The Hindu Business Line : Much ado about a loan

The sooner the controversy over the Asian Development Bank loan is settled, the better the prospects for the social and economic development of Kerala.

The statement of Mr Tadashi Kondo, Country Director of ADB in India, to regional television channels that there were no substantial changes in the agreement that was finalised by the previous UDF government, would have come as music to the ears of the UDF constituents, currently sitting in the Opposition. Politics continue to dog the $221.2-million ADB loan sanctioned over a year ago on a 25-year term, including a grace period of five years, aiming to improve the urban infrastructure of five municipal corporations of Kochi, Kollam, Kozhikode, Thiruvananthapuram and Thrissur.

Total project cost

The total cost of the project has been pegged at $316.1 million, of which the State Government will provide $59.8 million, while the municipal corporations will provide $35.1 million. The project is supposed to cover a combined population of 2.5 million, projected to rise to 3.6 million by 2011, when the project will end, and to 6.2 million by 2021. Many of the people living in these cities, according to the ADB, are poor.

That should come as a surprise to those who think that Kerala has already leaped over all development barriers and is in the comfortable limbo zone of a superior State, in terms of socio-economic and human development indicators. But, according to the ADB, lingering urban poverty could well hamper the State's future growth, particularly in the context of the inability of the State to garner the material and fiscal resources needed to take its development path into a different and higher trajectory.

That is the reason why the ADB has asked for user charges to be levied for public services such as provision of drinking water - among the chief objections of the LDF while it was in the Opposition.

Remonstrations

These remonstrations, ironically enough, now have a hollow ring as the LDF struggles to contain the growing controversy over the ADB loan. That is unfortunate, for, in the public eye, politics appears to be standing in the way of development priorities.

The urgency of the hour is for the factions and the coalition constituents to rally behind the State's development agenda.

Some of the primary objectives of the loan are to improve urban water supply, drainage, solid waste management, roads and transportation. With the unbridled development of cities in the State, the current infrastructure has proved to unable to cope with the demand. The case of solid waste disposal from the Kochi Corporation is just one case in point.

Another objective is to target the poor communities through basic infrastructure and service improvements.

Provision of technical assistance to the urban local bodies and capacity building process to sustain these activities are the other objectives. At a cursory glance, all of these objectives seem laudable, though question could be asked about the conditions attached to the loans. It would be in the State's interest to isolate these conditions, discuss them with the donor, and rectify them before proceeding with the project. Rather than to indulge in recriminations, faction fighting and political tussle among the principal ruling party and its coalition partners.

The recriminations between parties and Government constituents have been costing the State dearly. As development agenda has taken a backseat in the State, its neighbours have been striding forward in economic mobilisation through public participation.

Meanwhile, Kerala is getting increasingly getting embroiled in the quagmire of depressed economic growth, stunted industrialisation and erosion in its socio-economic indicators - something that the State and the Union Governments and people such as Dr Amartya Sen have been applauding over decades.

To be sure, one project does not make a summer of developmental delights, but for a State that is struggling to stay ahead of the pack, every little bit counts.

The writer can be contacted at kgkumar@gmail.

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