The World Bank is planning a $ 250 million loan for an urban development project for six municipal corporations and 20 class ‘A’ municipalities of Gujarat on lines similar to the financing currently on for several Karnataka local bodies. The talks between a World Bank team of senior officials Richard Beardmore and Kim Cuenko, and chief secretary L N S Mukundan, top bureaucrats of the urban development and finance departments ended with World Bank desiring the state’s local bodies to adopt a more market-oriented approach.

The World Bank officials, who held their first round of talks, in which commissioners of the six municipal corporations also participated, went back after giving instructions to top officials here to prepare a detailed project on the Gujarat local bodies that could go a long way in making their management more result oriented.

The team left Gandhinagar on Friday after three days of "fruitful deliberations." Senior secretariat sources here said the proposed project would have two branches — financing the privatisation effort of the local bodies’ infrastructure, and capacity building in such a way that the poorly managed local bodies become self-sustaining institutions. The five to seven year project would, however, be financed only after the US sanctions against India are lifted, the sources revealed.

Financing of infrastructure would include giving funds to water supply, road, streetlights and bridges but with the condition that they are "properly managed." Private and public participation, toll roads and toll bridges and private water supply have been particularly suggested as ways to recover the amount the local bodies spend for urban development. Pointing out that the talks ended on a "positive note", the source said, "everyone knows that our local bodies are badly managed, that they are all in fiscal deficit, that they need administrative reforms."