$150 million World Bank loan to Punjab to improve financial management and provide better services to citizens

WASHINGTON, September 19, 2022 – The World Bank Board of Directors today approved a $150 million loan to the state of Punjab in northern India to help the state better manage its financial resources and improve access to public services. The Punjab: Building Fiscal and Institutional Resilience Program will support the state’s efforts to build institutional capacity in various government departments, manage fiscal risks, and make informed policy choices to support sustainable growth.

Punjab’s growth has been below its potential. A combination of budgetary challenges and institutional capacity constraints mean that scarce resources are dispersed among development priorities.

The new project will support the state’s development goals by strengthening planning, budgeting and monitoring functions, and leveraging digital technology. The project will also seek to increase accountability in public procurement systems by supporting the statewide implementation of new legal and policy reforms.

“The World Bank is pleased to be a partner of the State of Punjab in the state’s effort to deliver timely, cost-effective and good quality public services, which is essential for inclusive development,” said Auguste Tano Kouame, World Bank Country Manager. Director in India. “This new project will support the implementation of the state’s new data policy, which aims to bring together various social protection initiatives and reduce potential leaks while providing essential services.”

The project will pilot two initiatives: first, introduce a performance-based grant system to incentivize municipalities to improve service delivery. Secondly, to demonstrate the provision of 24/7 water supply in selected areas of Amritsar and Ludhiana cities. It will improve water distribution systems and reduce water leakage. The success of these pilot projects will provide significant potential for statewide expansion of improved service delivery.

“The project uses a ‘whole of government’ approach which will ensure that the various departments of the Punjab state government are linked to improve their efficiency in the management of public resources. Performance-linked intergovernmental fiscal transfers will incentivize better city management and service delivery to citizens,” said Dhruv Sharma and Bhavna Bhatia, project team leaders at the World Bank.

The $150 million IBRD loan has a 15-year maturity including a 6-month grace period.

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