Maharashtra’s plea on World Bank loan axed

Top sources said the slow pace of economic reforms, especially in the power sector, was a major factor that went against Maharashtra. Ironically, the state had already inked a medium-term fiscal reform programme and a memorandum of understanding (MoU) with the Centre for increasing user charges, privatisation of infrastructure, power sector reforms, cap on guarantees and reduction in debt. However, the state has failed to impress the Centre and pursue its reform process compared to neighbouring Andhra Pradesh, Karnataka and Goa.

With the Centre rejecting the State government’s proposal, the fate of the government’s loans totalling Rs 4,948 crore from WB hangs in balance. The state had argued that if WB sanctions its loan for SSA, it would pave the way for all government project-related loans of Rs 4,948 crore, including Rs 1,700-crore Maharashtra Water Services Improvement Project (Irrigation), Rs 1,656.20-crore Maharashtra Rural Water Supply and Sanitation Project, Rs 892-crore Maharashtra Natural Resources Management Project (Forests) and Rs 700-crore Maharashtra Health Systems Development Project. The government, reeling under a debt burden of over Rs 83,000 crore, had argued that its loan would not fail due to backtracking as the government has already initiated steps required for structural adjustment.