ADB to grant $500-million aid for Gujarat

By Our Special Correspondent

NEW DELHI, MARCH 26. After a joint assessment by the Asian Development Bank (ADB) and the World Bank of the reconstruction cost of the earthquake-hit Gujarat, the ADB today announced that it would extend $ 500 millions concessional assistance to the State.

According to the Resident Representative of the ADB in India, Mr. Frank Polman, the bank had earlier decided to extend $ 350 millions out of the Indian fund portfolio, but had decided to enhance the amount to $ 500 millions after assessing the extent of the damage.

The total cost of the ADB's Gujarat Earthquake Recovery Programme is estimated to be $ 625 millions, out of which the ADB's contribution would be 80 per cent and the balance would come from the State Government.

The joint assessment found that the reconstruction of Gujarat would cost about $ 2.3 billions (approximately Rs.10,600 crores).

The concessional assistance from the ADB would have a maturity period of 30 years, including a grace period of seven years and would be disbursed in the next 30 months in tranches of $ 100 millions each.

About 40 per cent of the loan would be for housing needs and the balance for reconstruction of urban and rural infrastructure, restoration of power supply and livelihood rehabilitation. The joint assessment had pinpointed that the total loss of assets, including private assets, was about Rs. 9,900 crores and that the bulk of these losses were in the housing sector where the loss was estimated to be Rs. 5,200 crores.

Also affected were sectors such as education, health, rural water supply, irrigation, transport and public buildings and monuments. However, the assessment found that the loss of output would be small, ranging between Rs. 2,300 crores to Rs. 3,000 crores, that is, two to three per cent of Gujarat's 1999- 2000 gross State Domestic Product (SDP) in aggregate over the three years.

This would be because of the fact that the area most affected by the earthquake was not a major contributor to the overall State output. The output loss was likely to take place mostly in 2000- 01, while in 2001-02 and 2002-03 the reconstruction activity was likely to accelerate growth, the assessment report states.

The ADB has also decided to establish an extended office at Gandhinagar for closer cooperation with State Government officials and to ensure efficient implementation of Bank-funded projects.

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