Saturday, November 28, 2009

Finmin limits WB infra aid to 1 bn

Kakoly Chatterjee
Posted online: Nov 28, 2009 at 2340 hrs

New Delhi The finance ministry has turned down the urban development ministry’s proposal for a $5-billion World Bank loan for revamping the infrastructure of Indian cities under Jawaharlal Nehru National Urban Renewal Mission (JNNURM).

Concerned about the country’s external debt position, the ministry has scaled down the multilateral loan component of the mission to $1 billion. North Block’s views were conveyed to the nodal ministry for JNNURM at an inter-ministerial steering committee meeting recently, an official source said.

Urban development ministry wanted $5 billion (Rs 25,000 crore) in order to include more cities and more projects of existing cities. Currently, 65 cities with population of 1 million and above are included in JNNURM. With fresh fund infusion, the urban development ministry was hoping to include 25 cities which have above half a million population according to 2001 census.

“With no new funds being infused in the mission, the fate of the 25 cities is in jeopardy. We cannot include new cities or sanction more projects of cities that have submitted more projects after exhausting their initial funds,” a source in the ministry said.

The World Bank funding is expected to reach India in the 11th Plan Period. “We are expecting a funding of $1 billion (Rs 5,000 crore) to reach us by early 2011,” sources said.

Meanwhile, with World Bank funding coming in, JNNURM implementation has undergone slight modification. “The schemes would run on JNNURM pattern but a couple of related projects would be clubbed together. For instance if it is a water sanitation project then recycling and sewerage would also be included to treat it as a single project. The idea is to have a holistic approach. It would include improved water supply, distribution efficiencies, round the clock access to drinking water, waste recycling, sustainable models of sewerage schemes & tariff mechanism and efficiency parameters for the body handling water supply,” officials said.

Initially, the World Bank had insisted on revamping a city completely than running one project at a time. The ministry, however, suggested that a scheme should run on JNNURM pattern without major modifications. The ministry runs two schemes under the mission that include urban infrastructure and governance (UIG) and urban infrastructure development of small and medium towns (UIDSSMT). Of a total allocation of Rs 31,500 crore, a sum of Rs 9,500 crore has been released under UIG against the commitment of 75% funding.For UIDSSMT, Rs 6,000 crore has been released so far out of a total allocation of Rs 11,400 crore against a commitment of 90% fund.

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