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LATEST NEWS UPDATES | World Bank’s $1b loan for JNNURM to come with strings

World Bank’s $1b loan for JNNURM to come with strings

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published Published on Dec 9, 2009   modified Modified on Dec 9, 2009

A team from the World Bank will be in New Delhi soon to work out the nitty-gritties of a $1-billion loan to the urban development ministry for carrying forward the cash-starved flagship scheme for upgrading urban infrastructure, the Jawaharlal Nehru National Urban Renewal Mission (JNNURM).

There would, however, be conditionalities attached to the use of the fund as it would be reform-linked and only select states would get access to it, a senior official in the urban development ministry has said.

State governments have exhausted most of the Rs 1 lakh crore sanctioned for various schemes since the mission was launched in December 2005 for a period of seven years. The Planning Commission is yet to take a decision on the urban development ministry’s request for additional funds of Rs 50,000 crore.

“A team from the World Bank will be here soon and we will work on the details of the loan,” urban development secretary M Ramachandran told ET, adding that the final discussions on the proposed loan took place between Urban Development Minister Jaipal Reddy and World Bank chief Robert Zoellick during the latter’s recent visit to the country.

Mr Ramachandran pointed out that the fact that state governments had used up the funds mid-way through the scheme proved that the architecture of the scheme was successful.

Under the JNNURM, the Centre gives grants covering 50 per cent of the project cost for cities with population between one million and four million. For cities with population higher than four million, the Central grant is 35 per cent of the project cost. The remaining funding comes from the state’s kitty and the urban local bodies or para-statals.

However, for North-Eastern states, the Centre provides 90 per cent of the project cost as grants while for Jammu & Kashmir its contribution is 80 per cent. The sanctioned funds have been invested in various projects in areas such as water supply, sewerage, drainage, public transport system and building of roads and flyovers.

The secretary pointed out that it would not be possible to extend the amount loaned by the World Bank to all states and disbursals will be reform-linked. Identification of cities where reforms have been carried out needs to be done, he said.

The states of Assam, Tripura, Gujarat, Maharashtra and Andhra Pradesh have carried out reforms like enacting the public disclosure law and repealing urban land ceiling and regulation Act. Some states like Rajasthan and Punjab, however, are lagging behind.


The Economic Times, 10 December, 2009, http://economictimes.indiatimes.com/news/economy/finance/World-Banks-1b-loan-for-JNNURM-to-come-with-strings/articleshow/5320654.cms
 

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