Rs 1040cr WB loan for Andhra tank project

The Andhra Pradesh government, Centre and the World Bank on Friday entered into a $189-million (over Rs 1,040 crore) loan agreement for Andhra Pradesh Community-based Tank Management Project.

The project aims to restore 3,000 minor irrigation tanks covering an irrigation potential to 2.5 lakh hectares across the state in the next five years. Andhra is the second state in the country to have concluded funding tie-up with the multilateral agency for such a project followed by Tamil Nadu.

The World Bank assistance consists of $94.5 million loan from International Bank for Reconstruction and Development (IBRD) and $94.5 million credit provided by the bank's concessionary lending arm, International Development Association (IDA).

Speaking on the occasion, Finance Minister P Chidambaram said the restoration of these age-old water bodies would have a comprehensive impact on rural livelihoods in terms of increased productivity in agriculture, support to horticulture, fisheries and livestock. Restoration of tanks is also expected to improve the ground water resources around them.

"I assured the World Bank that the Government of India and the states have the capacity to implement a project such as this when they expressed apprehensions," Chidambaram said while reminding that he first announced the scheme for restoration of minor irrigation tanks during the 2004-05 Budget.

He assured the state government that the Rs 2,200-crore Nagarjuna Sagar canal modernisation proposal was also being processed for World Bank aid by his ministry.

Responding to the opinions being aired against the World Bank loans, Chidambaram said there was no difference between an individual approaching Andhra Bank for a loan and India seeking loan assistance from the World Bank.

The proper utilisation of funds and repayment is what matters to both, he said adding that the World Bank was eager to provide loans to India as the country is among the best borrowers in terms of prompt repayment.

The project is proposed to be implemented in 'demand driven' mode where the irrigation department would provide support to the respective Water Users Association (WUA) for preparation of tank improvement and management plan, which would be approved by the WUA general body.

The WUA will then request the department for release of funds. The project will be implemented at the state-level through the project management unit, according to a state government press release.

Chief minister YS Rajasekhara Reddy said his government would spend as much as Rs 6,000 crore, including the World Bank fund and Central grants, only on the restoration of minor irrigation tanks in the course of next five years.

The state government is planning to raise Rs 1,137 crore loan assistance from the Japan Bank for International Cooperation (JBIC) for a similar project, he said. While his government was not opposed to the idea of recovering the capital costs on projects such as this, it would keep the affordability levels of people strictly in mind before considering such measures, he said.

On the question of economic viability associated with the investment in minor irrigation tanks, once considered financially unviable by international lending agencies, World Bank representative Salman Zaheer, who signed the agreement along with the Central and state government officials, said the shift towards community-centric development concept currently prevailed over older concepts.

Earlier addressing a function organised by the staff of the government security printing press here, Chidambaram advised them to tap business from the private sector to sustain the institution.