The Hindu : WB to divert funds to State health project

Online edition of India's National Newspaper
Monday, Jul 14, 2003

Southern States

Southern States - Karnataka

WB to divert funds to State health project

By Nagesh Prabhu

BANGALORE JULY 13. West Bengal's loss is likely to be Karnataka's gain, thanks to the decision of the World Bank (WB) to divert funds from the former.

To overcome the shortage of funds for the Karnataka Health Systems Development Project (KHSDP)-II, the World Bank proposes to divert funds from the West Bengal component of the project.

In a Joint Review Mission (JRM) report sent to the Principal Secretary of Health, S.L. Gangadharappa, on June 13, the Country Director of the World Bank, Michael F. Carter, said that the project staff had requested the Department of Economic Affairs (DEA), Union Ministry of Finance, to transfer additional funds from the West Bengal component of the project to Karnataka to meet the latter's shortfall. The bank team had informed the State Government that it would review the planned expenditure status in West Bengal and then request the DEA to transfer funds to Karnataka for the completion of the project.

The JRM paid a three-day visit to the State from May 21 to review the implementation of KHSDP-II. The World Bank-aided KSHSDP-II commenced in 1996-97 along with two other projects in West Bengal and Punjab. However, the projects in three States were extended by two more years from March 31, 2002.

According to Naina Rani, Deputy Director, KHSDP, the project is facing funds shortage because of excess spending on civic works of secondary hospitals. The World Bank has decided to divert funds from the West Bengal component of the project as that State is not in a position to spend its granted aid before September 30.

Though the project ends on March 31, 2004, according to World Bank procedures, all project procurements should be completed before September 30, which West Bengal is unlikely to do.

"Karnataka has completed the procurement procedures, and it can use the funds diverted from the West Bengal project,'' says Dr. Rani. The KHSDP-II will use funds for buying software and other equipment, she adds.

The JRM report states that the disbursement to the State under the project is about $ 92.5 million against a revised allocation of $ 105.3 million, which is about 87 per cent of the State's share of the credit.

The World Bank has also requested the Department of Finance, Karnataka, to provide additional budgetary support to meet the shortfall.

"It would be important for the State Government to ensure timely and adequate release of funds to enable the project to be completed by March 31, 2004,'' the report says.

A budgetary support of Rs. 2.5 crore has been approved for 2003-04 against the project requirement of Rs. 4.68 crore. "Non-availability of funds will have its impact on the procurement of goods and equipment as per the agreed plan," Mr. Carter says in the report.

Of the 204 hospitals identified for modernisation, work on 197 has been completed in the State.

"The mission is now confident that work on other hospitals will be completed before the deadline," the report says.

The bank team has expressed satisfaction over many areas of the project, including patients' satisfaction, utilisation of geographical monitoring system (GIS) software for disease surveillance and hospital management information systems, increase in the collection of user charges, allowing non-clinical services on contract basis, and continued focus on the quality of service.

However, the team has expressed concern over the slow progress in components related to information, education, and communication of the project.

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