Press Releases 2004

U.S. to Provide $ 20 Million for Fiscal Reforms in Uttaranchal, Jharkhand, Karnataka

May 19, 2004

NEW DELHI - The United States Agency for International Development (USAID) will provide assistance of $ 20 million (Rs. 90 crore) over the next five years to strengthen fiscal management systems in Uttaranchal, Jharkhand and Karnataka.

The U.S. and India will collaborate in these three Indian states to bolster their fiscal management systems for better forecasting, budgeting and investment of public resources. The USAID effort, called REFORM, was a result of detailed dialogue with the Government of India's Ministry of Finance and the three state governments. USAID awarded $ 11.8 million (Rs. 53.10 crore) to the U.S.-based firm Bearing Point, formerly known as KPMG Consulting, to carry out the first phase of the program.

Despite strong growth rates registered by the Indian economy, state government finances are strained, limiting investments in social and physical infrastructure - such as education, health, roads, ports and agricultural irrigation. States continue to be stressed by high fiscal deficits, raising concerns about the long-term sustainability of India's overall growth.

There are not enough resources for needed social investments and capital improvements, which often cuts services to those who need and use them most: the poor, the unemployed and the illiterate. Areas of focus in three states include: better budget preparation processes; updated information systems to guide financial decision-making; practices to track and manage state debt; and use of appropriate international standards in public finance to inform and engage the public in decision-making.