NEW DELHI, June 27, 2017 – The Government of India, the Government of Assam and the World Bank today signed a $35 million loan agreement to support Assam in utilizing its public resources more efficiently through better management of its finances, increasing the efficiency of its tax administration as well as improving the transparency and predictability in the execution of its budget.
“The Government of Assam would like to deepen its public finance management initiatives,” said Raj Kumar, Joint Secretary, Department of Economic Affairs, Ministry of Finance. “This project will strengthen the capacity of the Departments of Finance, Taxation and Excise in delivering critical public services to its citizens using information technology and enhanced human resource capacities as the key drivers,” he added.
The loan agreement for the Assam State Public Finance Institutional Reforms (ASPIRe) Project was signed by Raj Kumar, Joint Secretary, Department of Economic Affairs, Ministry of Finance on behalf of the Government of India; V B Pyarelal, Additional Chief Secretary (Finance), Department of Finance, on behalf of the Government of Assam; and John Blomquist, Program Leader and Acting Country Director, World Bank India, on behalf of the World Bank.
“Establishing robust public financial management systems and capacities at the state level will help Assam better utilize its resources and enhance its revenue for delivering efficient services to its people,” said John Blomquist, Program Leader and Acting Country Director, World Bank, India. “It will also contribute to the broader national goal of achieving a robust federal system of finance,’’ he added.
ASPIRe will be implemented over a period of five years. It will help the Government of Assam put in place a financial management architecture that will support it to execute the budget more efficiently; modernize the entire revenue administration, collection and payment systems in order to reduce the turnaround time in delivering public services to other departments/citizens; strengthen the public procurement framework and scale up e-procurement; and enable more efficient online tax services and assessment procedures such that the revenues of the state are monitored and managed more effectively. Capacity building of staff is an important intervention under the project.
The project will also help the government establish IT-enabled budget preparation, execution and decision support systems (also known as Financial Management Information System), linking over 6000 departmental officials and creating an automated interface for a “paperless” and “cashless” payment system. This will be done through substantial investments in enhancing the capacity of state officials in the area of public financial management. It will also complement the efforts at the national level by building the capacity of the staff for a smooth rollout of the Goods and Services Tax (GST) in the state.
“With enhanced devolution of taxes, 60 percent of public expenditure now takes place at the state level. This, coupled with greater flexibility in planning development programs to suit local needs, makes the deepening of public financial management capacity at the state level an imperative. World Bank’s International experience and learning from other states of India will help Assam gain from appropriate solutions,” said Mohan Gopalakrishnan, Senior Financial Management Specialist and World Bank’s Task Team Leader for the project.
The $35 million loan from the International Bank for Reconstruction and Development (IBRD), has a 5-year grace period, and a maturity of 19 years.