Punjab may not get WB loan

CHANDIGARH: With the Punjab government opening floodgates of official employment, the chances of its securing a World Bank loan have practically vanished.
When seen in the context of lending guidelines under the recently-released country strategy of the Bank for India (for 2005-08), it may never get the loan.
That is unless it pursues reforms seriously.So far the state government has made little effort to do so.
With the plan to employ almost 5,000 persons across the board in various government departments, the danger of defaulting the targets prescribed in the Medium-Term Fiscal Reform Program (MTFRP) is almost certain in the next few years to come.
Till date, the targets set in the MTFRP document have not been met.
Meeting these targets is one of the conditions for getting a Structural Adjustment Loan (SAL), a no strings-attached type of loan, one that Punjab has been seeking for sometime now.
Though this is not the way in which the state government views what it is doing and the likely outcomes from such steps. "I don’t think these jobs will have a bearing on the loan. Essential jobs have to be performed and these cannot be stopped. These (5,000 jobs) are need-based and are not anti-reform, they will increase productivity of the economy," feels finance minister Surinder Singla, who, in the very next breath, added, "They will not be a drain on resources."
Despite the minister''s confidence, the state government appeared nowhere near controlling revenue deficit, the single most important marker of government’s fiscal health.
Revenue expenditure continues to gallop: In 2004-05, the government expects to spend Rs 19,121 crore, Rs 1,906 crore more than last year. Unsurprisingly, the revenue deficit is expected to hover around Rs 3,442 crore.
What the addition of an army of 5,000 government servants will do to these figures, is not on the government’s priority list at the moment, though it certainly will perturb the bank.
In the new strategy of the bank, the story of tough conditions is repeated in almost every sector and even a cursory reading of the list shows that Punjab is nowhere near qualifying for a SAL loan or sectoral loans such as those in power, state highways and rural roads, urban transport, urban development, irrigation and drainage, education and rural water supply and sanitation.
For example, in case of power sector loans, Punjab is nowhere near the level of commitment and track record required for structural adjustment loans. These include a demonstrated commitment to reform and clear improvement in cost recovery and financial performance.
Similarly, in case of rural roads, the bank requires that there be appropriate rural road design standards and agreement on prioritisation of a core network.
Whether Punjab Mandi Board, the agency that has the mandate to execute this task, even has a notion of these parameters is doubtful.
The story is identical across other sectors.