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Cabinet approves raising Rs 9020 cr irrigation fund through Bonds

The fund will be raised through issuance of Bonds by NABARD for implementation of 99 ongoing prioritised irrigation projects under Accelerated Irrigation Benefits Programme

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The Union Cabinet chaired by the Prime Minister Narendra Modi has given its approval for raising Extra Budgetary Resources (EBR) of upto Rs. 9,020 crore as per the requirement during 2017-18 by National Bank for Agriculture and Rural Development (NABARD). The fund will be raised through issuance of Bonds for ensuring lending rate of 6 percent per annum in respect of borrowings for implementation of Accelerated Irrigation Benefits Programme (AIBP) works of 99 ongoing prioritised irrigation projects along with their command area development (CAD) works under Prime Minister Krishi Sinchayee Yojana (PMKSY).

A large number of major and medium irrigation projects taken up under AIBP were languishing mainly due to inadequate provision of funds. During 2016-17, 99 ongoing projects under PMKSY- AIBP were identified for completion in phases by December 2019. To cater to the large fund requirement and ensure completion of these projects, the Union Finance Minister, during his Budget speech 2016-17, announced creation of dedicated Long Term Irrigation Fund (LTIF) in NABARD with an initial corpus of Rs. 20,000 crore for funding of Central and State share for the identified ongoing projects under PMKSY - AIBP.

To make the loan from NABARD attractive for states, it was decided that the rate of interest may be kept around 6 percent by providing requisite cost free funds to NABARD every year during 2016-17 to 2019-20 on which interest cost would be borne by Government of India.

During the year 2016-17, NABARD disbursed aggregate amount of Rs. 9,086.02 crore under LTIF, out of which Rs. 2,414.16 crore was released for Polavaram project (without EBR component) and balance Rs. 6,671.86 crore was released to identified projects using EBR. Further, an amount of Rs. 924.9 crore was disbursed as Central Assistance (CA) through budgetary provision. During 2016-17, overall an amount of Rs 2,187 crore was raised by NABARD in the form of Government of India fully serviced bond as EBR.

During 2017-18, it is estimated that an amount of Rs 29,000 Crore may be required through LTIF, for which EBR of Rs 9,020 cr would be required.

As per the status reported by the states and Central Water Commission during various review meeting, 18 projects have been completed or almost completed. Irrigation potential utilisation is expected to be more than 14 lakh hectares during 2016-17 from all the 99 projects. During 2017-18, 33 more projects are likely to be completed. The completion of the identified irrigation projects will generate immediate wage and other employment opportunities in good measure during the construction phase. More importantly, on completion of the projects, the utilisation of irrigation potential of about 76 lakh hectares is expected to transform the agriculture scenario of the region resulting in generation of substantially more employment opportunities through increase in cropping intensity, change in cropping pattern, agro processing and other ancillary activities.

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