Shimla, Sep 27 (IANS) The World Bank has approved a $200-million loan to Himachal Pradesh to carry out fiscal reforms and promote environmentally sustainable development.
A state government official said here Thursday: “The loan is designed to create fiscal space to support the state’s development vision and promote environmentally sustainable development. It aims to enhance growth and employment, especially in the private sector, besides improving governance and public administration.”
The World Bank cleared the loan Wednesday and praised the state for leading the way in gender equality and access to services in a remote state.
The 20-year loan will have a five- to 10-year grace period.
“The state today faces new challenges, including effective management of its environmental resources while investing in hydropower in an environmentally sound way. The loan supports this agenda,” Isabel Guerrero, World Bank India country director, was quoted as saying by the official.
The bank feels Himachal Pradesh needs to enhance fiscal space and financial development and also increase efficiency of public expenditure.
The major constraint in this regard is that around 65 percent of its expenditure is spent on salaries, pensions and interest payments. In addition, the state has a debt of around 74 percent of the gross state domestic product.
Support to environmentally sustainable development will help manage the state’s precious natural resource base, from which it derives its comparative advantages in sectors like hydropower and tourism.