The Asian Development Bank (ADB) and the Indian Government have signed a loan deal worth $300 million to proceed with a series of fiscal reforms in the state of West Bengal. As per the Finance Ministry, the deal will focus on improving the quality of delivering public service in the state.
The Finance Ministry release mentioned that the Second West Bengal Development Finance Program is targeting an increase in public investment by bringing down unproductive expenditure and boosting savings through revenue collection efficiency. The release said that the scheme will build on the intervention under Phase 1 of the project.
The loan deal was signed by the Joint Secretary of the Department of Economic Affairs, Ministry of Finance, Sameer Kumar Khare. He stated that the program will deepen the reforms and focus on boosting revenue administration and target expenditure rationalisation. Additional private investment in the state will also be leveraged.
The deal was signed by Kenichi Yokoyama, ADB Country Director in India, on behalf of the bank. He said that the new program will create the fiscal space that is required for improving investments in the state that would, in turn, put the state’s finances on a healthy and sustainable path.
Parwez Ahmad Siddiqui, secretary of the Finance Department, Government of West Bengal, also signed the program agreement.
As per the release, the bank’s first program that was intended to supplement public investments reached close to 1.3% of the gross state domestic product during the fiscal 2016 (from 0.5% in the fiscal 2012). At the same time, the fiscal deficit reduced to 2.2% from the previous value of 3.4%.
The release said that the new scheme will support private and public investments through the creation of an infrastructure facility that leverages project preparation and appraisal. There will also be renewed focus on partnerships between public and private firms in the fields of education and health. Further, the licensing process for small, medium, and micro industry firms will be simplified.
Over the next 2 years, the scheme will also bring about reforms such a linking expenditure plans to actual budgets, strengthening of the internal audit process, and boosting tax and land administration. The loan will also be accompanied by technical assistance of $500,000 that will be used to strengthen prominent institutions that carry out fiscal management reforms in West Bengal.