$ 750m World Bank loan for UP okayed

The World Bank has sanctioned Uttar Pradesh a loan of about $ 750 million under various heads. This soft loan is partly funded by the International Development Agency. The IDA loan carries a long period of repayment with zero interest, repayable over a period of 25 to 30 years while the World Bank loan carries a rate of Libor plus one per cent. 

Uttar Pradesh Government had in anicipation of the World Bank conditionalities signed an MoU with the Central Government in June 1999, which contained the World Bank norms for greater fiscal responsibility, reduction in the fiscal deficit, privatisation of the power sector and greater stress on primary education, health etc. 

In a review report on Uttar Pradesh, called `Uttar Pradesh : From Fiscal Crisis to Renewed Growth,' the World Bank had wanted a greater allocation of resources for power, irrigation, roads, primary education, and basic health services. 

Now after Uttar Pradesh has proved itself suitable for the loans through a series of steps, topped by the dismantling of the Uttar Pradesh State Electricity Board, the World Bank has allocated $ 250 million for programme loan, which means that this money is to be used for containing fiscal deficit, to balance the expenditure with revenue etc. 

Another $ 150 million is for improvement in power transmission and distribution. 

No fresh taxes in Haryana Budget for 2000-2001

No fresh taxes have been proposed in the Haryana Budget for 2000-2001 which was presented in Haryana Vidhan Sabha by the state finance minister, Prof. Sampat Singh on March 13. 

The Budget shows a deficit of Rs.294.56 crore which has been left uncovered, and would be covered through expected buoyancy in economy, tax rationalisation measures and effective implementation of existing tax laws. 

He observed that the State's share in central taxes would increase substantially due to the implementation of the Alternative Scheme of devolution of central taxes by the central government. 

Highest priority has been given to creation of infrastructure in power, irrigation, road and transport sectors for which an outlay of Rs.1,632.35 crore had been earmarked, which was 64.5 per cent of the total plan outlay. 

This was followed by priority to social services with a provision of Rs.657.45 crore which is 26 per cent of the total outlay. 

Maharashtra downgraded

Credit rating agency CARE has downgraded the implicit rating assigned to the Maharashtra government from AA- to A+, because of its high borrowings, widening revenue gap and high expenditure. 

The ratings are implicit in the sense that the Maharashtra government does not borrow in the market through bonds. It only guarantees the bonds issued by State Corporations. 

"The ratings assigned to the outstanding government of Maharashtra-guaranteed bonds have also been downgraded from AA- (SO) to A+ (SO)", the agency said in a release issued on March 13. 

According to CARE, the Maharashtra government's fiscal position has come under stress in recent years due to the growing revenue deficit. In 1999-2000, the revenue deficit was expected to rise to Rs.7,970 crore from Rs.2,700 crore in 1998-99. This is primarily due to transfer of Rs.2,800 crore of arrears in pay in 1998-99, increased pension expenditure of Rs.1,400 crore due to lowering of retirement age, and additional expenditure of Rs.4,800 crore on salaries. 

Rs. 2,015 crore deficit budget for Rajasthan

The Rajasthan Budget for 2000-2001 has left a deficit of Rs.2,015.47 crore uncovered, which included Rs.1,903.13 crore of the current fiscal. 

A part of the uncovered deficit would be covered from the grant under the 11th Finance Commission's report and from the additional taxation proposals announced during the course of budget speech. 

The finance minister said he proposed to introduce turnover tax to be applicable to dealers having annual sales turnover of over Rs.50 lakh, which would yield additional earnings around Rs.20 crore. A professional tax was also proposed on a taxable income of over Rs.1.50 lakh and above as per their I.T. return.