The Hindu : World Bank loans for four projects

Online edition of India's National Newspaper
Saturday, Mar 16, 2002

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World Bank loans for four projects

By Our Special Correspondent

NEW DELHI, MAR. 15. The World Bank today approved loans for four projects estimated at $ 665 millions to support economic reforms and improve transport and road systems. These include a controversial $ 250 million loan for budgetary support operations in Andhra Pradesh which has been co-financed by the U.K. Department of International Development with an additional grant of £ 65 million

The Andhra Pradesh loan issue was raised by Mr. Arjun Singh in the Rajya Sabha while participating in a discussion on the motion of thanks on the President's address. He pointed out that this was for the first time that a sovereign foreign government was providing a loan directly to a State Government instead of routing funds through the Centre. Besides, the loan was directly for bridging the State's budgetary deficit, he pointed out, in the form of grant from the British Government.

The details of the loan were announced today by the World Bank which said in a release that the Andhra Pradesh economic reform programme being supported by the loan package, had three major components. These are fiscal reforms, public expenditure management and financial accountability reforms and governance reforms.

The other $ 100 million loan for accelerating economic reforms will go to Karnataka as the second economic restructuring loan. This is the second in a series designed to assist the State government in implementing and financing its ongoing reform agenda. The first operation for $ 150 million was approved by the Bank Board in June 2001. The new package has four main components including fiscal and public expenditure reforms, administrative reforms, private sector development component and poverty monitoring and statistical strengthening component.

``Proceeds from the two projects will be passed on by the Government of India to the Governments of the two States as budgetary support to help finance the cost of reforms and high priority development expenditures '', it is stated.

According to the World Bank Country Director for India, Edwin Lim, there is a broad agreement in India on the need for reforms at the state level to accelerate growth and poverty

reduction. He said these types of projects reinforced initiatives by the Government of India to support and facilitate state reforms.

The other transport related loans of $ 315 million are for projects in Mizoram and Kerala. The Bank's board has cleared the loan package for the Mizoram State Roads project and the Kerala State transport project which aim at expanding and rehabilitating transport systems and strengthening the capacity of the respective State road agencies to manage and deliver quality road services.

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