The Asian Development Bank and the Government of India signed a $300 million loan to continue a series of fiscal reforms in the State of West Bengal to improve the quality of public service delivery.
The Second West Bengal Development Finance Program targets a further increase in public investment through reduction of unproductive expenditure, and savings from efficiencies in revenue collections.
The Program will build on earlier intervention under Phase I of the project through the $400 million Program that targeted a comprehensive fiscal consolidation program in the state.
The new Program will create the fiscal space necessary to sustain higher public investment in the State which could put the state’s finances on a balanced and sustainable path.
The program agreement was signed by Mr. Parwez Ahmad Siddiqui, Secretary, Finance Department, Government of West Bengal.
ADB’s first Program focused on augmenting public investments that reached almost 1.3%, as a percentage of gross state domestic product, in FY2016 from 0.5% in FY2012 while the fiscal deficit reduced to 2.2% from 3.4% in the same period.
The new Program will not only target public investment but would also support private investments more directly by creating an infrastructure facility to support project preparation, development, and appraisal, with emphasis on public-private partnerships in health and education.
It also seeks to simplify the registration and licensing procedure for micro, small and medium enterprises.
Spread over two years, the Program will also carry forward reforms such as linking medium term expenditure plans to actual budgets, supported by strengthening internal audit system, and enhancements in the integrated financial management system (IFMS).
Other activities under the program include improved tax monitoring and continued support for information technology systems in strengthening tax and land administration.