Reddy: Unruffled

Hyderabad, Nov. 20: The Andhra Pradesh government has earned the wrath of the World Bank, which has funded the state's reform process for almost a decade.

The World Bank has withheld the third instalment of a structural adjustment loan of Rs 1,600 crore for violating its guidelines against freebies, its India director Michael Carter announced in Delhi on Thursday.

The six-month-old government of Y.S. Rajasekhar Reddy had announced free power for farmers, costing the state almost Rs 2,800 crore. It also waived power dues amounting to Rs 1,200 crore as 'fulfilment of election promise'.

State finance minister K. Rosaiah today said the World Bank's stand would not deter the government from its pro-farmer initiatives. 'Since we are not seeking any fresh loans for power reforms, we need not worry about their strictures on free power,' he said.

He said if need be, the government would be ready to forego the Rs 1,600-crore loan. 'We have already initiated measures for improving our revenue receipts and reducing unnecessary expenditure,' Rosaiah said.

The minister said the World Bank had 'agreed in principle' to fund the state's irrigation initiatives, expected to cost Rs 46,000.

The government plans to complete all the 26 irrigation projects pending since 1950 to make an additional 45 lakh acres fit for cultivation in the next five years.

Praful Patel, a senior World Bank official, had promised Reddy at a recent meeting in Bangalore that there would be no dearth of funds for irrigation projects in India, Rosaiah said.

'In India, more particularly Andhra Pradesh, we are keen to fund the irrigation projects in the next two to three years,' the minister quoted Patel as having said.

'We are aware of the postures of the international agency on free power, but my party is committed to give the farmers a level playing field to improve their agricultural production,' Reddy told reporters this afternoon.

'But we are conducting a mid-course review of the programme and we aim to remove the creamy-layer farmers from the purview of the free power sop,' the chief minister added.

The state government has announced that 3.5 lakh illegal power connections would be replaced by new ones. 'These illegal connections are costing us another Rs 1,000 crore per quarter,' he said.

The state's debts have touched Rs 66,000 crore, which includes World Bank loans of Rs 14,000 crore, said a senior bureaucrat in the finance ministry.