200
the Bank rate, which would mean a rise in the lending rate from 6.5% to 7.5%
at the present Bank rate of 9%. In the case of RIDF, the RBI balance sheet is not
touched and hence RIDF loans should continue to carry the moderate interest
rate structure as in the past as such a structure prevailing for a long period has
given an impetus to the Fund’s operations.
On the NABARDpart, it has identified gigantic gaps in rural infrastructure
which cannot be bridged by state governments due to their limited resources
and weak organisational structures. The ability of the state governments to
raise resources is restricted by the borrowing limits imposed on them under
Article 293(3) of the Constitution. For completing the RIDF projects, the state
governments have to earmark adequate funds in their budgets so as to match
their funds with the phasing of the projects within the prescribed time frame.
With a view to obviating these problems NABARD is “looking at leveraging private
resources and technical competence implementing specific projects under
the public-private participation (PPP) model (NABARD
Annual Report 2010-
12
, p.30). PPP model involves very complex processes of identifying qualified
entrepreneurs, guidelines for financial biddings, formulating approximate
terms and conditions, and appraisal and approval. In this respect, NABARD
would be better of:
(i)
if it takes advantage of the Planning Commission suggestions
enumerated in the Box item above; and
(ii)
if it further collaborates with the public private partnership
appraisal committee (PPP-AC) constituted by the Union Finance
Ministry in consultation with the Planning Commission, with a
view to conducting a thorough scrutiny and due diligence in the
formulation, appraisal and approval of PPP projects.
Though that appraisal committee is obviously concerned with large size
projects, there are also what are called EFC mechanism for smaller projects
(
Eleventh Five Year Plan
, 2007-12, Vol.I, p.261). It is said that a PPP Appraisal
Unit (PPPAU) has also been set up within the Secretariat for the Committee on
Infrastructure in the Planning Commission to appraise PPP projects received
from Central and state/UTs governments.
We venture to make these detailed observations because we believe that
the present method of forced expansion of ground-level credit is facing a serious
stumbling block in the absence of better absorptive capacity with the farm
sector which, in turn, can be greatly augmented by better rural infrastructural
facilities. The instrumentality of RIDF can be further widened to embrace all
types of rural infrastructural needs as NABARD has sought to do through
speeding up of the existing RIDF projects as well as through the PPP model.
