Kerala   

Local development fund on the cards

THIRUVANANTHAPURAM: A Local Government Development Fund to provide financial support to the development initiatives of rural local bodies will come into being in Kerala soon.

The government would provide the corpus for floating the fund. Resources would be raised from the market and money will be channelled to the 14 district, 152 block and 999 grama panchayats at reasonable rates.

A similar fund floated in Tamil Nadu provides Rs. 70 to Rs. 100 crore annually to the local bodies. The Asian Development Bank offered up to $50 million to set up a fund for financing the projects of the five city corporations and the 53 municipalities. The formation of an exclusive fund for rural local bodies is expected to catalyse a balanced development of urban and rural areas.

Local Self-Government Department sources told The Hindu that steps were being taken for institutional strengthening of the local bodies with World Bank aid.

It would not be a consultancy-driven project, but would supplement the participatory planning process by increasing the efficiency of these bodies.

The grant-in-aid of Rs. 800 to Rs. 1,200 crore would be used for streamlining the functioning of offices and improving the financial and project management of local bodies. Capacity-building and module-based training are some of the core components of the initiative, proposed to be implemented with the concurrence of the Cabinet.

The grant-in-aid to be made available at 1 to 2 per cent interest would have a grace period of 10 years and have to be repaid in 40 years. This was expected to absorb the financial stress of the government in aiding the local bodies, sources said.

When a World Bank team visited the State last week, Local Self-Government Department officials apprised it of the government stance that the grant-in-aid for instrumental strengthening of local bodies would not be counterproductive to the People’s Plan.

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