City Lights

Indian cities are in for a Rs 25,000-crore bonanza from the World Bank to develop urban infrastructure over the next five years, according to an urban development ministry official. The official said the World Bank will start disbursing the amount from the beginning of next fiscal, and that his ministry was sorting out the heads under which it could be disbursed. The loan amount is more than the combined World Bank lending to India for all sectors during the last two years. India already has a flagship urban development programme running, the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), which too committed Rs 25,000 crore during the last five years. However, in the last five years of the UPA dispensation, the 63 cities that come under the purview of the scheme, managed to absorb only Rs 7,000 crore from that fund. In a letter dated April 22, 2009, the Bank’s country director for India Roberto Zagha sent the proposal to the urban development ministry willing to provide a $3.8 bn loan for India’s urban space. Urban development secretary M Ramachandran then negotiated with the Bank’s top brass in Washington on May 12, 2009 and requested the amount to be increased to about $5 b. If the loan is secured, it would be in addition to the normal grants under the ministry’s ongoing programme. Mr Ramachandran confirmed that the Bank had expressed its willingness to extend a loan for India’s urban space and it could be ready as early as the next fiscal year. Although he refused to go into details, he said the government expected to receive an International Development Association loan under the World Bank which charges an interest of about 1%. The Bank lent a total of about $1.7 bn to India in FY09 against $2.1 bn in FY08. As the Bank’s proposal for extending the huge loan for developing India’s urban space was already cleared by the finance ministry, the urban development ministry would now negotiate with the Bank on what heads these funds would be utilised. A set of reforms could be evolved in consultation with the state governments, which in turn may determine which state government would get how much. Although the World Bank’s original proposal talked about utilising the fund for building four cities of one million plus population in addition to using the fund for replicating the Karnataka model where the Bank extended loans to the state for 24X7 water supply, the urban development ministry wanted the loan amount to be used within the JNNURM space.