Bulging unused project aid    

The Power Division has, reportedly, suggested reduction in the volume of foreign development assistance earmarked in this year's original annual development programme (ADP) for its failure to utilise the same sufficiently. Surprise, surprise!

The Power Division has recently written to the Planning Commission (PC) to downsize the allocation by nearly a quarter as the latter is now busy preparing the revised ADP (RADP).

The Power Division is not alone to make such a request. Most other major public sector agencies engaged in development project execution do also make requests to cut in their original project aid allocations ahead of RADP formulation by the PC every year. This has become more of a routine practice in the country's development administration.

But such an unhealthy practice has led to one unwelcome development --- accumulation of a substantial volume of unused project aid. The size of the project aid in the pipeline is now estimated at over US$20 billion. Of the total amount, nearly $8.0 billion belong to one single multilateral lender --- the Asian Development Bank (ADB).  The unused project aid stood at only $ 6.8 billion in 2004-05.

Relevant statistics available with the Economic Relations Division does confirm that the flow of foreign development assistance has gone up in recent years. As if in keeping with that trend, the rate of accumulation of unused aid too has gone up. 

But, an altogether opposite development has been taking place in the allocation of domestic resources. The public sector development project executing agencies are found seeking domestic resources in excess of allocations made in the original ADP. 

However, the demand for greater amount of domestic resources at times is made for unapproved projects that are, in most cases, thrust upon the ministries concerned coming under political pressure.

Besides, additional resources are sought for projects the implementation of which is delayed, deliberately or otherwise.  However, delay in project execution, small or big, has become a norm and the government, apparently, is not much disturbed by such a bad practice as it does not harm normal development process.

A couple of reasons are also responsible for poor utilisation of foreign aid and hence accumulation of the same in the pipeline. The first one relates to strong monitoring of fund use by the donors, particularly the multilateral ones. There are instances where multilateral donors have cancelled their aid because of irregularities. The second one---inefficiency--- is the most dominant and damaging.  Inefficiency is the moot cause behind the delay in the execution of development projects and cost overrun.

Whatever may be the cause/s behind the poor or delayed execution of projects, it hurts the economic development of the country. Evidently, the government is not being able to take up many essential development projects for non-availability of sufficient resources.  In such a situation, the accumulation of a huge volume of unused project aid does speak of poor development administration. The country cannot afford it. So, the policymakers must find out ways and means for expeditious and proper use of foreign development assistance.

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