Chennai, April 2: A premier public sector undertaking in Tamil Nadu has pledged land with the World Bank for a loan to restructure its operations, in a throwback to the Chandra Shekhar government pledging gold for dollars in 1991.
Tamil Nadu Newsprint and Papers Limited — the first plant in the world to produce newsprint and paper from bagasse, a by-product of sugarcane, on a commercial scale — has pledged title deeds of 566.26 acres of land, buildings and other immovable property at Punjai Pugalur in Karur district.
Information that the land title deeds of the plant, located at Kagithapuram in Karur, are deposited in lockers in Washington have come as a shock to political parties, which are used to protesting against World Bank conditions such as curbs on subsidies and insistence on recovery of costs from users of services, such as electricity for farmers or water for irrigation. The loan is over four years old.
The PSU’s latest annual report (for the year 2001-02), placed in the Tamil Nadu Assembly a couple of days ago, makes it clear that the World Bank loan was “secured by joint equitable mortgage by deposit of title deeds” of the land and other immovable property.
Repayment of principal and interest is further guaranteed by the Government of India, the report adds.
The loan outstanding on March 31, 2002 was $44.47 million, compared to $51.36 million in the previous year.
The report said that as a result of “prudent financial management”, the PSU had during the year under review prepaid a loan amount of Rs 12 crore.
Only yesterday, finance minister C. Ponnaiyan had taken pains to explain that the state government does not directly negotiate with the World Bank, after the Opposition kicked up a furore in the Assembly, saying Tamil Nadu should not accept all conditions imposed by the institution.
World Bank loans and all other external funds are routed through the Government of India, which goes into the conditions before inking any deal, Ponnaiyan had argued.
The finance minister had also boasted that the state was getting back into the good books of the World Bank to qualify for fresh loans after nearly five years, in the wake of the Jayalalithaa regime having “boldly initiated second generation economic reforms”.
Telling members that even the Centre was beginning to impose reforms conditions for loans to states, Ponnaiyan had revealed that at least Rs 10,000 crore in World Bank loans was expected over the next five years.
To start with, the state looks set to clinch the Rs 2,118-crore Road Sector Project loan by June, he said. What he did not say was whether more government land would be pledged in return.