Date:07/07/2005 URL: http://www.thehindubusinessline.com/2005/07/07/stories/2005070700971700.htm

Back World Bank sanctions $300-m loan for TN urban development

Our Bureau

Chennai , July 6

THE World Bank has approved a $300-million loan to assist the Union Government to implement the Third Tamil Nadu Urban Development Project (TNUDP-III) to improve infrastructure and strengthen Urban Local Bodies (ULBs).

The project will fund urban infrastructure such as water supply and sanitation, underground sewerage schemes, solid waste management, street lighting, urban roads and traffic management activities, according to a World Bank press release.

It will also cover the widening and strengthening of access roads in the Greater Metropolitan Chennai area, the construction of bridges and subways and traffic management.

The loan from the International Board of Reconstruction and Development (IBRD), the World Bank's lending arm, has a five-year grace period and a 20-year maturity. The TNUDP-III will empower ULBs by training and delegating powers from State level bodies. Over 47 per cent of Tamil Nadu's population lives in urban areas, one of the highest in India. The project will mobilise resources for urban infrastructure investments through private financing by linking ULBs to the financial markets with the intermediation of the Tamil Nadu Urban Development Fund. Investment incentives will be provided in low-income neighbourhoods through capital grants.

The Government of India's Tenth Plan (2002-2007) emphasises on urban reform as critical to growth and poverty alleviation. It is estimated that about $7 billion would be needed for urban development over this period. State and local level reforms are needed to achieve this goal.

India's cities with a population of about 30 crore contribute over 60 per cent of the gross domestic product and contribute more than 90 per cent of Government's revenues.