$100 mn ADB loan for Assam to reduce poverty

New Delhi: In an effort to enhance development in the northeastern Indian state, the Asian Development Bank (ADB) on Wednesday announced a loan of US $100 million to Assam to boost economy and reduce poverty in the state's hinterlands.

The Japan Special Fund, through the ADB, will provide an additional technical assistance of US $600,000 for capacity development and programme implementation. The state government will contribute a further US $150,000 towards it, reports IANS.

The second sub-programme of the Assam Governance and Public Resource Management Sector Development Programme (AGPRM), the loan and technical assistance will focus on increasing the Revenue Department's administrative capacity including implementation of new information and communication technology systems.

It will also help take steps to further improve expenditure management, strengthen debt management systems and close a number of loss-making public sector enterprises.

The first sub-programme was implemented from 2005 to 2007 in close consultation with ADB.

"The aim is to improve the state government's financial flexibility and ensure that the available fiscal space is utilised to promote social and physical infrastructure development,” ADB's South Asia Regional Department Financial Sector Economist Kyung Nam Shin said.

This is expected to support more private sector investment, income generation and higher employment in the state with a consequent reduction in poverty in the state, Shin added.

Assam is the largest of seven states in northeastern region with a population of 27 million and a high incidence of poverty. During late 1990s and early 2000s, Assam's finances suffered from the effects of pay revisions of the government employees, high debt ratio to gross state domestic product and high interest rates.

The loan will be released in three tranches—US $40 million each in the first and second tranches and US $20 million during the third tranche.