The Hindu Business Line : World Bank begins process to sanction loan for AP

The World Bank has set in motion the process that is likely to result in sanction of the third round of Economic Reform Loan (APERL 3) for Andhra Pradesh in January next.

The Programme Information Document (PID) of the Bank envisages a tentative financing of $200 million to support "the continued implementation of the Government's programme of fiscal, administrative and service delivery reforms".

This is the "third operation" in the current series of Structural Adjustment Loans, now referred to as Development Policy Loans (DPLs) by the Bank.

While the loan proposal is expected to get appraisal authorisation in October, the Board is likely to approve the loan on January 7, 2007.

The first round of reform loan ($250 million) was approved in 2002 and the APERL 2 of $220 m was sanctioned in February 2004. Each of these loans got an additional $100 million from DFID (Department for International Development of the UK).

Explaining the rationale for continuing the loan programme, the PID said the current Government has built on the economic and social reforms initiated by its predecessor. Besides continuing the key reform initiatives such as fiscal discipline, governance reforms and restructuring of public enterprises, the new Government has added emphasis on agriculture and irrigation.

"The reform momentum in Andhra Pradesh continues to gather pace and the State remains one of India's leading reforming States," it pointed out.

It, however, felt that despite its recent development success, the State remained a middle-income State, with pockets of heavy concentration of poverty and deprivation, especially the rural areas in the Telangana region.

The Bank claimed that the State had emerged from an economically and socially backward State to one "where the positive impact of its sustainable reforms is well documented on both economic and social fronts."

It also claimed that the decade-long reform programme has yielded encouraging results and it has begun to bridge the development gap.

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