Release funds or pay penalty, Centre tells states in a first-of-its-kind rule

NEW DELHI: After receiving several complaints of slow progress in implementation of drinking water and sanitation schemes due to delay in release of funds from states’ exchequer, the Centre has come out with a first-of-its-kind rule that if a state sits on central funds it will have to pay a hefty penalty.

Prime Minister Narendra Modi’s pet project Swachh Bharat Abhiyan comes under these schemes and its implementation was being affected due to this.

Under the new rule, states have to ensure transfer of funds to implementing agencies within 15 days of its receipt failing which they have to pay a fine.

“A penal interest of 12% a year for the period of delay shall be required to be transferred by the state government to the implementing agencies along with the principal amount of fund,” the official order sent to all states on Wednesday said.

So if a state sits on ` 1,000 crore of central fund for a year, it will have to pay ` 120 crore. For a onemonth delay it will pay ` 10 crore.

“It’s lethargy on part of the states to release the central funds from their exchequer that results in delay in timely implementation of schemes. The penalty clause we hope will help in speedy release of funds,” a government official said.

The Modi-government has allocated ` 1,34,000 crore towards the scheme, which has to be spent over five years.

The states, however, have not been too keen on spending this money. According to the financial status of the funds for 2014-15, only 11% (`355 crore) of the total ` 3,178 crore given to the states for the clean India campaign have been spent.