Program will support the state to improve fiscal management, rationalize spending, and introduce new revenue measures
An agreement has been signed with Asian Development Bank (ADB) for a loan of US$ 200 million to facilitate the State of Punjab to implement a comprehensive fiscal consolidation programme. This will generate fiscal savings and make better use of scarce budgetary resources and thereby help with socio-economic development of the State.The Agreements were signed by Tarun Bajaj, Joint Secretary, Department of Economic Affairs, Ministry of Finance on behalf of the Government of India; M. Teresa Kho, Country Director on behalf of ADB; and Jaspal Singh, Secretary (Expenditure), on behalf of the Government of Punjab.
The program will provide necessary support to the state government to improve fiscal management, rationalize spending, and introduce new revenue measures. Among these measures will be a plan for improved targeting of public expenditure in the areas of education, health, public works and power; new revenue stream initiatives; the establishment of a fiscal policy and management unit in the state finance department, and the development of fiscal responsibility rules.
Speaking on the occasion, Tarun Bajaj, Joint Secretary, Department of Economic Affairs said that the Punjab Development Finance Program will improve targeting of public expenditure in the areas of health, education, power, and public works. Moreover, it addresses environmental issues that are undermining sustainability considerations through direct feedback loops from subsidy to water table depletion.
M. Teresa Kho. Country Director, ADB said that ADB's loan will help the state government to introduce reforms, which will strengthen finances, encourage fresh investment and free up resources for priority spending needs.
Savings produced are expected to free up extra space for spending in other areas, allowing capital outlays as a percentage of gross state domestic product to rise from less than 1% in fiscal year (FY) 2012 to an expected 2.4% by FY2016. Fiscal savings between FY2014 and FY2018 are expected to reach US$ 766 million.
More From This Section
The loan funds will be released in three tranches as policy milestones are met, with the first amount set at US$ 50 million. ADB is also providing a technical assistance grant of US$ 400,000 to raise the fiscal management skills of key institutions overseeing the reforms. The program will run for about two and a half years with an expected completion date of June 2017.
Powered by Capital Market - Live News