The Centre-state disputes over payments to bus manufacturers like Tata Motors, Ashok Leyland and Volvo have dented the viability of the urban renewal schemes. The much-hyped Jawaharlal Nehru National Urban Renewal Mission (JNNURM) was introduced in 2005 as an incentive to the commercial vehicle makers at the backdrop of the slowdown in sales.
Now industry estimates suggest that the state governments owe close to R450 crore to the Tatas, Ashok Leyland and Volvo Buses. This was shared by the auto firms in their meeting with the urban development minister Kamal Nath last week. Among the states that owe the most to these companies include West Bengal (R125 crore) and Tamil Nadu (R33 crore). Other States like Jammu & Kashmir and Kerala owe R20 crore and R7 crore respectively, sources said.
As per the total outstanding payments to these companies, deliveries worth R200 crore is yet to be made by the state governments. Apart from that an additional R200 crore is outstanding despite the complete deliveries of the buses. The states also owe R45 crore as disputed amounts. These refer to the extra payment that states are bound to make owing to increased prices of vehicles because of hike in excise duties and changed specifications of the vehicles.
Nath has now directed his senior officers to undertake a comprehensive review including the introduction of key changes that would facilitate and fasten the payments to the companies under the JNNURM programmes.
?Due to confusion between the states and the centre it is the private companies that are suffering. These companies are after all answerable to their shareholders that have to bear the brunt of it,? a senior industry executive told FE. He said that since states have to prove beyond doubt that certain facilities have been installed it is causing a severe problem for the companies.
Sources said that the central government would reach out to the various state entities to find a solution to the vexing issue. Among the options that are likely to be taken up by the central government include doing away with the ‘conditional funding’ criteria clause which has been seen as the major stumbling block for non-payment to these companies.
According to the criteria state government have to invest in back-end infrastructure like GPS and driver availability to be eligible for financial funds from the central government.
?The JNNURM programme was mainly a stimulus scheme keeping in mind the difficult situation the commercial vehicle segment had gone through. The non-payment issue is a cause for big concern,? director at the apex auto body Society of Indian Automobile Manufacturers (SIAM) Sugato Sen said. SIAM was also represented in the meeting with Nath last week.
When contacted managing director of Volvo Buses India Akash Passey said, ?Delivery of buses have not happened owing to reasons beyond our control. However the government has now given some assurances,? he said. An sms sent to managing director Ashok Leyland Vinod K Dasari and an email to the Tata Motors spokesperson went unanswered.