Rural Infrastructure Development Fund - IXth Tranche - 2003-04
The letter to the Chief Secretary of all states
1. As you may be aware, Government of India have approved IXth tranche of RIDF for 2003-04 with a corpus of Rs.5500 crore. Government of India have, however, desired that loans from RIDF IX should be sanctioned for projects which benefit the farmers more directly and that priority should be given for projects relating to irrigation, soil and water conservation, etc. We have accordingly, identified the sectors which may be prioritised by state governments for availing assistance under RIDF-IX, details of which are furnished in Annexure-I.
2. In order to provide special thrust for the development of infrastructure in sectors such as Irrigation, flood control, agriculture & allied activities and power system improvement as detailed at paras 1 to 4 of Annexure-I, it has been decided by GOI that atleast 60% of the sanctions under RIDF-IX should be for projects relating to these sectors. Projects under these sectors would also be sanctioned a higher quantum of loan @ 95% of eligible project cost. Social sector projects and projects for rural connectivity, outlined at paras 5 & 6 of Annexure-I would be eligible for RIDF loan @ 85% and 80% of project cost respectively. It has also been decided to provide loans under RIDF for preparation of detailed project reports and conducting of comprehensive technical surveys provided these services are outsourced. Further an allocation of 1% of the corpus of RIDF IX has been made for rural infrastructure projects of innovative nature.
3. Keeping in view the broad sectoral priorities indicated above, the State Government may firm up priorities for availing RIDF assistance under various sectors and advise us the same at the earliest.
4. Further, the linkage of sanction of loans from RIDF to reforms undertaken by state governments in agriculture and rural sectors would be continued under RIDF IX. The broad sectors of reform will cover (a) agricultural marketing, (b) irrigation water supply, (c) tribal development, (d) electricity supply for agriculture and rural areas and (e) reforms in cooperative credit sector. Projects to be implemented by Panchayat Raj Institutions (PRIs) / Self Help Groups (SHG) / Non-Government Organisations (NGOs) would continue to be eligible for support under RIDF IX. Similarly, the North Eastern States and Sikkim will continue to receive special attention during RIDF- IX. Details of the broad terms and conditions applicable for loans under RIDF - IX are furnished in Annexure II, for your information.
5. Rate of interest and repayment period for loans under RIDF IX will be communicated soon, separately.
6. You can well appreciate that early submission of the projects to our Regional Office and sanction thereof by Project Sanctioning Committee (PSC) would provide reasonable time to the State Government for execution of the projects. We are hopeful that the concerned departments have prepared suitable proposals for submission through the Nodal Department viz. the Finance Department of your State, for funding support under RIDF IX.
7. As RIDF IX has been announced bit later than earlier tranches, we request for your personal intervention and periodic review to sort out any operational constraints for early submission of suitable projects for sanction under RIDF IX.
Sectoral priorities for RIDF IX
1. Irrigation Sector
Under Irrigation Sector, preference will continue to be given for completion of incomplete projects, construction of the delivery system where head works have been already completed, improvement and modernisation of canals, etc.
The thrust under the sector would also be for implementing the minor irrigation projects envisaging construction of small dams, weirs, barrages including distribution network and restoration and modernisation of old irrigation tanks with strict control over expenditure on desilting. Projects having people's participation in conceptualization, implementation and maintenance of these structures will be accorded priority.
Considering the fact that doubling of irrigation area is possible with same quantity of water applied through drip and sprinkler irrigation resulting in energy efficiency, enhanced productivity, improved quality of produce, less disease and pest problems; projects for drip irrigation and sprinkler irrigation systems will be supported on priority especially in low rainfall areas with substantial contributions from farmers.
The ongoing medium and major irrigation projects will be selectively financed under RIDF especially those where dams, etc.. have been completed. RIDF loans will be considered for projects where distribution network needs to be constructed together with the projects requiring extension, renovation and modernisation (ERM). In close interaction with the Ministry of Water Resources, the last mile support in case of projects sanctioned under new medium irrigation projects would be considered under RIDF on a very selective basis.
Projects envisaging rain water harvesting and ground water recharge are proposed to be encouraged so as to increase the availability of water for irrigation and to enhance productivity of rainfed farm lands.
2. Flood Control
The annual damage on account of floods including loss to crops, loss of fertile agricultural land, cattle and damage to houses, etc. is substantial. Hence, flood protection projects which will directly benefit agriculture are proposed to be covered under RIDF-IX on a selective basis.
3. Agriculture and Allied Activities
There is a need to move from the conventional soil conservation approach of safe disposal of run off water to rainwater harvesting and resource conservation based on indigenous systems and practices. The watershed development programmes would be another thrust area under RIDF and projects comprising the multiple uses of water namely drinking water for people, livestock, domestic uses, life saving and preserving irrigation crops will be encouraged.
As water logging affects crop production, hinders movement of people and causes many human and livestock diseases, projects for reclaiming water-logged areas, drainage projects, etc. will be supported under RIDF.
The seed is a vital and basic input for realising higher yield to a certain extent. The efficiency of other agricultural inputs like fertilizers, irrigation, pesticides, etc.. is dependent on the quality of seeds. State Governments' efforts to overcome the mismatch between the demand and supply of quality seeds especially under problematic areas, specific crops / varieties will be supported under RIDF on a selective basis.
The sizable quantity of organic farm waste is generated which can be utilised for providing nutrient to the crops after converting into compost/manure. Sizable quantity of useful solid waste is also available which could be utilised for generating energy and making manure. Such projects together with the projects aiming at development of facilities for testing and certifying organically produced food could be covered on a selective basis as investments under this sector are largely expected under the private sector.
Considering the large number of operational farm holdings in the country, existing soil testing facilities seem to be grossly inadequate. The State Government's efforts to supplement soil testing facilities will be supported under RIDF.
The farm productivity can be substantially increased by taking the research findings from laboratories to farms and capacity building of the farming community. The extension education projects of the State Governments based on electronic media and information technology for capacity building of the people in rural areas will be encouraged/supported.
Availability of good quality disease free and high yielding planting material is a prerequisite for enhancing productivity and production of horticulture crops. The State Governments' efforts to ensure availability of quality planting material and access to related critical inputs on a large scale will be supported under RIDF by providing loans for network of nurseries and seed farms on a selective basis.
Adequate, well dispersed and efficient handling/storage and transport infrastructure for agriculture and horticulture commodity is essential to prevent post-harvest losses, maintain food quality and for promoting exports with increase in production and productivity. RIDF loans will be provided for creation of post harvest management infrastructure such as market yards, market complexes, food processing parks and cold chains. Similarly, development of infrastructure including rural roads/bridges, etc.. in the Agriculture Export Promotion Zones would be prioritised.
Enhancing productivity through improved animal health care is one of the major strategies proposed to be adopted by the Government of India during the 10th Plan. RIDF loans as such will be available for veterinary health centres and related infrastructure.
The Tenth Plan has placed emphasis on integrated development of riverine fisheries, habitat restoration and fisheries development in upland waters, development of reservoir fisheries and management of coastal fisheries. The investment in the fisheries infrastructure directly helps the fishermen. RIDF loan will be available for funding the State Government's initiatives in developing fishing infrastructure.
The fishing harbours and the related infrastructure also needs to be modernized to meet the minimum international standards necessary for fish quality assurance. The State Governments initiatives in developing fishing harbours will be supported under RIDF.
4. System Improvement in Power Sector
The Electricity Bill 2001 passed by the Parliament recently lays greater emphasis on the rural electrification, distributive generation covering small hydel projects and distribution of power in remote villages, using locally available renewable energy resources like water, bio-mass, solar and wind etc.., and decentralized technology. These areas are proposed to be covered under RIDF funding together with projects envisaging system improvement in transmission of power.
5. Social Sector
The three major and widely prevalent problems in sustainable supply of drinking water in rural areas is scarcity, brackishness and excess fluoride content. These problems are manifested mainly in the low rainfall and high evaporation areas. RIDF loans will be available as a supplementary effort to support rural water supply systems.
Primary Health Care Infrastructure will be supported under RIDF on a selective basis.
The number of secondary schools in rural areas is not adequate to accommodate the students passing out of school and growing number of upper primary school children. The efforts of the State Governments to provide necessary infrastructure for education in rural areas will be supported under RIDF.
E-governance denotes application of information technology to Government processes to bring about Smart, Moral, Accountable, Responsive and Transparent (SMART) Governance. Several State Governments have taken initiatives in E-governance in rural areas. Such efforts of the State Governments will be supported through RIDF loans.
6. Rural Connectivity
Infrastructure projects for rural connectivity such as construction of roads and bridges will continue to be covered under RIDF. Routine maintenance expenses of such road projects will also now form part of the eligible project cost as per the procedure adopted under PMGSY.
RIDF - IX - TERMS AND CONDITIONS FOR PROJECTS
TO BE IMPLEMENTED BY STATE GOVERNMENTS
1. Phasing (Period of Completion)
Maximum phasing period of three years i.e. upto 31 March 2006 will be allowed for projects sanctioned under the tranche.
2. Quantum of Loan
Loans will be available as per the following norms for various sectors covered under RIDF-IX :
Sr.No Sector / Activity RIDF loan admissible as percentage of eligible project cost
1 Irrigation and related sectors as detailed at para 1 to 4 of Annexure I. 95%
2 Social sector as detailed at para 5 of Annexure I. 85%
3 Rural connectivity as detailed at para 5 of Annexure I. 80%
3. Type of Projects
Priority would be given to ongoing projects. In case of new projects, only short duration projects which could be completed within 3 years would be considered.
4. Cut Off Date
Expenditure incurred on or after 01 April 2003 only would be eligible for reimbursement. However, pre-appraisal expenses such as expenses incurred on project preparation and cost of detailed technical surveys, incurred prior to the cut-off date, may be reimbursed subject to a ceiling of 0.5% of RIDF loan sanctioned, provided such work has been outsourced.
5. Nodal Department
Finance Department (FD) of the State Government would continue to be the nodal department for documentation, drawal of fund, etc..
6. Mode of Funding
NABARD would release the sanctioned amount on reimbursement basis. However, if the State Government desires, NABARD may consider releasing as advance such amount as per the norms applicable from time to time.
7. Rate of interest & Repayment period To be conveyed seperately.
National Bank for Agriculture and Rural Development
