US$ 50mn ADB loan to boost West Bengal’s Public Finance

The Asian Development Bank and the Government of India have signed a US$ 50mn loan to improve Public Finance in West Bengal:

December 2, 2020

Centralized mechanisms will be installed to monitor Development Projects and address grievances.

An integrated network connecting the government and the general public is also expected to be created.

US$ 350,000 has been allocated towards creating an inclusive Integrated Finance Management System.

Seamless service delivery and improved fiscal savings are two expected outcomes of the initiatives.

A US$ 50mn loan has been signed by the Government of India and the Asian Development Bank (ADB) today with the view of strengthening the Public Finance infrastructure in the State of West Bengal. With the proliferation of Smart Technologies in the financial ecosystem, stakeholders across the spectrum can experience seamless service delivery and improved fiscal savings. The loan will help institute centralised mechanisms to monitor the progress on Development projects,  create an integrated network between the government and the general public and take up grievance redressal as and when required. Additionally, a grant of US$ 350,000 has been introduced to aid in creating a socio-economic and gender inclusive Integrated Finance Management System with focus on capacity building and e-Governance. The signatories of the loan included Mr. Takeo Konishi, Country Director, India Resident Mission at the Asian Development Bank and Dr. C. S. Mohapatra, Additional Secretary, Department of Economic Affairs, Ministry of Finance. 

West Bengal as an economy has been characterised by a relatively higher scale of indebtedness in comparison to that of other Indian states. A NITI Aayog report on the State Finance of West Bengal cited the smaller size of the organised manufacturing sector in the State, reduced investment in the Agricultural sector, lower labour and industrial productivity, low OTR-GSDP ratio and high debt-GSDP ratio as factors contributing to the indebtedness of the state. The State had pioneered in industrial development and jute production in the pre-Independence era. However, the lowering quantum of investment in the agriculture sector poses significant challenges in terms of land availability, resource utilisation and sustainability of labour resources within the state. There is a need to strengthen the industrial economy of the State and increase the size of the organised sector to help reverse the current trends in OTR-GSDP and debt-GSDP ratio. Maintaining consistency in revenue expenditure and capital outlay is yet another focus area that requires re-visioning in order for the State to strengthen its existing public finance infrastructure.