Adb To Extend $1.3bn Credit Line To Gujarat

The Asian Development Bank (ADB) has cleared a direct line of credit estimated at $1.3 billion for Gujarat. This is the first instance of a multilateral agency extending a direct credit line to an Indian state.

The ADB credit line consists of two parts: A $1 billion package for revamp of the states infrastructure, and an estimated $300 million to restructure the public sector undertakings (PSUs) in the state.

The details of the $300 million package were finalised at meeting held at the beginning of this month between representatives of ADB and the Gujarat State Financial Corporation (GSFC).

GSFC managing director R Bannerji told Business Standard: The strategy for restructuring the PSUs is to privatise the profit-making PSUs first and then to concentrate on the loss-making ones. Once the loss-making PSUs turnaround, with the help of the state government, we hand them over to the private promoters for further improvement and development.

Bannerji cited the cases of Gujarat Communication & Electronics, a profit-making PSU which was privatised successfully, and the loss-making Gujarat Tractor Corporation (GTC), which was turned around with the help of GSFC and handed over to private entrepreneurs for further improvement.

The plan is to give a complete facelift to the PSUs in Gujarat. It has got the formal endorsement of the Finance Commission, which has set the guidelines for the change in the role of PSUs.

The $1 billion package is earmarked solely for improving the infrastructure in the state. Negotiations for the projects are being conducted by the Gujarat Industrial Investment Corporation (GIIC). Of this package, technical assistance worth $500,000 has already come in.

According to the infrastructure restructuring plan, the credit line will be utilised primarily for improving ports, roads and the power situation. At present, 10 port projects are in the pipeline.

GIIC managing director L Mansingh said six of these would be developed in the private sector. It is believed that the remaining four will be privatised later.

In the period between August 1991 and June 1996, Gujarat attracted 202 foreign investment proposals worth over Rs 2,800 crore.

Gujarat has less than 5 per cent of the countrys population, but accounts for nearly 11 per cent of the gross national product (GNP) and 10 per cent of the national consumption. The per capita income in the state exceeds the national average by 33 per cent.

The state accounts for nearly 16 per cent of the total exports. It has three stock exchanges. Nearly 30 per cent investments in the primary markets originate in Gujarat.