labels: asian development bank
Kerala Government to sign MoU with ADBnews
James Paul
09 November 2001

Thiruvananthapuram: The Kerala state government will sign a memorandum of understanding (MoU) with Asian Development Bank (ADB) for getting financial assistance from the bank to the state in March next, Chief Minister AK Antony said. The state might get assistance from ADB for various programmes from May next year.

Quoting Antony, sources said prior to the agreement, a fact-finding team would visit the state. On 9 November, Antony held talks with a reconnaissance team from the bank led by its public resources chief, Frank Polman, here. The team also included officials from the Netherlands, which is also considering assistance to the state.

The team reportedly expressed satisfaction over the measures taken by the state towards fiscal reforms, including the publication of the White Paper on State Finances, and the appointment of a committee for public sector reforms (Enterprise Reforms Committee).

It indicated that the aid could be something between $200 million and $250 million. However, official sources were not confident whether assistance could be obtained for all the programmes as the state may not be able to agree to all the conditions being stipulated by ADB.

Already, two consultants of ADB, an Australian company and a Bangalore-based institute, are here, studying the contours of the state's finances. ADB is demanding that the state undertake reforms similar to those undertaken by Madhya Pradesh and Gujarat, which have already received assistance. Madhya Pradesh had agreed to undertake sweeping economic reforms, including cutting of subsidies, tax reforms, reduction of expenditure and public sector reforms.

ADB has said that the assistance would not be for projects, but for programmes, including fiscal reforms. Antony told the team that his government is committed to reforms in the financial sector. "However, this could be done only after convincing the people and the Opposition of the need for reforms."

The state, it was pointed out, had already set up a World Trade Organisation (WTO) commission for dealing with the impact of the WTO regime. A law reforms committee has also been set up to modernise the laws and make them in tune with the reforms process.

Already an MoU has been signed with the Centre on power sector reforms and a tariff regulatory commission set up. Administrative expenses were being checked and a ban has been imposed on creation of new posts and restrictions imposed on financing projects outside the annual plan and budget. Revenue collection has been stepped up and bus fares and power tariffs have been hiked by 25 per cent.

A number of policy initiatives were being taken for framing policies on infrastructure, industry, IT and labour. More private sector participation is expected as a result of these measures. The higher education sector has been opened up to the private sector. This would provide opportunities for students to study within the state and prevent flow of capital out of the state.

This was the second round of discussions the present government had with ADB here after it came to power. Industries Minister PK Kunhalikutty, Finance Minister K Sankaranarayanan, industries secretary L Radhakrishnan, planning secretary SM Vijayanand, principal secretary to the chief minister Gopalakrishna Pillai also participated in the discussions.


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Kerala Government to sign MoU with ADB