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Pay interest on delayed fund transfer to RLBs: Centre to States
- • The Centre issues these orders because of the delay in transferring of funds to the RLBs by the State governments
- • The Centre wants to ensure that the Finance Corporation funds reach the local bodies without delay and deduction.
- • They have been deducting the power bills from the grants and releasing rest of the amount to RLBs
Hyderabad: The Centre has made it clear that the State governments should transfer the funds to the Rural Local Bodies without any deduction within ten working days of receipt from the Union government and otherwise they must pay interest on them.
The Centre issued these orders in this regard keeping the delay in transferring the funds to the RLBs by the state governments. The Centre wants to ensure that the Finance Corporation funds reach the local bodies without delay and deduction.
The Union Panchayat Raj department has also issued the guidelines on spending these amounts. It has stated that the Fifteenth Finance Commission has made recommendations on devolution of funds to the local bodies.
The FC has recommended granting Rs 90,000 crore to 28 States and out of this the Commission has recommended Rs 60,750 crore in 2020-21 to Rural Local Bodies. Out of this 50 per cent would be considered as basic grant and the remaining as tied grant.
The Centre said that the States should work out share of all tiers of Panchayats like Zilla, Mandal and Gram Panchayats out of the FC funds. They should transfer each installment of the RLBs grants received from the Department of Expenditure of Government of India to all the concerned entities, ZPs, MPPs and GPs. The funds should be transferred without any deduction within ten working days of receipt from the Union government.
Any delay beyond ten working days will require the State governments to release the same with interest as per the effective rate of interest on market borrowings or State development loans (SDLs) for the previous year.
It has stated that basic grants will be released in two installments by the Ministry of Finance of Government of India. The tied grants will also be released in two installments
The basic grants could be used by the local bodies for location-specific needs, except for salary or other establishment expenditure.
The tied grants could be used for sanitation and maintenance of open-defecation free (ODF) status and supply of drinking water, rain water harvesting and water recycling works.
The Centre has granted Rs 93 crore as basic grant and same amount as tied grant, totaling Rs 1847 crore.
So far the State government has been releasing the funds as per its convenience. It has been deducting the power bills from the grants and releasing rest of the amount to RLBs.
With the fresh order the State could not deduct any amount from the grants of the RLBs. It has to release the funds as soon as they have been received. If it fails to release them within the given period it has to bear interest on it.
