The cash-strapped Kerala government has allegedly redirected a ₹139.66-crore World Bank loan meant for an agricultural modernisation project to meet its year-end financial expenses.

The funds sanctioned by the World Bank for the Kerala Climate Resilient Agriculture Value Chain Modernisation Project (Kera) were reallocated shortly after approval in violation of the terms of the agreement.

A World Bank team is scheduled to visit Kerala on May 5 to take up the issue with the Kerala chief secretary. The Kerala government was supposed to transfer the funds from the finance department to the agriculture department on March 17, but it has not been done even after five weeks.

The Kera project is aimed at commercialising and boosting the resilience of Kerala’s food and agriculture sector for small-scale farmers, agri-based micro, small, medium enterprises, farmer producer organisations and start-ups.

The project was originally scheduled to be launched on February 3, but the state finance department, which was reeling under the shortage of funds, allegedly decided to redirect the World Bank loan to manage year-end expenses.

The project is now scheduled to be launched later this month, coinciding with the fourth anniversary of the Pinarayi Vijayan-led LDF government.

The total cost of Kera is envisaged at ₹2,366 crore, of which ₹1,656 crore will come from the World Bank and the remaining ₹710 crore from the state government.

The first instalment of the World Bank loan (₹139.66 crore) was disbursed to the Kerala government on March 17.

The project, which is supposed to be completed within five years, will benefit four lakh farmers directly and 10 lakh farmers indirectly. It
will be implemented with the active support of the industries department.

State finance minister K.N. Balagopal, however, denied any redirection of funds.

“There has only been a technical delay in implementing the project. I understand that the loan amount has since been transferred to the agriculture department’s financial head. The World Bank has not shown any magnanimity... it is a loan and has to be repaid. We have to pay interest on this loan... this is not an aid from them,” Balagopal told reporters here.