Mizoram Gets $40m For Reforms From ADB

By Roopak Goswami

Guwahati, Oct 10 : The Asian Development Bank has decided to release $40 million as the second installment of the $100 million loan to carry out fiscal reforms in Mizoram, satisfied with the progress made by the state.

In 2009, the ADB approved a loan of $100 million for Mizoram Public Resource Management Programme. The first installment of $47 million was released in 2009.

The programme’s main objective is to help Mizoram place its fiscal affairs on a sounder footing that can sustain investments for more rapid and inclusive growth and help it have greater access to, and better quality of, services in the education and health sectors.

The progress report of ADB says that the state has made considerable efforts to fulfill all installment release actions.

The release requires compliance with 21 policy conditions under six broad areas — tax and non-tax revenue reforms, debt management, expenditure management, service improvements in health and education, pension reform, and public sector enterprises reform.

Mizoram is a special category state with a population of one million and, like most small states, is constrained by deficient infrastructure.

The report says the programme hinges on the political commitment of the state government to bring about necessary fiscal reforms geared towards meeting the long-term needs of the people, and gradually reduce its dependence on the Centre by mobilising additional revenue from its own sources.

It says the state government has shown strong commitment to initiate critical reforms under the programme.

“Raising the professional tax rates, taxes on land, buildings, shops and others as well as water charges was politically sensitive not just in itself, but also because of exceptionally high inflationary pressures in the country. It was successful in educating a population that had long enjoyed near-zero tariffs for various public services about the need for fiscal consolidation. The state government has moved beyond the programme’s requirements and initiated other reforms to augment its own revenue” the report said.

The report says an important achievement is the implementation of the universal health insurance scheme, which should produce very tangible benefits for the people of the state.

“The voluntary retirement scheme for under qualified school teachers was another area of politically sensitive reform. It required considerable consultation with the stakeholders, especially the teachers’ unions. The state government again demonstrated its strong commitment by accomplishing this reform. Each of these difficult reforms was carried out in a challenging economic environment,” it said.

The state has also introduced water charges based on a proper plan, which is an example of the state’s effort to augment its own revenue and conserve scarce natural resources, the bank said.