World Bank to resume aid to Punjab

CHANDIGARH: After a gap of almost six years, the World Bank has decided to resume aid to development projects in Punjab. It is now thinking of funding a state highway project.
"A few days ago, we were asked to fund a state highway project in Punjab by the Centre. We are happy to do that and would be happier to help other sectors too if we are asked," Michael F Carter, the bank''s country director for India told Times News Network during seminar on economic reforms here.
How soon will the lending resume?
"We have a process under which we work with the Punjab government for identification of projects.I can''t say how long, but once they are identified, takes less than two years," Carter said.
On whether the World Bank would be willing to support a comprehensive economic restructuring projects of the kind that were implemented in Andhra Pradesh and Karnataka, where all aspects of the state''s economy are considered, the country director said: "We could consider these projects too, but Punjab has to take a decision on them. Those are projects that take comprehensive preparation before they can be approved. We could look at them."
Asked about the sustainability of the proposed power sector reforms in Punjab, that require anywhere up to Rs 15,000 crore in the transition period and questions about the state''s ability to repay such loans, Carter said: "Sustainability is very important and that needs to be looked into in the context of state finances. Any financing would have to be done on the basis of sustainable return of money. The aim should be to get Punjab''s finances back on the road."
Nearly 45 per cent of the farmers in the state, the major power consuming group, have landholdings less than two hectares. Even with most rational use of resources, farmers with such small landholdings would hardly be in a position to pay enhanced tariffs and this would put a question mark on the repayment of such huge loans. These are some of the questions which remain unanswered
The bank had stopped lending to Punjab government in 1998 after the SADBJP government in the state decided to give free power and water to farmers.