Rs 2,450cr aid from World Bank, KfW to get nod

THIRUVANANTHAPURAM: In a relief to the several developmental projects announced by the state government after the 2018 floods, the Centre is all set to clear an assistance of Rs 2,450 crore jointly from World Bank and German development bank KfW for the state.
The funds include Rs 1,700 crore from the World Bank and Rs 750 crore from KfW. The funds were stalled as the department of economic affairs (DEA) was unwilling to allow disbursal of state program loans for the current fiscal due to the exceeding of single borrower limit for the country and the Centre’s need to preserve space for national Covid-related projects.
The Centre’s decision came after the state successfully negotiated a revised model for borrowing, which was agreed by the World Bank and KfW.Instead of providing funds to the state without any strings attached, under the revised model, the World Bank funds will be offered under the program-for-results (PfR) model of funding. The KfW funds will be treated as co-financing component of the World Bank’s fund and for supporting the state’s efforts to respond to Covid-19 crisis by keeping up public spending, resilient reforms and supporting economic activities. The clearance from the department of economic affairs (DEA) is expected soon. In September last year, the government had spent Rs 1,750 crores granted by the World Bank as loan for capital development for payment of pending bills, which cannot be done in the case of upcoming assistance under PfR model.
The World Bank had introduced PfR in 2012, in which the disbursements to client governments are linked to their achievements or disbursement-linked indicators (DLIs) that are tangible, transparent, and verifiable. Each DLI is defined and agreed upon by the country in consultation with the World Bank, and has a verification protocol that sets out how it will be measured and verified. Disbursements of funds will be specified for each DLI and will be made according to achievement of DLIs.
On the basis of the consensus reached between the agencies and the Centre, additional chief secretary (finance) Rajesh Kumar Singh has written to the DEA, requesting the Centre to give formal clearance to the proposal at the earliest, so that the projects envisaged under the next phase of Rebuild Kerala Initiative (RKI) also can roll on.
Meanwhile, after making no significant strides for close to two years since RKI was launched, the first set of major road projects worth Rs 2,000 crore under the public works department has been tendered. This will also mark the beginning of expenditure of the funds earmarked under RKI under the Plan outlay. Sources in the government said that the detailed projects were under preparation mainly for roads under the public works department and local self-government department. “The DPRs are now ready and we have invited bids for PWD roads worth Rs 2,500 crore and tenders worth another Rs 2,000 crore will be published by this month end,” sources said.