The government is unlikely to obtain a development loan from the World Bank

Kerala will not get the second tranche of the World Bank’s $ 250 million Development Policy Loan (DPL) and the additional $ 100 million requested by the state for the Rebuild Kerala Initiative (RKI).

Instead, the government has a good chance of securing assistance from the Program for Results (PforR) financing instrument developed by the WB to carry out the ongoing recovery efforts after the floods and build resilience to future shocks.

Unique features of PforR include the use of a country’s own institutions and processes and the direct link between the disbursement of funds and the achievement of specific program results.

After the results

Although several states in the country have used the PforR since its inception in 2012, Kerala has not yet used the financing instrument as funds are only disbursed after reaching the results of the stand-alone programs and the audit. .

For national projects

This follows the political decision of the Union government not to make the 2 billion dollars of DPL available through a tripartite agreement to the States and to use it for national projects in the sectors of the health and MSMEs.

Kerala had secured a DPL of $ 250 million through a tripartite agreement with the Ministry of Economic Affairs, the Indian government and the World Bank last year.

The DPL, made available to the state for the first time, was provided by the International Development Association (IDA) and the International Bank for Reconstruction and Development (IBRD).

The aid was made available to the Treasury as budget support and the state was given the “flexibility” to disburse the funds to achieve the objectives set under the RKI for the eight priority sectors.

New discussions

Confirming the developments, RKI CEO Rajesh Kumar Singh said The Hindu that PforR funding would come in smaller installments on a quarterly basis and that further negotiations would take place with the World Bank. The Union government would have no objection to the State requesting the PforR.

For the State, the stakeholder services will have to assume more responsibilities and ensure transparency because PforR aid is results-based and will be provided under a tripartite agreement.

World Bank assistance was requested after the state witnessed severe flooding and landslides in June-August 2018, affecting up to 5.4 million people, or one sixth of the population. A rapid joint damage and needs assessment estimated recovery needs at 25,000 crore or $ 3.56 billion for priority sectors alone.

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