World Bank supports reforms to boost growth in HP

26 Sep '07

3 min read

The World Bank approved a US$200 million loan and credit to the Indian state of Himachal Pradesh (HP), to support the implementation of critical structural, fiscal, and administrative reforms needed to boost economic growth and inclusive development, while sustaining the environmental heritage of the state.

The First Himachal Pradesh Development Policy Loan and Credit is designed to create fiscal space to support the state's development vision, and promote environmentally sustainable development.

The operation supports fiscal reform including the strengthening of public financial management, and measures to improve the state's environment management capacity. It aims to enhance growth and employment, especially in the private sector, and improve governance and public administration.

“In spite of the challenges of remoteness of hilly areas, Himachal Pradesh is one of the states leading the way in gender equality and access to services,” said Isabel Guerrero, World Bank Country Director for India.

“The state today faces new challenges, including to effectively manage the state's environmental resources, while investing in hydropower in an environmentally sound way. The operation supports this agenda, as well as addressing key fiscal issues and help sustain the state's natural resource base.”

The major constraint facing Himachal Pradesh—with about 65 percent of its expenditure committed to salaries, pensions, and interest payments, and a debt stock of about 74 percent of Gross State Domestic Product—is the need to enhance fiscal space to finance development, while improving fiscal sustainability. Fiscal reform and measures to strengthen public financial management will improve fiscal sustainability, while increasing fiscal space and efficiency of public expenditures.

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