UP to get World Bank loan of Rs 15,242 crore

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Lucknow, Nov 16: The decks are finally cleared for Uttar Pradesh soon getting a loan of Rs 15,242 crore from the World Bank (WB) towards financing the reforms programme and retiring the costly debt. The sanction of loan brightened after year-long negotiations between UP government and the WB with the latter agreeing to the contentions of the former over the issues of fixed tenure of bureaucrats and tough anti-corruption mechanism. The WB was satisfied with seven out of a total of nine conditions mainly pertained to financial matters but the frequent transfers of the IAS and IPS officers and prevalence of corruption had held the multi-lateral financial institution back.

''Now since all the hurdles looked like removed, the loan is likely to be finalised within the current fiscal 2008-09,'' a top UP Finance department official told UNI. The process was delayed due to transfer of some senior finance department officials inlcuding the previous Principal Secretary of UP finance department Shekhar Agarwal who was moved to Delhi on deputation.

The UP government, in May 2007,had approached the Centre for the sanction of Structural Adjustment Programme loan (SAP) from the World Bank for tiding over its finances. The WB mission visited Lucknow in July 2007, and instead of SAP loan the WB agreed for Development policy loan' linked to the reforms programme. The loan is likely to immensely benefit the finances of the state government which will annually save up to Rs 700 crore by retiring the costly small saving loan. The UP government is paying interest at the rate of 10 per cent on small saving fund loan while the WB loan is likely to cost around 6 percent.

The annual interest burden on UP government is over Rs 12,000 crore and the total loan burden on the state government till March 31, 2008, stood at over 1,25,000 crore.

The WB could be convinced following much persuasion by the UP government officials as the former agreed to drop its conditions accepting the arguments and assurances of the state government. WB wanted the UP government to make the Vigilance and anti-corruption mechanism more stringent by making the Vigilance Commission independent on the lines of Central Vigilance Commission at the Centre.

The WB had also suggested to the UP government to ensure fixed tenures of the bureaucrats at the field posting and all other major agencies of the government at the district and state headquarters level.

''Initially , there was some difference in perception of the WB officials on both the issues. We made a detailed presentation before the WB team on both the issues to put across our view point and both the issues have been settled,'' official sources said.

The problem of fixed tenure pertained only to the IAS and IPS officers and there were several reasons that the government could not ensure fixed tenure as the officers of the Central service go to Delhi on deputation or promoted and in both the cases substitutes are needed. So reshuffle is the only option.

The issue of fixed tenure and state government's anti-corruption endeavours got acceptance of WB as were explained by the UP government. With regards to anti-corruption mechanism , the WB was told that the system of vigilance in UP was different from that of the Centre.

''While the Centre has the Central Vigilance Commission while UP has the Lok Ayukta system, which was independent and can institute inquiry on suo moto basis against any bureaucrat and minister without the approval of the state government,'' the WB was explained.

The loan once released would not only relieve the state from some financial crunch but also speed up the developmental process in the state.

UNI

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