For West Bengal, Modi government and Asian Development Bank sign $300 million loan to promote fiscal reforms

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New Delhi | Published: October 24, 2017 7:15:25 PM

Asian Development Bank and the Government of India have signed a $300 million loan to continue a series of fiscal reforms in West Bengal to improve the quality of public service delivery in the state.

west bengal, asian development bank, adb, mamata banerjee, narendra modi, west bengal fiscal deficitAsian Development Bank (ADB), Centre have signed a loan. (Reuters)

Asian Development Bank and the Government of India have signed a $300 million loan to continue a series of fiscal reforms in West Bengal to improve the quality of public service delivery in the state, a Ministry of Finance release said today. The release said, “The Second West Bengal Development Finance Program targets a further increase in public investment through the reduction of unproductive expenditure and savings from efficiencies in revenue collections.”

“The program will build on earlier intervention under Phase I of the project through the $400 million program that targeted a comprehensive fiscal consolidation program in the state,” it added.

Sameer Kumar Khare, Joint Secretary, Department of Economic Affairs, Ministry of Finance, who signed the loan on behalf of the Government of India, said, “The Program aims to further deepen the reforms with focus on expenditure rationalization, improvement in revenue administration, and facilitation of more private investment in the state.”

Kenichi Yokoyama, ADB Country Director for India, who signed for ADB, said, “The new Program will create the fiscal space necessary to sustain higher public investment in the State which could put the state’s finances on a balanced and sustainable path.”

The program agreement was also signed by Parwez Ahmad Siddiqui, secretary, Finance Department, Government of West Bengal.

According to the release, ADB’s first Program focused on augmenting public investments reached almost 1.3%, as a percentage of gross state domestic product, in FY2016 from 0.5% in FY2012 while the fiscal deficit reduced to 2.2% from 3.4% in the same period.

“The new Program will not only target public investment but would also support private investments more directly by creating an infrastructure facility to support project preparation, development, and appraisal, with emphasis on public-private partnerships in health and education. It also seeks to simplify the registration and licensing procedure for micro, small and medium enterprises,” it said.

Over a period of two years, the program will also carry forward reforms such as “linking medium-term expenditure plans to actual budgets, supported by strengthening internal audit system, and enhancements in the integrated financial management system (IFMS). Other activities under the program include improved tax monitoring and continued support for information technology systems in strengthening tax and land administration.”

It is expected that the capital outlay as a percentage of gross state domestic product will rise to 2.2% by FY2022 under the second program, with improved budget allocations geared toward development expenditure.

Along with the loan, there is also a technical assistance grant of $500,000 to strengthen key institutions responsible for carrying out fiscal management reforms in the state.

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