WB for power sector privatisation

The fiscal deficit for the federal government for 1999/2000 is estimated at 5.6 per cent of gross domestic product (GDP), sharply up from 4.5 per cent the previous year.

Limm said the World Bank would encourage foreign companies to invest in Indian electricity, aiming to trim the two per cent of GDP the government spends each year on power subsidies.

"They (Indian power firms) are so inefficient now, and there’s so much demand that private companies ought to be able to turn the situation around and make it very profitable," Limm said.

India’s central government has pushed for energy sector reforms as a first step towards privatisation, but has faced resistance from some politicians and unions who fear that sharper competition will lead to job cuts.

The World Bank said it would seek to speed privatisation by extending its move towards working directly with state authorities who administer the power sector.

The Paris meeting was attended by representatives of Andhra Pradesh, Uttar Pradesh and Karnataka, the first time representatives of Indian states have joined Union government officials at the India Development Forum.

India’s top official at the meeting said the national government was committed to working in tandem with states to tackle bulging deficits.

"The problem of fiscal stress in states is right on the top of the agenda of all state governments," said E.A.S Sarma, secretary of economic affairs at the Indian finance ministry.