Following the recommendations of the 14th Finance Commission and fourth State Finance Commission, aggregate fund flows to these GPs, the lowest tier of rural local governments, would more than double by 2020.
The state's support under the Institutional Strengthening of Gram Panchayat Program - Phase II (ISGPP-II), will support all 3,342 GPs in the state to effectively utilize these funds that is being provided to them under the inter-governmental fiscal transfer system, the bank said in a release.
The World Bank support would strengthen local communities' participation in the planning, budgeting, and financial management of projects undertaken in rural areas, where most of the poor in the state reside.
The loan has a grace period of eight years and a maturity of 15 years.
"Bringing the state closer to citizens has been an important promise of India's democracy. Effective and accountable Panchayati Raj institutions empowered with additional resources can help deliver on this promise," Junaid Ahmad, World Bank Country Director for India said.
Out of the 92,000 activities carried out by the GPs using ISGPP grants, 54 per cent were on transport, 23 per cent on water and sanitation, and 20 per cent on public buildings.