New Delhi: The World Bank on Monday day signed an agreement with the government of India for $200 million to strengthen the capacity of rural and urban local bodies in Kerala. Some 978 gram panchayats and 60 municipalities in the State of Kerala will be the direct beneficiaries of the Project.
The Kerala Local Government and Service Delivery Project will fund improvements in local infrastructure to facilitate decentralization at the local level. In 1994 India adopted the 73rd and 74th Constitutional Amendments, which mandated the creation of local governments in both urban and rural areas.
“This project seeks to strengthen gram panchayats and municipalities (urban and rural local bodies) so that they can better deliver essential services such as drinking water supply, roads, sanitation, health and education. Improving access to such services as well as their efficiency will help improve the quality of life of people across the state,” Venu Rajamony, joint secretary, Department of Economic Affairs, ministry of finance was quoted as in an e-mailed press statement.
The loan will provide urban and rural local bodies with additional discretionary funds as performance grant for the creation and maintenance of its capital assets. The credit is from the International Development Association (IDA), the World Bank’s concessionary lending arm, which provides interest-free loans with 35 years to maturity and a 10-year grace period. There is no interest charge but a service charge payable by the recipient on the withdrawn credit balance shall be 0.75% per annum.