Cash-starved mandi board seeks finance dept’s help
CHANDIGARH The agricultural marketing board Punjab (Mandi Board) has raised red flag over its inability to pay up a loan instalment of ₹465-crore scheduled in June. In a communique sent to the state government’s finance department (FD), the cash-strapped entity, once a cash rich organisation, has sought financial support so that the loan doesn’t turn into a non-performing asset (NPA).
A loan to the tune of ₹4,600crore was raised from a consortium of banks in 2017 during Capt Amarinder Singh’s government to fund his pre-poll promise of loan waiver to the state farmers. The loan was raised by pledging the future accruals, particularly rural development fund (RDF) on procurement of crops- wheat and paddy from the state. However, the Centre has stopped paying the RDF for three seasons - wheat and paddy of 2022 and the current wheat procurement, which has taken the total pending amount accumulating to ₹3,600-crore. “In this scenario, we can’t repay the loans, the government has to support us,” said a board official, on the condition of anonymity.
Rural Development Board (RDB), an organisation that runs parallel to the Mandi Board, with chief minister as its ex-officio head (chairman) receives RDF accrual and then allocates funds for development works executed by the Mandi Board and Public Works department, such as development of link roads and mandis’ infrastructure, particularly in rural Punjab.
Before the wheat procurement of 2022, the Centre used to pay 3% RDF on crop procurement which turns out to ₹700crore to ₹800-crore, depending on the actual cost of crop purchase. “However, it was stopped afterwards. It is despite the fact that we have amended the Rural Development Fund act implementing the provisions of the model act suggested by the Centre, by specifying usage of the RDF,” said a Mandi Board official. A provisional cost sheet sent by the Centre’s ministry of food and public distribution to the state food and civil supplies department on May 3, has no mention of the RDF and has also curtailed mandi fee by 1% from the existing 3% to 2%, which is a loss of at least ₹250 crore. Mandi Board sought FD’s intervention after the received provisional cost sheet was non-committal on the RDF accrual.
The bi-yearly instalments for the loan of ₹4,600-crore raised in 2017 will continue till December 2024, while another loan of ₹800-crore was raised from a single bank after Charanjit Singh Channi became CM in September 2021. This loan was raised for carrying development works. For this loan, bi-yearly installment will continue till 2026.
“We are able to repay ₹800crore but government has to support us for the bigger instalment,” informed an official, adding that the last instalment in December 2022 was also repaid when FD released ₹350-crore. According to him, a reply from the FD was awaited for release of fresh instalment of ₹465 crore to Mandi Board for loan repay.
“Not only the repayment of loans had suffered due to stop on accruals, it will also affect the development works carried in past by the Mandi Board,” said a senior officer. Also, in such scenario when accruals have been restricted by the Centre it would be difficult to raise loans in the future, he said.
Punjab chief secretary VK Janjua said the government is aware of the scenario when the Mandi Board’s accruals have been constrained and is finding a way out for timely repayment of the instalment due in June. “We are taking up with the Centre for release of pending accruals as the state government has completed the compliance mandated by the Centre in case of RDF by amending the rural development act,” he said, adding, “Else we are left with no option but to take a legal recourse for release of pending taxes on food grain procurement for which discussions are underway”.
Not only the repayment of loans had suffered due to stop on accruals, it will also affect the development works carried in past by the Mandi Board A SENIOR OFFICER