The World Bank has stopped processing a $250-300 billion loan to the Punjab government for financing a rural water supply scheme. Speaking to Business Standard, World Bank managing director Gautam S Kaji said the decision was taken following the Shiromani Akali Dal governments announcement after its recent victory in the elections that water and power would be supplied free to all farmers.
They have apparently implemented their promise of providing free water and free power, which is diametrically opposed to what they have given us as a policy statement, Kaji said. A letter to this effect has already been forwarded to the state government, he said.
They are perturbed because a lot of work has gone into it. I am equally perturbed as we too did a lot of work with them. I do think it was a very good project. And we had a very good policy statement from the Punjab government.
Kaji said he had raised the issue with Punjab Chief Minister Parkash Singh Badal, whom he met recently, and added that Badal did not have a satisfactory answer. How you can make water free while being consistent with the water policy which says the polluter pays, and that you are going to recover cost at least to cover operation and maintenance, However, Kaji said he was prepared to wait till further discussions.