NEW DELHI, Dec 21 ? The Asian Development Bank (ADB) has approved an assistance of $ 150 million to Assam for managing its fiscal and revenue deficits. Based on the progress of the first programme, the ADB would consider a second loan of $ 100 million for ?deeper fiscal consolidation and governance reforms? over two years starting from December 2007.
?To successfully fulfill its development objectives, including growth and poverty reduction, the Assam State Government must address its fiscal imbalances and enhance governance,? ADB senior governance specialist Arjun Goswami said in a statement.
With a population of 27 million and poverty rate at 36 per cent, Assam has been lagging behind other States. While Indian economy grew by 5.4 per cent in the Ninth Plan period, Assam?s gross State Domestic Product grew by 2.1 per cent.
?Unless fiscal stabilisation and consolidation takes place, and governance reforms to promote efficiency, fiscal imbalances will increasingly erode physical and human capital expenditures and constrain private investment,? Goswami said. Of the $150 million loan, ADB will extend 15-year loans worth $125 million to reform State finances for the first two-and-half years and another project loan of $25 million will be used to build capacity, undertake institutional reforms and training of government officials involved in public finance.
The ?Governance and Public Resource Management Sector Development Program? would support the State in strengthening public finances, fiscal governance and core governance through a series of policy, legal, regulatory and institutional reforms, the statement said.