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UK-funded project runs aground

Calcutta, Sept. 15: Buddhadeb Bhattacharjee’s government today announced the postponement of the launch of an ambitious project for the uplift of urban poor, apparently after being told by the Centre that it will be allowed to use only 30 per cent of the British funds for the scheme as grant.

Municipal affairs and urban development minister Asok Bhattacharya said the government has decided to defer the launch of “Calcutta Urban Services for the Poor”, which was scheduled to take off on Thursday. The Department for International Development (DFID), UK, had offered grant to the tune of Rs 700 crore for the project.

The launch ran into rough weather after the department of economic affairs in the Union finance ministry told the state it will not be allowed to make use of the entire amount as grant and, under prevailing norms, will have to treat 70 per cent of it as a loan.

“This upset our plans. We were hoping to get the entire amount as a grant,” Bhattacharya said. “In the new central proposal, we will be under compulsion to return a huge sum at a hefty interest. It is beyond us.”

In addition to raising doubts about the project for the poor in urban areas, the development also puts a question mark on the possibility of getting grants from the DFID for executing welfare projects in the state.

Bhattacharya said the Union ministry passed on the directive to the state government because it is following this norm “in principle”in case of foreign grants.

The project for the urban poor was meant to cover 40 local bodies in the Calcutta Metropolitan Development Area and the areas under Calcutta Municipal Corporation.

It would have helped improve the condition of slums. Under the project, the municipal bodies would become financially self-sufficient and generate their own funds.

The state government went on a tizzy after receiving the information, sources said. The urban development department was expecting the release of Rs 700 crore under the project soon.

“It will be disastrous for us because we were hoping the project would benefit a large number of urban poor,” Bhattacharya said. “The Centre has not passed a final verdict. But it has certainly worried the state government and that is why the chief minister has written to the Union finance minister.”

Chief minister Buddhadeb Bhattacharjee wrote to finance minister Jaswant Singh saying the ministry of urban development had given an “in principle” clearance to the project.

About 30.94 per cent of the funds was to be spent on slum-level infrastructure, 5.09 per cent on economic development of the urban poor, 7.86 per cent for capacity-building of local bodies and about 29 per cent on municipal infrastructure.

DFID minister Gareth Thomas, too, postponed his trip to India. But the British high commission said it was not because of the postponement of the project launch but because of urgent parliamentary work.

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