World Bank clears $200 mn Himachal Pradesh loan

The World Bank has approved a $200 million loan to Himachal Pradesh for carrying out fiscal reforms and also preserving the environment of the state as it develops.

An official of the state government said on Thursday here: "The loan is designed to create fiscal space to support the state's development vision and promote environment sustainable development. It aims at enhancing growth and employment, especially in the private sector, besides improve governance and public administration."

The World Bank cleared the loan on Wednesday and praised the state for leading the way in gender equality and making services accessible a remote state. The loan will have a twenty-year-old maturity and a five- to ten- year race period.

"The state is facing new challenges including effective management of its environmental resources, while investing in hydropower in an environmentally sound way. The operation supports this agenda," Isabel Guerrero, World Bank Country Director for India said.

The Bank said the state needed enhancement of fiscal space and finance development and also an increase in the efficiency of public expenditure. The major constraint was that around 65 per cent of its expenditure was spent on salaries, pensions, and interest payments. Also, the state has a debt stock of around 74 per cent of the gross state domestic product.

Support to environmentally sustainable development will help manage state's precious natural resource base, from which it derives its comparative advantages in sectors like hydropower and tourism.