Stick to old rates on RIDF: Jaya to PM

CHENNAI: Expressing shock at the unilateral decision taken by the Reserve Bank of India to hike the interest rate for loans under the Rural Infrastructure Development Fund (RIDF) of the National Bank for Agriculture and Rural Development (NABARD), Chief Minister J Jayalalithaa on Friday sought the intervention of Prime Minister Manmohan Singh to resolve  the issue at the earliest.“The interest rate on RIDF loans should be restored to its original rate of 6.5 per cent. If at all the interest rate has to be enhanced, it should be kept around 7 per cent and made applicable only to loans for those projects which will be sanctioned from 2012-13 onwards,” the CM said in a letter to the PM.Pointing out that the State governments had been using the RIDF loans as a cost-effective financing option for taking up various essential infrastructure activities in rural areas, Jayalalithaa said Tamil Nadu was one of the front-runners both in terms of sanction of projects as well as drawal of funds from RIDF. She said that at present, Tamil Nadu has a bank sanction of `2,184 crore for which funds would be drawn in 2012-13 and subsequent years. “We had proposed such massive investment using RIDF loans only, on the assumption that the lending rates would remain reasonable,” she observed.The revised interest rate of 8 per cent per annum for RIDF loans would make them   unviable and the States would be forced to cut down on investment in rural infrastructure which is vital for inclusive development, she said. “What is more shocking is that the higher interest rate of 8 per cent is made applicable to the drawals after April 1, 2012,  even for those projects which have already been sanctioned in the previous financial years,” Jayalalithaa added.The CM further said it would be unfair to alter the conditions during the project period.