Official sources said the objective of the UPDPL, is to retire the old high cost debts from National Small saving fund loan on the UP government which were about Rs 15,250 crore by the end of March 2008. The WB loan will enable the UP government to swap the costly debt with cheaper loan.
UP government will annually save up to Rs 700 crore on account of debt servicing or interest. UP government is paying interest at the rate of 10 percent on small saving fund loan while the WB loan is likely to cost around 6 percent. The annual interest burden on UP government is over Rs 12,000 crore and the total loan burden on the state government till March 31, 2008, stood at over 1,25,000 crore. The Centre has already approved the proposal and the negotiations between the UP government and the World Bank were at advance stage.
The World Bank mission was here this week on three day visit on May 14 and the loan proposal is likely to be placed before the board of the World Bank at Washington by the end of September. The WB team examined the reform measures introduced by the UP government in various sectors as the loan is linked with the reform matrix to be implemented in various sectors of the government.
The major sectors to be covered by reforms are fiscal policy reforms which includes fiscal consolidation, fiscal discipline and transparency and strengthening and improvement in public financial management system. The governance and civil service reforms includes the effective implementation of Right to information (RTI) Act fixed tenure of IAS and IPS officers in districts and anti corruption measures taken by the government.
Reforms in power sector are the major concern of the WB. The state government has chalked out a business plan aimed at improving cost recovery, reducing the T and D losses and appointment of internal auditors.
Improvement in investment climate is also included in reforms matrix to be implemented by the state government. UP government has showcased the measures taken by it for promoting investment via the PPP route. So far the UP has identified PPP projects worth Rs 1, 25,000 crore which includes the 1,047 KM long Ganga expressway (Rs 30, 00 crore) network of six other expressways (47,000 crore) power projects (25,000 crore) and urban development projects worth Rs 12,000 crore and Taj international airport of Rs 4,000 crore.
