The World Bank has exhorted India, Pakistan and Bangladesh to reduce their power subsidies, saying these have become the single largest source of fiscal imbalance of their economies.
"In virtually every country, but particularly in Bangladesh, India and Pakistan, large subsidies for power have become the single largest source of fiscal imbalance and reduction of these subsidies is an essential step to restore national and sub-national fiscal balances," a report on 'Perspectives on Development' released by the bank said.
The report said reduction in power subsidies would free resources for much needed investments in infrastructure and social services.
On its investments in infrastructure in India, the World Bank said these include the Kerala state transport project, the Mizoram state road transport project and Mumbai urban transport project, which cost millions of dollars.
In the direction of empowerment of the poor in India, the report said it has financed community-based projects of the Karnataka tank management and the second Karnataka Rural Water supply and sanitation project.
The World Bank had also provided financial assistance for community-based projects in Rajasthan and Uttar Pradesh, the report said.
In Pakistan, the bank said it had lent US $800 million, including a banking sector credit of $300 million in 2002 for undertaking institutional reforms.
Institutional reforms in Pakistan have focussed on financial management, decentralisation, tax reform, reorganisation of the central bank and corruption, the World Bank report said.
Stating that building a healthy investment climate has been an important priority of the bank across the South Asian region, it said in India and Pakistan, firms were surveyed for reviews of the investment environment.
This, the report said, helped identify the main constraints to private investment as seen by investors themselves.
It said adjustment lending in Pakistan and at the state level in India (in Andhra Pradesh and Karnataka) explicitly supported policy reforms that seek to restore fiscal sustainability.
This also supported reforming the public expenditure management and to improve the overall functioning of governments to increase efficiency in the use of public resources and delivery of social services, the report said.
"The provision of roads is a critical component of the bank's poverty focus, improving the productivity of the economy and opening up market access and delivery of basic services to the poor," it added.
The report said in the direction of empowerment of poor people in India, the finding of the health report in the country will guide future bank engagement, starting with a Health Systems Development project being prepared for Rajasthan.
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