Home 
Countries and Regions Country Assistance Plans Document
|
Country Assistance Plans - India : III. Sector Strategies
D. Governance Dimensions of ADB Operations71. While India has implemented the first stage of reforms and has succeeded in establishing a policy framework enabling higher economic growth, policy gaps together with capacity gaps in the regulatory and other institutions need to be addressed as part of a second stage of reforms. ADB's efforts involving governance issues in India have initially been focused on project-related interventions in key infrastructure sectors, particularly energy (power and hydrocarbon), transport (roads and ports), and telecommunications, as well as in establishing the policy and institutional frameworks of the financial and capital market sectors. The major thrusts of ADB's governance-related interventions in these sectors include the strengthening of the policy, regulatory, and institutional frameworks to promote greater transparency, competition, and efficiency; creating an enabling environment for private sector participation in infrastructure projects; and capacity building of key agencies. 72. In accordance with the widening focus of ADB, on the basis of its operational strategy in India to address social concerns and poverty reduction more directly, governance aspects have been incorporated in social infrastructure projects involving mainly urban infrastructure and housing, and in ADB's state-level operations to improve public resource management such as in Gujarat and Madhya Pradesh. Support includes improvement in budgeting and tax administration, public enterprise reform, promotion of private sector participation through establishing a level playing field between public and private entities, and capacity building of key local government bodies. In addition to improving public sector management and the public finances, and establishing an enabling environment including depolitization of tariff setting and regulatory framework, subnational program lending such as the Madhya Pradesh loan (approved in December 1999) also supports measures for improving corporate governance, comprising institutional and management aspects such as appropriate procedures for selection of management, enhanced accountability, and performance-based incentives; and financial aspects such as enhanced autonomy of PSUs from government for investment decisions, and objective criteria for return on investment and dividend payment. 73. ADB assistance will continue to incorporate governance dimensions as an important building block of its operational program in India. Loan assistance, TA, economic and sector work, and policy dialogue will be used in combination to pursue governance objectives at both the national and state levels, with support at the central level being integrated with ADB's assistance to specific sectors and subsectors. Assistance will be provided inter alia through: (i) project-related interventions in the key infrastructure sectors, particularly power and transport, to promote greater transparency, competition, and efficiency, and create an enabling environment for private sector participation; (ii) promoting orderly financial and capital markets that will provide more efficient and transparent decision-making for the allocation of resources to long-term investments; (iii) capacity building of key national and state level agencies; and (iv) state-level operations to improve public resource management and ensure sustainability of states' economic and social development. The latter will also comprise support for the devolution of responsibilities and resources to local bodies through effective decentralization, an important feature in the reform agenda of the state government of Kerala. Empowerment at the local level could provide further impetus for the reduction in poverty. ADB will also assist in capacity building of the Department of Administrative Reforms and Public Grievances, which has a lead oversight role on governance in India. The operational program of ADB will further address portfolio management and financial transparency and accountability issues through TAs on Capacity Building for Project Implementation and on Institutional Strengthening of Controller of Aid Accounts and Audit. Moreover, ADB is also supporting enhanced participatory development processes through ongoing assistance for Strengthening Participation in Urban Environment Development and Capacity Building for Social Development. 74. An important element of ADB's objective of supporting good governance for sound development management relates to the need for the existence of adequate legal framework. On the basis of a regional technical assistance (RETA), work is ongoing on evolving best practices to maximize the efficiency and quality of government legal services and improve the functioning of government in areas where legal inputs are critical. A further priority area, associated with ADB's support for debt market development (see para. 56) and financial sector reform, is the change to secured transactions laws, to provide a comprehensive, timely, and effective framework for protecting the rights of liability holders. Secured transactions law reform will also be of importance for the process of economic restructuring, including restructuring and commercialization of public sector institutions. The Government has participated in ADB-supported studies on secured transactions law reform during 1999 and has established a Government committee in this area. A TA on Support for Registration System for Secured Transactions is included in the 2001 TA Program to support these efforts.
|
RSS Feeds
Back
Top of page