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ADB to provide over $5 b assistance to India

Our Bureau

NEW DELHI, April 30

AFTER a spell of deceleration in lending following sanctions on India in the last couple of years in the last decade, the Asian Development Bank (ADB) is all set to make good by extending over $5 billion by way of its Country Assistance Programme to Indi a in the next four years.

Disclosing this to newspersons here, a senior official from the Manila-based regional development bank, Mr Klaus Gerhaeusser, said that for the current year the Bank's lending to India would be of the order of $1.6 billion, including $500 million to eart hquake affected Gujarat, $300 to $350 million for power sector in Madhya Pradesh and an additional $300 million for private sector participation in infrastructure, $240 million for western corridor of the Prime Minister's Golden Quadrilateral highway pro ject and $210 million for West Bengal's Metro Rail Project.

Mr Gerhaeusser said that from 2002 to 2004, India would get on average $1.2 billion a year so that the medium-term country assistance to India would reach $1.6 billion beyond 2004.

He said the ADB officials held intensive discussion with Indian Government officials both at the Centre and in the States during the last two weeks to wrap up the Bank's Medium-Term Lending Programme covering 2001-2004 four-year period.

He said the States under focus, from the Bank's point of view, include Madhya Pradesh, Gujarat and Kerala, though during the current visit of the Bank mission exploratory talks were initiated with the newly-formed State Government of Chhattisgarh.

Besides, these States, other States keen on getting lending from the ADB include Tamil Nadu and Karnataka, he said adding that the Bank enters into comprehensive dialogue with the respective States about the sector in which loan was being made so that re forms in this sector and overall macroeconomic position of the State could be thoroughly reviewed to make the future project lending to them ``sustainable''.

Alongside, he said, the Bank discusses the tax reform, expenditure management, debt management including restructuring and reform of State-owned enterprises. He said one of the mandates of this mission is to discuss with State governments to what extent they are committed to undertake reforms and sustain them so as to qualify for continued future assistance from the Bank.

On the loan assistance programme, he said traditionally the Bank supported power sector in States but now it was extended to the Centre also. ``Discussions are ongoing with Power Finance Corporation to leverage reform in other reform-minded States, parti cularly given the importance of power sector in rural electrification,'' he said.

Once the National Highway Development Programme (NHDP) is through by 2003, the Bank would start dialogue with the National Highway Authority of India (NHAI) for assisting the Golden Quadrilateral highway corridor programme in which the Bank could provide technical assistance in the form of capacity building for executing agency to prepare project preparation and logistics management, Mr Gerhaeusser said.

He said the Bank's offer of assistance for West Bengal in the highway corridor programme was mainly due to ``sub-regional considerations, given the strategic location of the State in that area''.

Asked about whether the Enron tangle would have any effect on the Bank's assistance to power sector lending programme in India, Mr Gerhaeusser said that ``we do not like to comment on this issue. The Government of Maharashtra and the Central Government w ere dealing with this''.

He, however, said that the Bank undertakes power sector programme with the State Government concerned only after thoroughly satisfying itself with various parameters of the concerned State's commitment to reform in the sector.

To a query about how much component of over $5 billion loan assistance to India would comprise soft loans being extended from the Bank's Asian Development Fund (ADF), Mr Kazu Sakai, Programme Manager of India at ADB said that last year negotiations for f resh pledge to ADF were over.

``Unfortunately, both India and China were not to get this assistance. So all the assistance for India would be from the Bank's Ordinary Capital Resources(OCR),'' bearing market-related interest.

To a specific query about the Bank's commitment to extend loan for restructuring Indian Railways, Mr Gerhaeusser clarified that the Expert Committee on Restructuring of Indian Railways had not completed its final report and there was a delay of one and a half year.

He said that assuming that report would be ready within the next few months, it would be discussed thoroughly by all the people concerned and ``it is premature to talk about assistance in terms of big loans for restructuring Railways'', he added.