World Bank offers $200 million loan to Kerala (With Images)

July 5th, 2011 - 7:27 pm ICT by IANS  

New Delhi, July 5 (IANS) The World Bank has offered a $200 million interest-free loan to Kerala to help strengthen its local government system, a statement said here Tuesday.

Some 978 gram panchayats and 60 municipalities of the state will directly benefit from the fund.

The Kerala government and the World Bank signed the agreement in Thiruvananthapuram Monday.

The credit will be provided by the International Development Association (IDA), the World Bank’s concessionary lending arm which provides interest-free loans with 35 years of maturity and a 10-year grace period.

Although there is no interest charge, but a service charge of 0.75 percent per annum will be levied.

“This project seeks to strengthen gram panchayats and municipalities so that they can better deliver essential services such as drinking water supply, roads, sanitation, health and education,” Venu Rajamony, joint secretary of the Department of Economic Affairs, Ministry of Finance, said after signing of the agreement.

The agreements were signed in the presence of Kerala Chief Minister Oommen Chandy.

The project will provide gram panchayats and municipalities with additional discretionary funds as performance grant for the creation and maintenance of its capital assets, provide inputs to strengthen the capacity of these local bodies and provide overall support to the project management unit within the local body, finance ministry said in a statement Tuesday.

Reacting to the agreement, World Bank country director in India Roberto Zagha said the funds will help the Kerala government implement key reforms and improve service delivery at the local level.

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