Fissure in Kerala's ruling coalition over ADB loan

 
By R K Srinivasan
Last Updated: Saturday 04 July 2015 | 02:50:09 AM

in kerala, the ruling coalition, the Left Democratic Front, is divided over the Asian Development Bank's (adb) loan for urban improvement. An agreement was signed between the government and adb on December 8, 2006, for a sum of Rs 1,061 crore for the Kerala Sustainable Urban Development Project. Chief minister V S Achuthanandan claims that the deal was struck without his knowledge and lacks cabinet approval.

The project will cost about Rs 1,422 crore. A bulk of it would come from the loan, while the state government will contribute Rs 269 crore. Municipal corporations of Kochi, Thiruvanthapuram, Thrissur, Kollam and Kozhikode will raise the remaining amount. The money will be spent to improve water supply, sewerage, drainage system, roads and transportation in these cities.

The deal will help adb make inroads into the functioning of local bodies.It will approve selection of contractors and consultants. The agreement emphasises that the property tax should be increased. By March 2007, the state shall also have to formulate a policy on metering stand-posts (public water spouts) as also their conversion to metered individual house connections. The aim is to encourage efficient demand side management and reduction of non-revenue water.

All municipal corporations have to pass a resolution by March 2008 to introduce service tax for municipal services to fund operations and maintenance of the expanded water supply. Metered stand-posts will increase financial burden on families below the poverty line.

Another document on the adb website, the "Report and Recommendations of the President" (rrp), rrp ind 32300, recommends a year-wise increase of tariff for water and sewage services. rrp is a detailed project document that the adb 's board uses to decide whether to approve the loan or not. It actually lays out the terms for the loan But T M Thomas Isaac, finance minister Kerala, says "Irrelevant references from the rrp is being cited in the media."

The agreement will now be discussed by the Kerala cabinet.

Subscribe to Weekly Newsletter :
We are a voice to you; you have been a support to us. Together we build journalism that is independent, credible and fearless. You can further help us by making a donation. This will mean a lot for our ability to bring you news, perspectives and analysis from the ground so that we can make change together.

Comments are moderated and will be published only after the site moderator’s approval. Please use a genuine email ID and provide your name. Selected comments may also be used in the ‘Letters’ section of the Down To Earth print edition.