WB sanctions $125 million loan to Orissa

The World Bank has sanctioned 125 million dollar (about Rs 600 crore) budgetary support assistance to the Orissa government.

"This is first tranche of a multi-tranche 900 million dollar (Rs 4,500 crore) loan promised by the World Bank for the development of the socio-economic sector in Orissa", said a top official of the state finance department.

Sources said, a chunk of the sanctioned assistance will go towards swapping of high cost loans while the rest will be spent on providing for matching grant for various centrally sponsored schemes in the state.

The debt swapping is expected to relieve the loan-servicing burden of the state, which along with payment of salary and pension accounts for nearly 80 per cent of the state's total revenue. The state's debt burden now stands at a staggering Rs 32,000 crore.

Orissa had sought this loan from the World Bank a couple of years back for certain fiscal structural adjustments and support the annual plan outlay in the face of funds crunch.

Meanwhile, the state government expects sanction of another 250 million dollar from the World Bank by early next year.

For this, certain conditions like change in the agriculture marketing policy to open the storage yards for private investment and enactment of industrial facilitation rules reducing the number of statutory clearances for industrial units from the present 16 to two are required, said the finance department official.

Negotiation for the loan was going on for a prolonged period.

However, the bank, despite a favourable view on the state's proposal, dilly-dallied on the sanction of loan on the pretext that the state had not implemented certain reformatory steps as suggested by the bank to be eligible for the assistance.

So much so that though the government last year had projected its annual plan outlay at Rs 3250 crore taking into account the expected sanction of Rs 850 crore from World Bank, it was forced to cut the plan outlay at the end of the financial year as no money was available from the bank.

Again this year, the government has projected the plan outlay at Rs 3250 crore again on the hope of sanction of Rs 950 crore during the fiscal.

Earlier, in mid 90s, the World Bank had sanctioned 290 million dollar loan to Orissa to prop up the power sector reforms project in the state.