Southern States - Kerala

Rs. 800 cr. from ADB likely by Nov.

By Our Staff Reporter

THRISSUR JUNE 21. The Finance Minister, K. Sankaranarayanan, has said that the State is likely to get the first instalment of the proposed loan from the Asian Development Bank (ADB) by November.

Replying to questions at a `Meet-the-Press' programme organised by the Thrissur Press Club today, the Minister said the Rs. 3,600-crore loan from the ADB would be in four instalments and the first is likely to be about Rs. 800 crores.

Asked whether the State had to meet any more new conditions to ensure the release of the first instalment, the Minister said another one or two rounds of discussions would be held and most likely the talks would be completed by next month. The Government will not accept any condition that is detrimental to the interests of the State. Like any lending institution the ADB too wants to ensure that the money it lends to the State will be repaid. But it need not have any worry on that count, as the State is getting the money through the Centre.

Reiterating his position that the ADB loan would have an interest rate of 8.05 per cent only and not 12 per cent as was being projected by the Opposition, the Minister said the variation in the rate would depend only on the fluctuation of the exchange rate of the dollar. But even that difference will have to be paid by the Centre and not the State.

The Minister said the State would not have to pay any consultancy fee for the ADB loan, as the lending institution would bear that. Thirty per cent of the loan will be treated as grant.

The LDF is now campaigning against the ADB loan after having taken steps for its sanction during its tenure, only to ensure that no development activities are implemented in the State during the UDF regime, the Minister alleged.

He denied that the Government was planning massive retrenchment in the State as part of the reforms programme. In fact, about 13,000 people were recruited after the UDF came to power.

The UDF Government, he said would ensure that the ADB loan was utilised in accordance with its original purpose, unlike the previous LDF Government, which had made a debt of Rs. 507 crores by issuing bonds claiming that it would be spent for infrastructure development. But the money was later diverted to the ways and means account. The ADB loan is to be utilised for infrastructure development, but the list of areas, where it is to be used has not yet been finalised.

He claimed that the reforms being planned in the State were not linked to the ADB loan. The State Government on its own had undertaken the reforms programme, including the decision to disinvest loss-making Public Sector Undertakings (PSUs).

All efforts would be made to ensure that the gains that the State had made in the social sectors were not jeopardised by the reforms. For instance, even though a large number of educational institutions are being sanctioned in the private sector it will not significantly affect the students from poorer sections, because 50 per cent of the seats will be kept in the open merit category, the Minister said.

He said the local bodies in the State would start getting this year's Plan allocation by August. The Government will sanction the entire 33 per cent Plan allocation in the current financial year itself, and the practice of sanctioning a major chunk of the amount towards the year-end will be dispensed with.

Last year, the Government had sanctioned three instalments to the local bodies. But the last instalment could be sanctioned only towards the year-end, and, therefore, the time limit for its utilisation had to be extended till June 3 this year. However, there will be no such extension this year. The Government is trying utmost to ensure that cheque issued by it would not bounce, and accordingly has regulated the issuing of the letter of credit, the Minister said.

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