South India: Government Firm on Loan

Trivandrum, India, Mar. 28 2002 (INS News) -- The Kerala State Minster for Finance Mr Sankaraarayan asserted that the government would not go back on its decision to take loan from the Asian Development Bank.

Kerala had been selected as the third focal State for assistance by the Asian Development Bank a few years ago, on the basis of willingness expressed by the then government to undertake substantive reforms in the fiscal sector, public sector enterprise and power sector.

One of the main advantages of the Asian Development package is that it will help us to restore fiscal accountability. The analysis made in White Paper brought out last year establishes beyond doubt that the main reason for our present plight are the reckless borrowing and spending indulged in the past.

As we move forward on the path of reform, it is imperative that we create a legal and administrative framework to ensure that the follies of the past are not repeated. To Asian Development Bank package will also enable us to improve the quality of governance substantially, by streamlining administration, ensuring accountability and transparency and by reducing or eliminating deficits and subsidies.

The Package will bring substantial investments in the power sector, public enterprises and fiscal reforms. ADB has earmarked six million dollars {Rs. 3000 crores} for the period 2002-2004. They have also expressed their intention to double the quantum of assistance to 1200 million dollars in confessional form of assistance and that the rate of interest is only 7%.

Finance Minister said that the state government would take the people of the state in to confidence before taking a final decision. Replying to Opposition suggestion that the South East Bank of Australia was keen to to finance the state government projects on 5% interest which is lower than the seven per cent being offered by ADB Finance Minister said that the government was ready to borrow from any good Bank provided by the concurrence other central Government.

-- Sam Asharaf - South Asia Correspondent in Trivandrum, India

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