India: Punjab Development Finance Program

Sovereign Project | 45288-002

Summary

ADB and the Government of Punjab in India are working together to improve the state's finances so that it can better deliver government services. The state is undertaking a comprehensive fiscal consolidation program to free up money that can be spent on health, education, power, and public works. The program is also addressing environmental issues through improved targeting of free power for irrigation. The program is expected to create adequate fiscal space for augmenting development spending in the state.

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Project Name Punjab Development Finance Program
Project Number 45288-002
Country India
Project Status Approved
Project Type / Modality of Assistance Loan
Technical Assistance
Source of Funding / Amount
Loan 3187-IND: Punjab Development Finance Program
Ordinary capital resources US$ 200.00 million
TA 8759-IND: Supporting the Punjab Development Finance Program
Technical Assistance Special Fund US$ 400,000.00
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Governance and capacity development
Knowledge solutions
Sector / Subsector Public sector management - Public expenditure and fiscal management
Gender Equity and Mainstreaming Some gender elements
Description ADB and the Government of Punjab in India are working together to improve the state's finances so that it can better deliver government services. The state is undertaking a comprehensive fiscal consolidation program to free up money that can be spent on health, education, power, and public works. The program is also addressing environmental issues through improved targeting of free power for irrigation. The program is expected to create adequate fiscal space for augmenting development spending in the state.
Project Rationale and Linkage to Country/Regional Strategy Punjab state in India, which relies primarily on agriculture, traditionally provides a wide variety of subsidies to farmers, including free power. Subsidies and ad hoc government spending, combined with the fixed costs of the government, including salaries, pensions, and interest payments, have left the state budget in a weak fiscal position. Little has been available in the state budget for investing in infrastructure and social programs, or for improving the delivery of public goods and services. This has put the state into a cycle of deficit spending.
Impact Improved development financing in the state
Project Outcome
Description of Outcome Larger and sustainable fiscal space in the state government
Progress Toward Outcome in progress
Implementation Progress
Description of Project Outputs

1. Improved capacity for fiscal management

2. Rationalized expenditure focusing on power subsidies

3. Improved revenue efforts

Status of Implementation Progress (Outputs, Activities, and Issues) in progress
Geographical Location
Safeguard Categories
Environment C
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects None
Involuntary Resettlement The proposed policy actions under the program will have no direct and indirect impacts.
Indigenous Peoples The proposed policy actions under the program will have no direct and indirect impacts.
Stakeholder Communication, Participation, and Consultation
During Project Design Extensive consultations were carried out with Government officials including both the state Government and the Government of India. Several tripartite meetings were held under the Chairmanship of the Additional Secretary, Finance, Government of India. Those meetings were attended by officials from various Government departments and ADB. Consultations were also held with the officials from the Confederation of Indian Industries (Norther region) and the university professors.
During Project Implementation Operationalization of a communication strategy is included in the design of the program to create public awareness about the proposed reforms among various stakeholders. Completion of the public awareness campaign is also included as a tranche release policy action. The Fiscal Policy and Management Unit (FPMU) has already been set-up to monitor the progress of compliance with the policy actions. FPMU will carry out necessary consultations with relevant Government departments and officials.
Business Opportunities
Consulting Services none
Procurement Procurement, advance contracting, and retroactive financing are not expected. The loan proceeds will be disbursed in accordance with ADB's Loan Disbursement Handbook (2012, as amended from time to time) and detailed arrangements agreed upon between the government and ADB. ADB will monitor program implementation through periodic progress reports and will field regular missions to confirm the fulfillment of policy actions for tranche releases.
Responsible ADB Officer Hiranya Mukhopadhyay
Responsible ADB Department South Asia Department
Responsible ADB Division Public Management, Financial Sector and Trade Division, SARD
Executing Agencies
Finance Department, Government of PunjabPUNJABFIN@GMAIL.COMPunjab Government Secretariat,Chandigarh
Punjab, India
Timetable
Concept Clearance 22 Nov 2012
Fact Finding 19 Jun 2013 to 24 Jun 2013
MRM 15 Jul 2013
Approval 19 Nov 2014
Last Review Mission -
Last PDS Update 12 Mar 2015

Loan 3187-IND

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
19 Nov 2014 28 Nov 2014 12 Dec 2014 30 Jun 2017 - -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 200.00 Cumulative Contract Awards
ADB 200.00 19 Nov 2014 50.00 0.00 25%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 19 Nov 2014 50.00 0.00 25%

TA 8759-IND

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
19 Nov 2014 22 Dec 2014 22 Dec 2014 30 Apr 2017 17 Jul 2017 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
400,000.00 0.00 0.00 0.00 0.00 0.00 400,000.00 19 Nov 2014 78,220.00
Title Document Type Document Date
Program Agreement for Punjab Development Finance Program Project/Program Agreement Nov 2014
Loan Agreement for Punjab Development Finance Program Loan Agreement (Ordinary Resources) Nov 2014
Punjab Development Finance Program: Report and Recommendation of the President Reports and Recommendations of the President Oct 2014
Punjab Development Finance Program Initial Poverty and Social Analysis Jun 2013
Punjab Development Finance Program: Project Data Sheet (हिन्दी) Translated PDS Mar 2013

Safeguard Documents

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Evaluation Documents

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