While it works on a Rs 65,000-crore relief package for indebted farmers on the basis of the findings of the R Radhakrishna panel appointed by Prime Minister Manmohan Singh during his 2006 visit to Vidarbha, the UPA Government may also use the coming annual fiscal exercise to make some significant changes to a fund created by the Prime Minister in the last full Budget he presented as Finance Minister in 1995-96 — the Rural Infrastructure Development Fund (RIDF).

Though the rate of disbursements under the RIDF, set up by Singh to tackle the ‘inadequacy of public investment in agriculture’, has dipped sharply under the UPA, a close examination of the fund reveals that there is significant money in the system to fund aam aadmi-oriented announcements for the farm and rural sector — expected in the coming Budget. States and panchayat bodies approach the RIDF, administered by the National Bank for Agricultural and Rural Development (NABARD), for concessional loans to implement projects that bolster rural infrastructure.

Speaking to The Indian Express, a member of the PM’s panel pointed out, “The RIDF was created as banks were not meeting their agricultural credit target — with the idea that the shortfall in banks’ lending to agriculture would be transferred to RIDF. In reality, banks are only contributing a small part of their agricultural credit default to RIDF though the impression is that RIDF gets all the defaulted funds. The rest is probably getting diverted.”

The amounts involved aren’t small by any yardstick. Consider the difference between the total amount of agricultural credit default by banks and the amount allocated by them to RIDF in the years 2003-04, 2004-05 and 2005-06: Rs 16,586 crore, Rs 23,759 crore and Rs 22,628 crore, respectively. That adds up to a whopping Rs 63,000 crore.

... contd.