State likely to get Rs 2,130-cr WB aid

Ruchika M Khanna

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Tribune News Service

Chandigarh, December 17

The Punjab Government is expected to get a soft loan of $300 million (Rs 2,130 crore) from World Bank in the next three months. This could mitigate the biggest challenge faced by the state — of large portions of its income going towards debt servicing, and thus very little resources being left at its disposal for carrying development works.

Top government officials told The Tribune that the Centre had given in-principle approval to the state for availing this soft loan. A detailed project report will be submitted to the Board of Directors of World Bank in February or March. This loan to the state will lower the cost of market borrowings and the money thus saved can be used for development. This year, Punjab is spending Rs 30,309.17 crore for servicing of debt of Rs 2.29 lakh crore.

“The amount spent for debt servicing is 38.6 percent of the state’s revenue receipts of Rs 78,509.70 crore. We are paying an interest of 8-8.5 percent on the total accumulated debt. The soft loan that the World Bank will offer, will attract a much lesser rate of interest, thus lowering the cost of borrowings,” said a senior Finance Department officer.

To avail this loan, reforms in key sectors, as suggested by World Bank, have already been initiated by the state. While most of these reforms sought in power sector, water supply and sanitation, governance reforms and finance have already been initiated, the challenge lies in initiating reforms in the agriculture sector. A roundtable discussion on policies for promoting agriculture diversification in Punjab was held here today, wherein officials from World Bank said the state’s agriculture model was no longer sustainable economically, environmentally or financially, even though the state played a pioneering role in achieving national food security.

Experts asked the state to wean away farmers from the comfort zone of assured prices and explore the market according to the dynamics. The government officials as well as progressive farmers present there tried to defend the state’s agriculture policy, and blamed the restrictive practices in funding under various Central schemes. However, the state was asked to emulate MPmodel for pushing farm reforms and for going in for climate sustainable agriculture.

A top official said reforms in water supply and sanitation had been initiated under the Punjab Urban Governance and Water Supply Improvement Programme. The government has strengthened urban governance, finances and delivery of sustainable water services in Amritsar and Ludhiana. The recently approved The Punjab Transparency in Public Procurement Act is also an initiative in reforms sought by World Bank in the state’s Finance Department. “We are on the mark for initiating all reforms, so as to meet the World Bank deadline and get the loan before the end of this fiscal year,” said the official.