Support to environmentally sustainable development will help to manage the state's precious natural resource base, from which it derives its comparative advantages in sectors like hydropower and tourism. Improvements in governance and administrative effectiveness, combined with growth-enabling reforms, will lead to increased private investment and productive job opportunities, along with expanded access to improved basic services, particularly for the remote areas.
"The Program will strengthen fiscal sustainability and expenditure efficiency and show that there is a way out of excessive reliance on public sector led development, which will provide a valuable learning experience for other states rich in natural resources seeking to harness their development potential, ” said Mohan Nagarajan,Senior Economist and co-Team Leader of the operation.
“The emphases on strengthening environment management and planning, and on developing hydropower resources in a sustainable manner, are particularly important with a view to protecting the state's rich natural heritage. If successful, this strategy will have important demonstration effects for other hill states in India facing similar challenges and opportunities,”said Ananya Basu, Senior Economist and co-Team Leader of the operation.
The US$135 million loan is provided by the International Bank for Reconstruction and Development (IBRD), and has 20 years to maturity and a 5-year grace period.
The US$35 million credit is provided by the International Development Association (IDA), the World Bank's concessionary lending arm and has 35 years to maturity and a 10-year grace period.
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