Kerala govt under World Bank scrutiny over agricultural aid mishandling, Kerala, World Bank, Agricultural Reform, Financial Crisis, KERA Project, Funds Diversion

The Kerala government has allegedly diverted Rs 140 crore, originally meant for an agricultural modernisation project supported by the World Bank, to cover year-end financial expenses. The funds were sanctioned for the Kerala Climate Resilient Agriculture Value Chain Modernisation Project (KERA), but were reallocated shortly after approval, reported violating the terms of the agreement.

According to reports, the World Bank, in its assessment, found the state government’s action a serious violation of contractual conditions. According to the agreement, the allocated amount should have been transferred into the project’s account within a week. However, even after five weeks, the money remains with the Finance Department, withheld to manage the state’s financial year-end expenses.

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Details of the KERA project

The KERA project aims to help Kerala’s agriculture sector tackle climate change, promote value-added agricultural products, and encourage small-scale private enterprises. Of the total cost, Rs 1,656 crore is being funded by the World Bank, while Rs 710 crore is the state’s contribution. The project received final approval from the World Bank on October 31, 2024, following discussions that began in 2023.

The first instalment of Rs 139.66 crore from the World Bank was handed over by the Centre on March 17, 2024. As per the contract, the state government was required to transfer the amount to the project account within a week. However, this deadline was missed, creating a delay of over a month.

World Bank team to visit Kerala

A World Bank team is scheduled to visit Kerala on November 5. During the visit, they are expected to bring the breach of agreement to the Chief Secretary’s attention.

Project timeline and beneficiaries

The project was supposed to begin operations on February 3 and will run for five years. Its goal is to directly benefit around four lakh farmers and indirectly support another ten lakh. The inauguration of the KERA project is now planned at the end of this month, as part of the Kerala government’s fourth-anniversary celebrations. However, the diversion of funds has put the project’s implementation in a precarious position.

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