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Take a close look at debt burden: Iqbal

Rajesh B. Nair

Lieutenant Governor writes to Chief Minister


Finance Department unaware of receipt of loan and crediting of money to government account




Iqbal Singh

PUDUCHERRY: Lieutenant Governor Iqbal Singh has cautioned the government on its effort to raise funds through external borrowings from financial institutions and advised the administration to take a close look at all issues pertaining to taking loans.

In a letter to Chief Minister V. Vaithilingam dated July 29, Mr. Singh observed that “there is a need to take a hard look at the ever-increasing debt burden with Puducherry now occupying the third highest place in the country in respect of per-capita loan burden.”

The Lieutenant Governor made this observation while scrutinising a file of the Social Welfare Department dealing with negotiated loans. It was noted that though the amount estimated for five works was only Rs. 13.26 crore, the Welfare Department had taken a sum of Rs. 15 crore which was Rs. 1.74 crore over and above the requirement.

Besides, the entire amount was taken at one go on the last day of the financial year instead of staggering the releases from the financial institution based on pace of utilisation, he said in the letter.

Mr. Singh went on to add that the financial institution concerned was appointed as consultant on nomination basis even though in-house expertise was available for preparation of detailed project reports and estimates.

A more “startling fact,” he noted in the letter, was that the Finance Department was “totally ignorant” of the receipt of the loan amount and crediting of the money to government account “because of which the Finance Department was taken by surprise when the first claim for interest payment was received by it in the month of May, 2010,” Mr Singh said in the letter.

Underscoring the need to give Finance Department better control on State borrowing, the Lieutenant Governor said, “unless a proactive and decisive role is given to the Finance Department, recurrence of similar situation cannot be ruled out in the future.”

The letter also highlighted government's preference in obtaining negotiated loans from specific institution “repeatedly overlooking the necessity of obtaining competitive rates from the market.

“All these issues require serious consideration to reduce the cost of borrowing, more so, considering the fact that the Union Territory has not been in a position to increase its revenue income substantially in the recent years,” Mr Singh said in the letter.

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