45288-002: Punjab Development Finance Program | Asian Development Bank

India: Punjab Development Finance Program

Sovereign (Public) Project | 45288-002 Status: Active

ADB is helping India’s Punjab state introduce reforms that will strengthen finances, encourage fresh investment, and free up resources for priority spending needs. The project will improve capacity for fiscal management; rationalize expenditures, focusing on subsidies in the power sector; and improve revenue efforts.

Project Details

Project Officer
Akin, Cigdem South Asia Department Request for information
  • India
  • Public sector management
Project Name Punjab Development Finance Program
Project Number 45288-002
Country India
Project Status Active
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
TA 8759-IND: Supporting the Punjab Development Finance Program (Supplementary)
Technical Assistance Special Fund US$ 100,000.00
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)

The 5 out of 7 policy actions for the second tranche were fully completed and tranche documents were endorsed as of August 2016. GOP has decided to introduce an alternative methodology, 45% high voltage distribution system (HVDS), 21% DT metering and 15% consumer metering and 1% sampling of agricultural feeders, in lieu of 100% DT metering of agricultural connections (T2-A9) to improve the energy audit. Several letter explaining rationale of HVDS, capital investment requirements and coverage were shared earlier and a new technical note explaining the proposed alternative together with other energy efficiency related initiatives was shared with DEA for their consideration and endorsement in March 2017. ADB energy specialist reviewed/verified the technical note as requested by DEA during November 2016 and January 2017 review missions. The note is currently under review by the Ministry of Power of Government of India as per request of DEA and their assessment is expected in September 2017. GOP made substantial progress towards the targets indicated in the technical note. 45% HVDS target and 15% consumer metering target were met; 18% DT metering was completed and remaining 3% will be met by October 2017 and 56% of 82 agricultural feeders (1% sample) were metered and remaining will be metered by October 2017. GOP was unable to submit the profession tax bill to the State legislature (T2-A14) due to state elections in March 2017 despite completing technical work. GOP submitted a letter to DEA, indicating that GOP is fully committed to submission of profession tax bill to State legislature in the financial year 2017-2018 after the elections. The draft bill is expected to be submitted to the Cabinet and subsequently to the State legislature in early September 2017.

Due to delays in implementation of T2-A9 and T2-A14, timeline of the Punjab Development Program was extended until June 2018 following endorsement of DEA.

Implementation of third tranche policy actions are on track. Out of 7 policy actions, 2 policy actions will be completed. Approval of FRBM rules by the Cabinet is expected in September 2017 and the completion of employee and pension databases are expected by December 2017.

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 (Northern 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 Akin, Cigdem
Responsible ADB Department South Asia Department
Responsible ADB Division Public Management, Financial Sector and Trade Division, SARD
Executing Agencies
Finance Department, Government of Punjab
[email protected]
Punjab Government Secretariat, Chandigarh,
Punjab, India
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 08 Sep 2017

Loan 3187-IND

Approval Signing Date Effectivity Date Closing
Original Revised Actual
19 Nov 2014 28 Nov 2014 12 Dec 2014 30 Jun 2017 30 Jun 2018 -
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

Approval Signing Date Effectivity Date Closing
Original Revised Actual
19 Nov 2014 22 Dec 2014 22 Dec 2014 30 Apr 2017 30 Jun 2018 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
500,000.00 0.00 0.00 0.00 0.00 0.00 500,000.00 19 Nov 2014 347,365.00

Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

The Public Communications Policy (PCP) recognizes that transparency and accountability are essential to development effectiveness. It establishes the disclosure requirements for documents and information ADB produces or requires to be produced.

The Accountability Mechanism provides a forum where people adversely affected by ADB-assisted projects can voice and seek solutions to their problems and report alleged noncompliance of ADB's operational policies and procedures.

In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

Title Document Type Document Date
Loan Agreement for Punjab Development Finance Program Loan Agreement (Ordinary Resources) Nov 2014
Program Agreement for Punjab Development Finance Program Project/Program Agreements 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 See also: Safeguards

Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

None currently available.

Evaluation Documents See also: Independent Evaluation

None currently available.

Related Publications

None currently available.

The Public Communications Policy (PCP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.

Requests for information may also be directed to the InfoUnit.