The Hindu : Assurances given by Kerala Govt. to ADB

Online edition of India's National Newspaper
Wednesday, Dec 18, 2002

Southern States

Southern States - Kerala

Assurances given by Kerala Govt. to ADB

By Our Special Correspondent

THIRUVANANTHAPURAM DEC. 17. The following are the specific assurances given by the Central and State Governments to the Asian Development Bank (ADB) for obtaining the Rs. 960-crore loan for Modernising Government and Fiscal Reforms Programme.

These have been incorporated into legal documents signed by the Indian Ambassador to Philippines, Navarekha Sharma, on behalf of the Central and State Governments on Monday.

A. Policy Letter and Policy Matrix

104. The Kerala Government will carry out the policies and actions in accordance with the schedule of policy reforms contained in the Policy Matrix as agreed upon between the Kerala Government, ADB and the Government of the Netherlands, and ensure that these shall continue to be in effect for at least the duration of the Programme.

105. The Kerala Government will ensure that the MGP secretary will be responsible for (i) the coordination and management of the Programme; (ii) report to the State Chief Secretary; and (iii) continue in the position on a fulltime basis for a reasonable duration to ensure continuity in the implementation of the Programme.

B. Counterpart Funds

106. The Central Government will transfer the counterpart funds generated under the loan, under the normal arrangements for transferring external assistance to the Kerala Government and shall treat such counterpart funds as an additionality to its transfers allocated annually to the State.

107. The Kerala Government will make available on a timely basis, the counterpart funds required for the Programme. The Kerala Government will use the counterpart funds to finance the cost of structural adjustment under the Programme. In this regard, the Kerala Government will provide budget appropriation/allocation to release necessary funds as required for the Programme, including inter alia for the implementation of: (i) the Kerala Governments policies on asset renewal, service delivery and social audit; (ii) personnel and payroll computerisation; (iii) LSG action plan; (iv) capacity building and training in financial management for LSGs and community organizations; and for (v) support of MGPs administrative and programme management expenses, the service delivery policy unit, functional review unit and the costs associated with the coordination of the implementation of the detailed implementation plans of the SIPs.

C. Policy Dialogue

108. The Kerala Government will keep ADB and the Government of the Netherlands informed of, and the Kerala Government, ADB and the Government of the Netherlands will from time to time exchange views on, the progress made in carrying out the policies and actions set out in the Policy Letter and the Policy Matrix in the formulation and implementation of new policies affecting the Programme.

109. The Kerala Government will keep the ADB informed of policy discussions with other international and bilateral aid agencies and will allow the ADB to comment on the same in so far as these affect the Programme.

110. The Kerala Government will continue policy dialogue and regularly exchange views and information with the ADB and the Government of the Netherlands, on problems and constraints encountered during implementation of the Programme and on changes to overcome or mitigate such problems and constraints.

D. Detailed Implementation Plan under the SIPs

111. The Kerala Government will approve and notify the detailed implementation plan 30 (i) by not later than December 31, 2002, for the first 12 months of the Programme; and (ii) by not later than December 31, 2003, for the next 12 months of the Programme. The Kerala Government will also ensure that the Programme is implemented in accordance with the detailed implementation plans.

112. The Kerala Government will take all steps and actions, including provision of staff resources and funds to ensure satisfactory completion in a timely manner of all outputs in the detailed implementation plans, as referred to in preceding paragraph.

E. Community and Stakeholders Consultation and Participation

113. The Kerala Government will ensure that the relevant components of the Programme are implemented in consultation with and participation of the community, stakeholders and community representatives such as the non-government and community-based organisations.

114. Without limiting the generality of the preceding paragraph, the Kerala Government will ensure that appropriate institutional mechanisms are in place for communication and feedback on the relevant policy actions from the community and stakeholders.

F. Technical Assistance

115. The Kerala Government will ensure that in carrying out the policy measures and activities included under the Programme and the Policy Matrix, due consideration will be given to the findings and recommendations of any related technical assistance. The Kerala Government will consult with and keep the ADB and the Government of the Netherlands informed on the findings and recommendations of the technical assistance as may be provided by other bilateral agencies in relation to the Programme.

116. The Kerala Government will allow ADB and the Government of the Netherlands to provide their comments on the findings and recommendations of the TA referred to in the preceding paragraph, for consideration in the policy measures and other activities, as mutually acceptable to the Kerala and Netherlands Governments and ADB.

G. Mutual Consultations

117. (i) The Kerala and Netherlands Governments and ADB will exchange and draw on, in a timely manner, the necessary information and resources, in the formulation and finalisation of tranche outputs and implementation thereof, as included in the Policy Matrix and SIPs. (ii) In formulating the tranche outputs as indicated in clause (i) of this paragraph, and the reform measures under the Programme, including in the Loan Agreement, the Kerala Government will ensure that the findings, recommendations, and mitigation measures of the IPSA, including follow-up action therein, are carried out during Programme implementation, all in accordance with clause (i) of this paragraph.

H. Power Sector Reforms

118. The Kerala Government will seek KSEB to file the application for revision of tariffs before the SERC within not more than two months of establishment of the SERC.

I. Fiscal

119. The Kerala Government will prepare a midyear report on its budget performance and required mid-year correction by not later than 31 January 2003.

120. The Kerala Government will take all steps necessary to ensure timely compliance with the Tripartite Agreement, and the Letter of Shared Fiscal Goals and Objectives, with the central Government.

121. The Kerala Government will take a decision on the Second State Finance Commission Recommendations and issue necessary orders by not later than March 31, 2003. 122. The Kerala government will continue to adhere to the 1999 agreement among all States not to grant indirect tax concessions under the sales tax or its successor VAT.

J. Long-Pending Infrastructure Projects

123. The Kerala Government will prepare and approve guidelines for termination of infrastructure projects over five years old, based on its policy on the long pending infrastructure projects, by not later than January 31, 2003.

K. Core Government Functions

124. The Kerala Government will maintain a minimum annual net attrition rate of 1 per cent.

125. The Kerala Government will ensure that there is strict adherence to service guidelines on minimum tenure in a post.

126. The Kerala Government will approve and notify the service delivery policy in relation to services provided by Kerala Government and LSGs, by not later than March 31, 2003.

127. The Kerala Government will approve and notify the social audit policy including the programme for first annual implementation of the policy, by not later than December 31, 2002.

L. Poverty Reduction and Minimum Needs Programme

128. The Kerala Government will make available the poverty census and poverty database as validated by the community, to the LSGs, departments and agencies responsible for providing free or subsidised services to the poor, by not later than December 31, 2003.

M. District Rural Development Agencies

129. The Kerala Government will take a decision on the merger of district rural development agencies with the district panchayats, by not later than June 30, 2003.

N. SLPEs

130. With regard to the second tranche conditions under the SLPE reforms under subprogramme 1, the Kerala Government will ensure that all stakeholders including the employees and workers that may be affected by the SLPE reforms are fully consulted in a fair and transparent manner including in accordance with applicable laws and regulations of the Central and Kerala Governments and their views are duly considered in finalisation of: (i) the policies on VRS and the SSN schemes, for regular/permanent employees; (ii) detailed proposals for reforms/restructuring for SLPEs as identified by the Kerala Government.

131. The Kerala Government will prepare detailed proposals for SLPEs identified by the Kerala Government in Government Order of July 26, 2002, in two stages that shall include: (i) proposal on sale/closure of non-operational SLPEs by not later than March 31, 2003, and (ii) proposal on reform/restructuring of the remaining SLPEs by not later than June 30, 2003.

O. Co-financing

132. The Central Government will transfer the amount co-funded by the Government of the Netherlands to the Kerala Government on a timely basis for implementation of the Programme. The Kerala Government will ensure application of the same towards implementation of the Programme in accordance with the ADB Loan and Programme Agreements.

P. Condition for Disbursement 133. The Central Government will pay the front-end fee of 1.0 per cent on the Loan amount.

(Extracted from document approved by the ADB Director Board)

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