Jharkhand exits 2017 TPA: ‘Not in the favour of state’s health’


Jharkhand Wednesday announced its exit from a Tripartite Agreement (TPA) between the state, Government of India (GOI) and Reserve Bank of India (RBI) after the cabinet approval. The TPA was invoked after the state government failed to clear its outstanding dues to Damodar Valley Corporation.

After the TPA was invoked, deduction of more than Rs 1,400 crore took place, however, Wednesday the government decided that the auto-deduction from the consolidated fund is not in the favour of “Jharkhand’s health”.

Principal Secretary Energy Avinash Kumar said the state government had decided to exit in the interest of state, financial health and for the welfare of the people. He added that the money currently being deducted is from the consolidated fund in which the grants from Center, for various developmental schemes such 15th Finance Commission fund, among others, come in.

An agreement was signed between GOI, Jharkhand state and RBI in 2017 stating that the state government shall ensure that the state power utilities—in this case Jharkhand Urja Vitaran Nigam Limited (JBVNL)—make the supply payment due to the Central Public Sector Units—in this case Damodar Valley Corporation (DVC)—within the period specified in the supply agreement. In the event of State Power Utilities committing a breach in the terms, the state government shall independently and as a principal debtor become liable for the payment. As per the TPA, it authorizes the GOI to instruct RBI to act promptly on its instructions i.e to debit the amount.

On September 11, a notice was served by the Power Ministry to the Jharkhand government to ensure payment of outstanding dues of Rs 5,608.32 crore—as was informed by the DVC—payable by the JBVNL to DVC within 15 days from the date of issue on this notice. In case the JBVNL fails to make payment within the timeline, the central government will invoke the provisions of TPA and recover the outstanding amount in four installments of Rs 1,417.50 crore each on quarterly from the state government’s account.

In response the state government denied outstanding dues as Rs 5,608.32 crore. A letter sent by the government on September 25 pointed out that total outstanding was Rs 3,919.04 crore. The letter also said that the DVC is required to pay Rs 360.36 crore to the state government for conducting mining activity. The net outstanding undisputed dues of DVC arrives to Rs 3,558.68 crore, the state government said.

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