The Hindu : Karnataka News : World Bank asks Government to expedite power sector reforms

Online edition of India's National Newspaper
Wednesday, Sep 15, 2004

Karnataka

Karnataka

World Bank asks Government to expedite power sector reforms

By Our Special Correspondent

BANGALORE, SEPT. 14. The World Bank has urged the Government to expedite the implementation of reforms in the financial management of the power sector. The Government is incurring huge losses in the sector.

In his welcome address at a function to release the Karnataka Public Finance Management and Accountability Study here today, Michael Carter, World Bank Country Director, said the State had turned its revenue deficit of Rs. 2,000 crores a few years ago to a surplus this year. Last year, the revenue deficit was Rs. 150 crores. "This indicates the correction that has taken place on the current account," he said.

The State's growth record was good but it was endangered by infrastructure bottlenecks. The human development indicators had lagged behind those of its neighbour, Tamil Nadu. Whereas in the last 20 years, Tamil Nadu had gone up from the seventh position in the human development index to the third, Karnataka had slid from the sixth to the seventh position.

Two more projects

Mr. Carter said the bank aimed at working with some more States, taking the work implemented in the State as a model. He said the bank had not reduced support in the form of grants to the State, though its focus was on the northern States. Apart from the present five investment operations, two more investment operations were at an advanced stage of preparation. The State was likely to get Rs. 765 crores for health and nutrition projects and Rs. 400 crores for urban water supply project. The projects were likely to commence from the next year.

Asked about the Karnataka Economic Restructuring Loan of the bank, he said negotiations for the third tranche of assistance to the State would start in a few months. The bank had suspended the loan on the grounds that the Government had not effectively implemented power sector and fiscal reforms.

"The Union Ministry of Finance, the Planning Commission and the Office of the Comptroller and Auditor-General of India have major roles to play in improving financial management at the national and State levels," Mr. Carter said.

Stephen Howes, World Bank Lead Economist for India, who made a presentation of the study, suggested improvements in legislative review processes and modernising the audit system.

He also wanted the State to abolish the distinction between plan and non-plan expenditure and introduce satisfactory accounting and financial reporting standards.

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