World Bank okays $150 million loan for Punjab to improve state's finances, service delivery
Washington (US), September 20: The World Bank's Executive Directors approved a USD 150 million loan to the Indian state of Punjab on Tuesday to help the state better manage its financial resources and enhance access to public services.
In a statement, the international financial institution said it will assist the state's efforts to improve the institutional capacities of different government departments, manage financial risks, and make informed policy decisions to ensure long-term growth.
"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 further said.
The new projects will help the state achieve its development goals by strengthening the planning, budgeting, and monitoring functions and leveraging digital technology, as well as increasing accountability in public procurement systems by assisting with the state-wide implementation of new legal and policy reforms.
World Bank's Country Director in India Auguste Tano Kouame said in a statement that "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."
"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," he added.
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Two initiatives will be tested as part of the project: It will implement a performance-based grant system to incentivize municipal corporations to enhance service delivery.
Second, it will showcase the delivery of 24-hour water supply in select parts of Amritsar and Ludhiana. It will improve water delivery systems and cut down on leaks. The success of these pilots is projected to provide a considerable opportunity for statewide scale-up of better service delivery.
"The project is using a 'whole-of-government' approach which will ensure that various departments in the Punjab state government are linked so as to enhance their efficiency in managing public resources. Performance linked inter-governmental fiscal transfers will incentivize improved management of cities and service delivery to citizens," Dhruv Sharma and Bhavna Bhatia, World Bank Task Team Leaders of the project, said.
The USD 150 million loans have a 15-year maturity duration with a 6-month grace period, according to the statement.
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