The Hindu : Kerala News : Government plumps for more loans

Online edition of India's National Newspaper
Sunday, Sep 12, 2004

Kerala

Kerala

Government plumps for more loans

By Roy Mathew

THIRUVANANTHAPURAM, SEPT. 11. The Government is speeding up its plans for availing loans so that it would have money to spend on various schemes.

A team from the Asian Development Bank (ADB) is expected here this month to review the implementation of the Modernising Government Programme (MGP) and fiscal reforms. As most of the conditionalities specified by the bank have been met, officials hope that the bank would release the second tranche of its loan for the MGP next month. The only major impediment is the failure of the Government to fulfil its promise to abolish the District Rural Development Agencies. This issue would now have to be settled with the bank.

The second tranche would consist of nearly Rs.600 crores. The Government is hoping that it could carry out a number of "visible schemes" using these funds, which come to nearly one-eighth of its Annual Plan this year. For this reason, the Government is showing fresh enthusiasm to avail the second tranche.

(The Antony Government had become less enthusiastic about the second tranche after the last visit of the ADB team, which insisted on progress in reforms mandated by the loan agreement. There was also a delay of about eight months in the Government approving the aide-memoire prepared by a team. The then Finance Minister, K. Sankaranarayanan, had even said that the Government could go on without the second tranche.)

Urban development

The Government is also plumping for loan from the ADB for the proposed development project for five cities. The action plan of the Government says that the project for sanitation, waste disposal, drinking water supply and road development would be prepared in 100 days. Though there had been protests against availing the loan, mayors have been generally enthusiastic as the repayments are the responsibility of the State Government. Cities would be able to get $ 200 million to $ 250 million as loan with limited conditionalities.

The Government is hoping that it can make an impact by clubbing the project with the Clean Kerala Project.

Steps are also under way to obtain World Bank assistance for the Health System Development Project though issues regarding the role of private sector in the scheme of things are yet to be settled. The bank may provide around Rs.500 crores by next year, if an agreement could be reached over conditionalities.

The Government is also moving to tap funds from Nabard and other agencies.

It would need substantial amount of funds to address the crisis in the agriculture sector.

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