Nabard to soon operationalise Centre’s long-term irrigation fund, says chief

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Pune | Published: June 4, 2016 7:04:29 AM

With two consecutive droughts leading to farm distress and in turn impacting the country’s economy, the National Bank for Agriculture and Rural Development (Nabard), the country’s apex rural bank, has decided to focus on irrigation and watershed management in FY17.

With two consecutive droughts leading to farm distress and in turn impacting the country’s economy, the National Bank for Agriculture and Rural Development (Nabard), the country’s apex rural bank, has decided to focus on irrigation and watershed management in FY17. In addition to a substantial increase in the funding made available through Nabard’s Rural Infrastructure Development Fund (RIDF), the bank is also in the process of speeding up operationalising of the long-term irrigation fund with a corpus of R20,000 crore announced in the recent Budget by Union finance minister Arun Jaitley.

“Discussions are in progress and we shall soon see some disbursements happening through the Fund in a month or so,” Harsh Kumar Bhanwala, chairman, Nabard told FE. “There is a lot of stress in rural areas, primarily on account of water. We have seen state governments more enthused to borrow under the RIDF than earlier years. Irrigation has become a major requirement in light of the two droughts that the county has faced in the last couple of years,” the chairman said. According to Bhanwala, Nabard has seen its RIDF disbursement increase from R5000 crore to R6,000 crore two years ago, to R10,700 crore in 2015-16.

While RIDF has a seven-year repayment term, the long-term irrigation fund will have a repayment period of 12-15 years; the market-linked fund will be created under a special vehicle under the water resources ministry and the National Water Development Authority. RIDF has been a low-cost fund for states since the interest rates have been as low as 5.5% as compared with other borrowings that come at a cost of 8%, he said.

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