$20 million US grant for fiscal reform in 3 states

The United States Agency for International Development (USAID) said today it would extend Rs 90 crore to Uttaranchal, Jharkhand and Karnataka to improve their fiscal management systems.

The five-year assistance, under "reform" programme, would enable the three states to strengthen their fiscal management system for better forecasting, budgeting and investment, an American embassy press release said here.

It said the area focus in three states include better budget preparation processes, updated information systems to guide financial decision-making, practices to track and manage state debt and use of appropriate global standards in public finance to inform and engage public decision-making.

The move to extend assistance to these states comes after a detailed discussion with the finance ministry and the USAID has awarded Rs 53.1 crore to the US-based Bearing Point (formerly KPMG Consulting) for the first phase of the programme, it said.

Despite India's strong growth, state governments finances were strained, limiting investment in social and physical infrastructure -- education, health, roads, ports and agriculture irrigation, the USAID said.

"States continue to be stressed by high fiscal deficits, raising concerns on the long-term sustainbality of India's overall national growth," it added.

The release said there were not enough resources for social investment and capital improvements, which often "cuts services to those who need and use them most: the poor, the unemployed and the illiterate".