#India-As farmers suffer, NABARD offers soft loans to corporates

NEW DELHI, December 10, 2012

Shalini Singh, The Hindu

Private companies get loans at 6.5% with additional cash refunds; for farmers it is 7%
Private companies get loans at 6.5% with additional cash refunds; for farmers it is 7%

 The National Bank for Agriculture and Rural Development (NABARD), which is dedicated to promoting rural development by providing soft loans to State governments for social sector projects, has given hundreds of crores as loans to corporates on concessional terms.

In the Union Budget of 2011-12, Rs. 18,000 crore was allocated by the Centre to NABARD’s Rural Infrastructure Development Fund (RIDF), of which Rs. 2,000 crore was exclusively earmarked for the creation of warehousing facilities. While the allocation of Rs. 16,000 crore to the States was made by NABARD’s State Projects Department, the allocation of Rs. 2,000 crore towards warehousing was entrusted to a new team set up on the recommendation of global consulting firm Boston Consulting Group (BCG), after being awarded the mandate for a repositioning exercise.

In a circular of September 27, 2011, NABARD, making a significant deviation from its earlier policies, included private entities as eligible institutions without consulting the RBI. In another circular of December 23, 2011, NABARD further revised the scheme, again without consulting the RBI, to provide private firms an interest rate rebate of 1.5%. In violation of the regulated 8% rate levied by RIDF, an avenue was created for flow of funds to corporates and release of the interest rate rebate to the borrowers directly by NABARD.

According to documents available with The Hindu, a total of Rs. 759 crore was disbursed, including as refinance at 8% to various banks to fund 516 warehouses and cold storage projects of private entities in March 16-31, 2012. Shubham Logistics Ltd, a subsidiary of the over Rs. 6,000 crore Kalpataru Group, was handpicked for a rebate of 1.5%, allowing it to access Rs. 115 crore under a government scheme at a concessional 6.5% rate of interest. Shubham Logistics would have paid a 10.5% rate of interest had the funds been sourced from the market. The company, which was disbursed a total of Rs 180.87 crore, to set up 18 warehouses, became the beneficiary of a further 15% subsidy under another government scheme, entitling the company to a refund of over Rs. 20 crore.

The two schemes that were used to favour Shubham Logistics are Grameen Bhandaran Yojana which offers subsidy of 15% to 33.33% for construction of rural godowns. For corporates the subsidy is 15% of total financial outlay up to a maximum of Rs 28.12 lakh. Under the other scheme, ‘Warehousing scheme under RIDF’, banks are offered refinance at 8% which can be further reduced to 6.5% as an incentive for prompt repayment.

Documents reveal that the RBI has questioned NABARD’s interest rate manipulations in financing warehousing projects without its permission and demanded a recall of the Rs. 759 crore allocated to private firms. Compliance with this directive means that NABARD will have to return the money to the RBI and raise debt from the market to honour its commitments. This is likely to hit NABARD’s balance sheet by roughly Rs. 150 crore. The Ministry of Agriculture has further questioned irregularities in Shubham Logistics storage projects in Deesa, Banaskantha, pointing out that the project is ineligible for sanction of the subsidy.

Meanwhile, Aditya Bafna, Executive Director of Shubham Logistics Ltd (SSLL), a subsidiary of Kalpataru Power Transmission Ltd was appointed Director on the board of NABARD Consultancy Services Private Ltd (NABCONS) — a wholly owned subsidiary of NABARD — on January 15, 2010. He refused to comment on either the allegations of special favours or the conflict of interest arising from his appointment on the NABCONS Board.

NABARD’s response to a RTI query reveals that it released Rs 13.3 crore BCG for a ‘repositioning’ report that it admits has never been submitted. Sources in NABARD allege that an additional payment of Rs. 9 crore has also been released to “rollout the recommendations”. NABARD Chairman Prakash Bakshi, under whose leadership these transactions were sanctioned, did not respond to detailed questions that were emailed to him on December 3, including on the fresh release of Rs 9 crore to BCG or what hit NABARD’s balance sheet was likely to take after the repayment to RBI of the unauthorised fund transfers to corporates.

BCG’s Chairman, Asia Pacific, Janmejaya Sinha did not respond to detailed questions regarding whether the firm had any exposure to working with any developmental financial institution prior to its consulting assignment with NABARD, especially in the Asia Pacific region, the terms of reference and payment for the assignment or whether it was true that BCG was scouting for fresh business opportunities with the RBI.


Criminal waste of food grain in Punjab?

4 May 2012, , TIMES NOW

After food Minister KV Thomas revealed the waste of over 70,000 tons of wheat in Punjab in the last year alone TIMES NOW uncovered how official apathy continues to result in the waste of food grain. In a country where 23 crore people go hungry every day can we allow this criminal wastage?

In a country where millions go hungry every day, where food prices break the back of the common man, an estimated 231 million (23.1 crore) people in India go hungry every day, each minute, five Indians die of hunger – i.e., 7000 each day and 2.5 million people every year a bumper harvest is today rotting in godowns and the situation in Punjab is glaring at India.

‘66,306 tonne of the winter crop stored by state agencies in Punjab and 10,456 tonne in Haryana were rendered damaged/non-issuable in 2011-12′, said Food Minister KV Thomas.

With the union food ministry claiming that over 70,000 tonnes of wheat has been left to rot in the storage facilities across the state.

TIMES NOW revealed the shocking apathy that led to criminal waste of food grains. We traveled to two such godowns of the Punjab state Government agro, where wheat stocks face complete neglect.

A guard of one go-down in Dera village in Fategarh sahib said, “4 lakh quintals of wheat has rotten completely. Some new stock was added here last year but that too has rotten now.”

The guard on duty in another such go -down spilled the beans on the colossal waste of food grains over the years, where fresh stock was dumped without clearing the older harvest. The guard at the Punjab Agro go-down in Sirhind said, “The fresh stock came last year. Else it has been lying here for 2-3 years and no one takes it. No one takes care of it.”

The problem is not restricted to storage alone. At one of the largest grain markets of Asia traders allege that the government officials work at a tardy pace, doing nothing to save even the fresh harvest.

Even as Punjab is saddled with the food grain pile up the state government passes the buck to the Centre, blaming the Union Government for the massive crisis.

India’s food grain production may be at an all time high this year with numbers likely to touch 250 million tonnes, but if Punjab Govt and the Centre don’t wake up this precious grain that could feed millions will once again be left to rot another year. Maybe if they wake up now 2 and a half million people in India who die of hunger each year could just be saved.



Kractivism-Gonaimate Videos

Protest to Arrest

Faking Democracy- Free Irom Sharmila Now

Faking Democracy- Repression Anti- Nuke activists


Kamayaninumerouno – Youtube Channel


Enter your email address to follow this blog and receive notifications of new posts by email.

Join 6,228 other followers

Top Rated

Blog Stats

  • 1,839,565 hits


April 2021
<span>%d</span> bloggers like this: