Monday, 27 August 2012

Now, Rajasthan to pay interest on unused loan to Japan International Cooperation Agency

Japan funding for the Rajasthan Forestry & Biodiversity Project (RFBP) may have been delayed for less than three months but not a blade of grass has moved despite the project receiving funds for over one year. The project on afforestation was signed in June 2011 with the Japan International Cooperation Agency (JICA) but till date it has not been inaugurated by the state government
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As a result, instead of availing the Japanese funding for ecological betterment, now the state would have to pay to JICA, 0.10% commitment charge calculated on prorated daily basis on the unused amount. So far, out of the loan agreement Rs 1,152.53 crore, not a penny has been used in this financial year and only Rs 85 lakh was spent in the last financial year. The Japanese Official Development Assistance (ODA) loan according to the contract signed was for a term of 40 years at an interest rate of 0.65% to be re-paid with a moratorium of 10 years.

"Japanese ODA loans are made possible by using the public funds in Japan. In order to promote early realisation of the project and to increase the incentive of implementing the project within the set date for projects pledged after October 2007, commitment charge will be accrued from 120 days after signing of the loan agreement. If the loan agreement is not effectuated within 120 days from the signing date, the commitment charge accrued up until the date the agreement comes into effect should be retroactively paid on the date of the first repayment under the loan agreement," the JICA loan agreement reads.

While the RFBP phase I was implemented by the forest department, phase II of the project with an outlay of Rs 1,152.53 crore was to be implemented under the society mode. The phase II was also to be implemented in accordance with the JICA principle was by first establishing a project management unit (PMU) as an independent autonomous society for the exclusive implementation of the project as per the provisions of Society Registration Act 1958. But till date, no PMU is set up.

"That is precisely the problem. This project had to be implemented with the help of local committees and NGOs. And where is the government interested in empowering the grassroots?" a source rued. According to the detailed implementation report, the forest department has to by now hired a project management consultant, finished selecting batch II of the target village, finished advance work in afforestation, finished training of NGOs, village level workers, but all that is only on paper.
"With a focus on the Millennium Development Goals, micro-planning for the project was to be carried out at the village level involving local communities from the beginning. This was to work towards securing community participation and ensuring their active involvement in the development of forest and community land, but all that is not even thought about," the source said.

The RFBP was to be implemented during an eight-year period from 2011 to 2019 financial assistance of the Japan Bank for International Corporation (JBIC). The project was to be launched with objectives of restoring ecological status of Aravallis, conserve biodiversity, check desertification, improve moisture and protect infrastructure in the desert areas. It was also aimed at providing fuel/fodder grass, timber and non-timber forest products along with employment generation in the rural areas.

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