To Ensure Expeditious Utilization of RGPSA and BRGF Funds Government to Charge Penal Interest on States for Default

To ensure expeditious utilization of grants under the Rajiv Gandhi Panchayat Sashaktikaran Abhiyan (RGPSA) and the Backward Regions Grant Fund (BRGF) programme, the government is to charge penal interest on States if transfer of funds is delayed for more than 15 days from the Consolidated Fund of the States to the Implementation Entities (IEs).

Under the RGPSA, which has become fully operational in 2013-14, to strengthen Panchayats, grants-in-aid is provided to States on the basis of approved State Plans. Under the BRGF Programme, untied grants are released to the States for development of basic infrastructure facilities and for capacity building of Panchayats/Gram Sabhas in the backward districts/regions. For availing grants from BRGF, the States/districts are required to furnish district plans consolidated by the District Planning Committees and utilisation certificates, progress reports and audit reports for the grants availed earlier.

The main reasons for under utilisation of funds are delay in release of funds by the States to the local bodies, procedural delays in preparation and implementation of Plans and delay in reporting the progress of utilisation of the grants by the states.

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