Punjab: To Improve State's Finances And Services, World Bank Approves Loan Worth $150 Million

The World Bank has approved a loan of $150 million to Punjab to help the state better manage its financial resources and improve access to public services.

The Board of Executive Directors of the Bank has okayed the Punjab: Building Fiscal and Institutional Resilience Program to support the state's efforts to strengthen the institutional capabilities of various government departments, manage fiscal risks and make informed policy choices to support sustainable growth.

According to the World Bank release, Punjab's growth has been below potential. A combination of fiscal challenges and institutional capacity constraints means that scarce resources are spread thin across development priorities.

The new project will support the state's development goals by strengthening the planning, budgeting and monitoring functions, and leveraging digital technology.

The project will also aim to increase accountability in the public procurement systems by supporting state-wide implementation of new legal and policy reforms.

"The World Bank is pleased to be a partner of the state of Punjab in the state’s effort to deliver timely, cost-effective and good-quality public services, which is critical for inclusive development," said Auguste Tano Kouame, the World Bank's Country Director in India.

"This new project will support the implementation of the state’s new data policy, which aims to bring together various social protection initiatives and reduce potential leakages while delivering essential services," he continued. The project will pilot two initiatives:

• To introduce a performance-based grants system to incentivise municipal corporations to improve service delivery.

• To demonstrate the delivery of 24x7 water supply in select areas in the cities of Amritsar and Ludhiana.

  It will improve water delivery systems and reduce water leakages.

The success of these pilots will offer a significant potential for the state-wide scale-up of improved service delivery.

"The project is using a ‘whole-of-government’ approach which will ensure that various departments in the Punjab state government are linked so as to enhance their efficiency in managing public resources.

Performance linked intergovernmental fiscal transfers will incentivise improved management of cities and service delivery to citizens,” said Dhruv Sharma and Bhavna Bhatia, World Bank Task Team Leaders of the project.

The $150 million loan from the IBRD has a maturity of 15 years including a grace period of 6 months.

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