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Global financing agencies, including the World Bank and Asian Development Bank, have expressed keenness to invest in construction, power, health, tourism and rural development in Bihar.
Head of the World Bank (WB), Asian Development Bank (ADB), UK-based Department of International Development (DFID) and Japan Bank of International Cooperation (JBIC) had their first joint meeting in Bihar in the presence of Chief Minister Nitish Kumar in Patna on January 13.
At the meeting, they agreed in principle to extend full financial help to the state government in these sectors.
According to Kumar, each of the 8,712 gram panchayat in the state required Rs 350,000-400,000 for construction of a state secretariat-like building. A whopping Rs 3,000 crore (Rs 30 billion) was estimated to be spent for construction of these buildings, which would be tremor-proof and would have enough space to shelter those affected by floods.
A delegation of joint international development partners groups having representatives from World Bank, ADB, DFID and JBIC had already submitted to Kumar a concept report on the joint approach of the international development partners for the state.
"The joint approach for development evolved by the international funding agencies is a novel method to maintain coordination among agencies for granting loans and grants to states for carrying forward reforms," Kumar said.
The approach would help check any overlapping of fund to be sanctioned by the international agencies in development sectors.
WB in a coordination note to the chief minister had informed about sanctioning development policy loan of $ 225 million to support policy reforms being undertaken by the state government, according to official sources.
The basic purpose of the state government was to continue the reform process and find cheaper resources to finance its budget as the effective interest on loan was lower than that on the market borrowing, they said.
The loan and programme agreements were signed by the state government, the Centre and WB on January 15 this year. "We have sent the legal opinion by advocate general to the Centre, which has forwarded it along with the solicitor general's opinion to the WB so that the first installment of the loan was disbursed to the state government.
"As part of the programme agreement, we have agreed to take the reform process further. To monitor this, a committee under the chairmanship of chief secretary is being set up," they said. Bihar Rural Livelihoods Development Projects for $ 3 million was approved by WB in June 2007, they said.
This was a 5-year project in 4,000 villages in 42 blocks that cover 290,000 people in Gaya, Muzaffarpur, Nalanda, Madhubani, Khagaria and Purnia districts. The project aimed at empowering the rural poor through self-managed and vibrant community based organisations, including SHGs, through internal thrift and revolution of savings.
The primary-level self help groups would be organised into a federal one to have stronger linkages with financial institutions and there is a provision for community investment fund ($ 42 million) for skill building, infrastructure linkages, addressing food security needs, income generation and livelihood improvement.
The project is being implemented by Bihar Rural Livelihoods Promotion Society under the chairmanship of the state development commissioner, sources said. WB was also contemplating to run Bihar panchayat strengthening project, which was at the preparatory stage. The project aims to improve autonomy, capacity and accountability of panchayati raj institutions, they said.
The state government was in discussion with ADB for financing its road construction programme and it had agreed to retro-finance the construction of 82 km road at a cost of $ 420 million.
A discussion was on with ADB team for power sector support, and Bihar State Electricity Board and State Energy Department were working on related investment component. DFID is considering funding of the governance and administrative reform programme, which is being designed to provide technical assistance of $ 36 million by early 2008 and would aim to strengthen the state government's capacity to implement administrative reforms and support the establishment of a centre for governance to take forward the reform process.
"The programme would strengthen systems and departments such as revenue, registration, commercial taxes, home and education. It would look at enhancing transparency and improving the mechanisms of accountability with an emphasis on the right to information," they said.
For the urban sector, DFID planned to aid the proposed project aimed to improve municipal governance in Bihar so that the urban areas could facilitate growth and reduce urban poverty, the sources said. The focus would be to improve the capacities of municipal bodies in 14 towns, plan, finance and implement infrastructure projects as well as to monitor service delivery.
"This project will be based on successful experiences in West Bengal, Andhra Pradesh and Madhya Pradesh and is likely to be initiated early 2008," sources said. DFID had also proposed flexible sector-wide financial support as well as technical assistance to activities in health, nutrition and water supply.
This support is provided against an overall reform and expenditure plan. DFID, they said, expects to put in place technical support services to assist the sectors in planning, utilising funds more effectively and learning from good practice elsewhere. It financed UNCEF trust fund ($ 150 million), which already supports the work in Bihar in areas such as reproductive, and child health development and nutrition, water and sanitation, HIV/AIDs and education.
The Bihar government has asked for monetary support from JBIC to build an expressway between Patna and Gaya and also to develop tourist spots coming under the Buddhist circuit, they added.