India Signs Loan Agreement with the World Bank for USD 25.2 Million for Chhattisgarh Public Financial Management and Accountability Program

The Government of India, the State Government of Chhattisgarh and the World Bank signed here in New Delhi yeaterday a $25.2 Million Loan Agreement to support the State’s Reforms in Expenditure Management. This support will cover Expenditure Planning, Investment Management, Budget Execution, Public Procurement and Accountability.

The Chhattisgarh Public Financial Management and Accountability Program, which is the First Bank-Financed State-Level Project in Chhattisgarh in nearly a decade, will also help the State strengthen its Direct Benefit Transfer (DBT) and Tax Administration Systems.

The New Project will build capacity of the State’s Human Resources and the Institutions Handling Management of Public Finances. The World Bank will facilitate cross-learning from Public Financial Management (PFM) Reforms undertaken by it in other Indian States while bringing in global experiences.

Speaking on the occasion, Mr. Sameer Kumar Khare, Additional Secretary, Department of Economic Affairs, Ministry of Finance said that the Government of India supports reforms that will contribute toward improving Public Expenditure Management. The Chhattisgarh PFM reflects the priorities identified by the State, and builds, incrementally, on ongoing reforms around Public Financial Management, he added.

The Loan Agreement was signed by Mr. Sameer Kumar Khare, Additional Secretary, Department of Economic Affairs, Ministry of Finance, on behalf of the Government of India; Ms Kamal Preet Dhillon, Secretary, Finance, on behalf of the Government of Chhattisgarh; and Mr. Hisham Abdo, Acting Country Director, World Bank India, on behalf of the World Bank.

After the Loan Signing Ceremony, Mr. Hisham Abdo, Acting Country Director, World Bank said that the Chhattisgarh Government has correctly identified improvements in Public Financial Management as a key step for achieving its development potential. This will ensure that the State can invest more and with greater efficiency, for its poor and vulnerable. He said that the New Project, with its focus on IT solutions, will benefit almost 11,000 Village Panchayats and 168 Urban Municipalities in the State.

With 92 % households in the State belonging to Scheduled Castes, Scheduled Tribes and Other Backward Classes, the Direct Benefit Transfers (DBTs) are increasingly being used by the Central and State Governments to channel resources to households and individuals. The Program will support development of systems that will facilitate inter-departmental data interaction under secured protocols and automate most of the processing and payment of DBTs in the State.

Almost 11,000 Village Panchayats and 168 Urban Municipalities in Chhattisgarh are likely to benefit from the program’s emphasis on transparency and accountability. It will also support the State Government’s initiative to put in place systems to automate most of the processing and payment of DBTs to beneficiaries; improve property tax collection through the digitization of property tax rolls; and extending the property surveys to 47 municipalities. Enhanced outreach and improved tax return filing performance are also likely to help the State’s objective of increasing the number of GST Taxpayer Registrations.

Mr. Manvinder Mamak and Mr. Papia Bhattacharjee, Senior World Bank Financial Management Specialists, and Mr. John Blomquist, Lead Economist and the Task Team Leaders for the Program said that with enhanced devolution of taxes, 60 percent of the Public Expenditure now takes place at the State Level. This, coupled with greater flexibility in Planning Development Programs to suit local needs, deepening Public Financial Management Capacity at the State Level is imperative. They said that the World Bank’s international experience and learning from other States of India will help Chhattisgarh gain from appropriate solutions.

The $25.2 Million Loan from the International Bank for Reconstruction and Development (IBRD), has a 5-year grace period, and a final maturity of 10.5 years.