Additional World Bank funding for Kerala totalling $315 million, subject to negotiations and approvals, is in the pipeline, Martin Raiser, Vice President for the South Asia Region, World Bank, said here on Friday.
The proposals consist of $150 million as Programme for Results-based (PforR) additional financial assistance to the Resilient Kerala programme and $165 million for the Kerala Economic Revival Program (KERA) aimed at agricultural revival through socio-economic interventions.
Negotiations and further action on both funding proposals are subject to clearances from the Department of Economic Affairs (DEA) and the World Bank Board, Mr. Raiser said after meeting Chief Minister Pinarayi Vijayan and senior State government officials here on Friday where the activities under the Rebuild Kerala Initiative (RKI) were reviewed and ‘‘potential future working areas’‘ discussed.
‘’The additional financing is pretty much ready. Technical preparation is done. We are waiting for a date to negotiate it and hopefully, take it to the World Bank board as quickly as possible,’‘ he said. The KERA funding is expected to materialise by the next fiscal year.
Caution on debt
With regard to Kerala’s debt position, Mr. Reiser, who was appointed VP for the South Asia Region in July 2022, urged caution. ‘‘In the fiscal area, Kerala has a high level of debt already. It needs to be careful, it needs to be judicious, it can’t borrow for everything,’‘ he said. He added that the State should tap the potential of the private sector, given the limited fiscal space. ‘‘One of the things I discussed with the Chief Minister is the areas where the private sector can actually do the work for you,’‘ he said, suggesting renewable energy as one sector where it can work.
For the RKI, the World Bank employs the PforR instrument where the money is not disbursed against invoices but against the results achieved. ‘‘In the sense what matters to us is not how it was achieved but that the results were achieved. Having said that, as part of the preparation for the project, we do undertake a detailed fiduciary analysis of the expenditure framework,’‘ he explained. The process will be continued for the additional financing as well.
‘Lighthouse function’
Commenting on Kerala’s post-2018 flood, ‘build back better’ policy, Mr. Raiser described it as one of the States in India which serves a ‘lighthouse’ function. ‘‘What is happening here can be of relevance to other States, but also of relevance to other countries,’‘ he said. A ‘‘high level of government capacity,’‘ good scientific information and planning, and strong local governments and civil society engagement were strong points of the State, he said.
‘’If you have endless amounts of money you can build the most expensive structure that can withstand everything. If you have limited money, which is the case everywhere around the world, you have to work with nature, not around it. You need to think about nature-based solutions,’‘ Mr. Raiser said.
