Indian Government to Collect Penal Interest from States for Delay in Fund Transfer to Implementation Entities

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By Rama Mohan | February 28, 2014 1:28 AM EST

The Indian government is to charge penal interest on state governments, if they delay the transfer of funds for more than 15 days from the Consolidated Fund of the States to the Implementation Entities (IEs).

The step has been taken by the Central government to ensure expeditious utilization of grants under the Rajiv Gandhi Panchayat Sashaktikaran Abhiyan (RGPSA) and the Backward Regions Grant Fund (BRGF) programme, the government said on 27 February.

The Union Ministry of Panchayati Raj stated on 27 February  that under the RGPSA, which has become fully operational in 2013-14, is to strengthen Panchayats. Grant-in-aid is provided to States on the basis of approved State Plans.

Under the BRGF, untied grants are released to states for development of basic infrastructure facilities and for capacity building of panchayats/gram sabhas in the backward districts and regions.

Meanwhile, the Union Ministry of Tribal Welfare, on the same day, said that it has released ₹3,313.576 crore for employment generation for tribal population in 2013-14 up to February 2014 to the states, PIB said. The Ministry, under its Special Area Programme of Special Central Assistance to Tribal Sub-Plan (SCA to TSP), provides funds as an additive to the state plan for economic development of tribals in the states. 

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