World Bank extends $150 million loan for Punjab

The funds-starved coffers of Punjab government has got a loan of $150 million (approximately Rs 1,200 crore) from the World Bank to help the state better manage its financial resources and improve access to public services.

The World Bank, in a statement said it would support Punjab’s efforts to strengthen the institutional capabilities of various government departments, manage fiscal risks and make informed policy choices to support sustainable growth.

Punjab at present has a debt of Rs 2.63 lakh crore. The state, which was receiving a large chunk of its earnings as GST compensation from the Centre, is set to lose around Rs 16,000 crore annually after the Centre ended its GST remuneration scheme for the states in June this year. The state at present is grappling with a challenge to keep itself afloat with the new government splurging on freebies to keep its pre-poll promises.

The World Bank loan that Punjab will receive can only be used for the purpose and the departments it is meant for, officials said.

“Punjab’s growth has been below potential. A combination of fiscal challenges and institutional capacity constraints means that scarce resources are spread thin across development priorities,” the statement by World Bank said.

The new projects will support the state’s development goals by strengthening the planning, budgeting and monitoring functions, and leveraging digital technology, besides increasing accountability in the public procurement systems by supporting the state-wide implementation of new legal and policy reforms.

“The World Bank is pleased to be a partner of the state of Punjab in the state’s effort to deliver timely, cost-effective and good-quality public services, which is critical for inclusive development,” Auguste Tano Kouame, the World Bank’s country director in India was quoted as saying in the statement.

“This new project will support the implementation of the state’s new data policy, which aims to bring together various social protection initiatives and reduce potential leakages while delivering essential services,” Kouame added.

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The project will introduce a performance-based grants system to incentivize municipal corporations and improve service delivery and also demonstrate the delivery of 24×7 water supply in select areas of Amritsar and Ludhiana. It will also improve water delivery systems and reduce water leakages. The success of these pilots is expected to offer a significant potential for the state-wide scale-up of improved service delivery.

Punjab Finance Minister Harpal Cheema on Saturday said that he had already provisioned for the amount in the budget. He added that the world Bank gives this loan for reforms in various departments. He also said that all states get this loan and the amount gets released gradually as various departments show utilisation.

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