from National Small Savings Fund (NSSF) investments from 01.04.2016. It also approved providing a one-time loan of Rs. 45,000 crore from NSSF to Food Corporation of India (FCI) to meet its food subsidy requirements.

The details are as under:-

a) Exclusion of States/UTs (with Legislature) excepting Arunachal Pradesh, Kerala, Madhya Pradesh and Delhi from NSSF Investments. Arunachal Pradesh shall be given loans to the tune of 100% of NSSF collections within its territory, whereas Delhi, Kerala and Madhya Pradesh shall be provided 50% of collections.

b) Servicing of interest and principal of debt extended to FCI through the budget line of Department of Food and Public Distribution. The repayment obligation of the FCI in respect of NSSF Loans would be treated as the first charge on the food subsidy released to the Food Corporation of India. In addition, FCI shall reduce the amount of its current Cash Credit Limit with the banking consortium to the extent of the NSSF loan amount.

c) NSSF in the future shall, with the approval of Finance Minister, invest on items the expenditure of which is ultimately borne by Government of India and the repayment of principal and interest thereto would be borne from the Union budget.

The States except Arunachal Pradesh, Delhi, Kerala and Madhya Pradesh shall be excluded from NSSF investments from 01.04.2016. A legally binding agreement will be signed between FCI, Department of Food and Public Distribution and Ministry of Finance on behalf of NSSF on the modalities for repayment of interest rate and principal and the restructuring of FCI debt will be made possible within 2-5 years.

Once states are excluded from NSSF investments, the investible funds of NSSF with Gol will increase. Increased availability of the NSSF loan to Gol may reduce the Gol's market borrowings. The States will however, see an increase in market borrowings. Any increase in yields due to an increased demand for loanable funds in the market from Centre and States combined would be marginal. The reduction of FCI's borrowing cost equivalent to the extent of the interest differential will be reflected in the Gol's savings on the Food Subsidy Bill.

Implementing the decision to exclude states from NSSF investments and extending the loan will entail no additional cost. Instead a reduction in the food subsidy bill of the Gol is anticipated.

Arunachal Pradesh, Delhi, Kerala and Madhya Pradesh will continue availing of NSSF loans, 26 other States and Puducherry who are eligible to borrow from the market have preferred to stop taking loans from the NSSF.

Background:

The Fourteenth Finance Commission (FFC) recommended that State Governments be excluded from the investment operations of the NSSF. The NSSF loans come at an extra cost to the State Government as the market rates are considerably lower. The Union Cabinet in its meeting held on 22nd February, 2015, accepted that this recommendation will be examined in due course in consultation with various stake holders. Barring Arunachal Pradesh, Delhi, Kerala and Madhya Pradesh, the other State Governments/UTs expressed a desire to be excluded from NSSF investments. The involvement of States which are excluded from operations of National Small Savings Fund with effect from 1.4.2016 would be limited solely to discharging the outstanding NSSF debt obligations as on 31.3.2016 (FFC Recommendation). The loan contracted by States till 31.3.2016, from the National Small Savings Fund will stand completely repaid by the Financial Year 2038-39.

NSSF shall extend a part of its collections to Food Corporation of India (FCI) to meet its food subsidy requirement. This will help the FCI reduce its interest cost. FCI presently takes working capital loans through Cash Credit Limit (CCL) at an interest rate of 10.01% and Short Term Loan (STL) at a weighted average interest rate of 9.40%, whereas the NSSF currently charges 8.8% p.a interest on its loans. This savings on interest rate outgo will reduce the food subsidy burden of the Government of India.

PFRDA to organise National Pension System service fortnight from February 1

PFRDA to organise National Pension System service fortnight from February 1

"In order to ensure availability of information and ease problem, PFRDA and NSDL/CRA send various communications regularly to promote awareness regarding NPS.

The activities scheduled to be taken up during the fortnight (Feb 1-15), include updating subscriber details, printing of transaction statement for the subscribers, resolving grievances and addressing issues of pending exit/withdrawals under NPS.

PFRDA will organise a service fortnight from February 1 for building subscribers awareness and disseminate information regarding National Pension System (NPS) - the government's flagship pension programme. According to the Pension Fund and Regulatory Development Authority (PFRDA), subscribers and employees of the central and state governments are not fully aware about NPS which leads to a large number of queries and grievances.

"In order to ensure availability of information and ease problem, PFRDA and NSDL/CRA send various communications regularly to promote awareness regarding NPS.

"However, it has been observed that in absence of latest contact details in their NPS accounts, most of the subscribers are not receiving such communication," the regulator said.

Therefore, during the awareness fortnight at offices of central and state governments, besides sharing information, nodal offices and the subscribers will be apprised about the need of updating their personal data to enable the system to work effectively.

The activities scheduled to be taken up during the fortnight (Feb 1-15), include updating subscriber details, printing of transaction statement for the subscribers, resolving grievances and addressing issues of pending exit/withdrawals under NPS.

PFRDA said the central ministries and state governments will be required to encourage the subscribers attached to them for downloading mobile apps. The maximum number of downloads of the app will be awarded.

The regulator said that downloading of mobile app by the subscribers will considerably reduce the dependence on the nodal officers.

"This will result in saving time and efforts of the nodal officers," it said. As on November 30, 2016 there were about 1.4 crore subscribers under NPS with over Rs 1.61 lakh crore asset under management.