M A I N   N E W S

CAG picks holes in HRD Ministry’s ‘favour’ to IIT-Madras
Aditi Tandon
Tribune News Service

New Delhi, September 2
At a time when a debate is raging on the potential of Indian Institutes of Technology (IITs) to raise their own funds, the Ministry of HRD has been found favouring these premiere technical institutes a tad too much.

In a surprise find, the Comptroller and Auditor General (CAG) has revealed that the Ministry which Kapil Sibal heads extended a huge loan of Rs 100 crore to the IIT Madras Research Park at an interest rate which was 8.5 per cent lesser than the rate the institute should have been charged.

The largesse resulted in the loss of Rs 46.75 crore to the Government even though the Ministry, after being alerted on the faux pas by the CAG, recovered the lost amount and corrected the anomaly.

That apart, the CAG found out how in January 2010, the Ministry had extended the said loan to IIT Research Park, a company registered under Section 25 of the Companies Act, 1956, against the General Financial Rules of the Government.

The Ministry of Finance, Department of Economic Affairs, through its office memorandum issued in October 2007, had prescribed an interest rate of 11.5 per cent per annum on investment loans given by the Central Government to industrial and commercial undertakings in the public sector as well as to the cooperatives.

Despite this, the agreement which the Ministry of HRD executed with the IIT Madras Company in February 2010 provided for levying of interest at the rate of three per cent per annum as against the applicable rate of 11.5 per cent. Repayment of the loan was to commence from 2013-14 for a period of 10 years.

“The action of the Ministry was in contravention of the General Financial Rules and the decision of the Expenditure Finance Committee of the Government. After this was pointed out to the Ministry in June 2011, it replied in June 2012 that the agreement had since been revised and the company had agreed to pay interest at the applicable rate as per Government norms,” CAG said in its audit report on the issue.

The timely intervention of the audit resulted in recovery of the impending interest loss amounting to Rs 46.75 crore.

The Auditor’s intervention

* The Ministry gave it Rs 100 cr loan at just 3 pc interest

* Under govt rules, such loans must be charged at 11.5 pc rate

* After being alerted by the CAG, the anomaly was finally corrected.

* The intervention of the audit resulted in recovery of the interest loss worth Rs   46.75 cr





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