Inadequacy of public investment has decelerated growth rate of agriculture and rural infrastructure sectors since the 8th Five-Year Plan. There are many infrastructure projects, which have been started but are lying incomplete for want of resources. Even though there is an urgent need of creating adequate employment opportunities in rural areas through development of infrastructure, there had been virtually no institutional arrangements for financing rural infrastructure. Against this background, the Government of India in the Budget of 1995-96 announced the scheme for setting up Rural Infrastructure Development fund (RIDF) to be operationalised by NABARD. This fund has emerged as a popular and effective scheme for financing rural infrastructure projects.
Assisting State Governments for the completion of ongoing rural infrastructure projects and also taking up new projects. Activities/Sectors eligible for finance under RIDF
(i) Irrigation projects.(Major, Medium &Minor)
(ii) Flood Control & Drainage Projects.
(iii) Agriculture and Allied Activities
(iv) Rural Connectivity.(Road & Bridges)
(v) Social Sectors (Rural water Supply, Infrastructure for PHC, Educational Institution & e-governance).
Procedure for sanction of Projects
The Department concerned formulates the project proposals and submits the same to High Power Committee (HPC) formed by Government for scrutiny. Later the proposals are submitted to Regional office of NABARD for consideration of funding. The project proposals are scrutinized and appraised by the Regional Office with the help of Consultants by conducting desk and field appraisal. Appraisal reports submitted by the Regional Offices are then scrutinised by State Projects Department at Head Office before placing the same to Project Sanctioning Committee (PSC) for consideration of sanction. Normally seven or eight meetings of PSC are held in a year to sanction loans from the RIDF corpus. Sanction of projects is communicated to the State Governments by a sanction letter.
Period of Loan
The repayment period of 5 years including a 2 year grace period was provided under RIDF-I to RIDF-V. The repayment period has, however, been extended to 7 years including a grace period of 2 years since RIDF-VI and the same policy is continuing.
Corpus in Tranche is allocated among all States on the basis of norms prescribed by the PSC. The present allocation norms provide weightage to rural population (25%), Geographical Area of the State (25%) and Infrastructural Development Index (25%) and availement of sanction(5%) and disbursements (20%) in the past tranches.
Nodal Department for RIDF
The Finance Departments of the State Governments act as nodal departments for operationalising RIDF. The project proposals are routed through the Finance Department only and no proposals are accepted directly from any other Department of the State Government. All other related items of work like submission of drawals applications under sanctioned projects, Release of loan, execution of documents, repayment of loans, etc., are attended to by Finance Departments of the State Governments.
Release of Funds
Mobilisation advance / Start up advance @ 20% of the RIDF Loan sanctioned under the projects is released to the State Governments on conveying acceptance of the terms & conditions of sanction by the State Government, before incurring expenditure on the projects for procurement and supply of materials, etc. Loans are released on reimbursement basis against the actual expenditure incurred in execution of sanctioned projects. RIDF loans are released to the State Governments by Regional Offices of NABARD.
It is expected that RIDF projects would be completed on time within the approved cost. Proposals for cost escalation are considered based on merits.
Physical & Financial Performance
The Department of Water Resources has availed loan under RIDF scheme since inception of the programme. Earlier the loan was extended for taking up new as well as completion of ongoing Major, Medium and Minor Irrigation projects. Later on, during 2004-05, NABARD agreed to provide loan to Flood control & Drainage Projects. The status of major, medium, minor(Flow) irrigation projects taken up under different RIDF tranches is given in the following table. The status of Flood control & drainage projects and Lift Irrigation Projects executed under different tranches has been described in separate chapters.