The World Bank is likely to give structural adjustment loans to the state governments of Andhra Pradesh, Karnataka, Orissa and Tamil Nadu.

These states have received approval from the centre, which will stand guarantee to the loans as in the case of all World Bank loans. The funds sanctioned will help improve the fiscal health of these states.

The World Bank is working on the proposals for united structural adjustment loan for these states, which are likely to be cleared in the fourth quarter of fiscal 2004, said World Bank country director (India) Michael Carter. He was speaking on the sidelines of a one-day seminar on World Bank development policy review on India, organised by Crisil in Mumbai on Tuesday.

Carter said the performance of state governments in pursuing reforms has been a "mixed bag" and the gap between states with higher growth and those lagging in development was widening. "We also face a dilemma as while the need is to focus on states which are weak and lagging behind in order to hasten the reform process and thereby step up the growth, we cannot give up on the performance of funds," he added.

Earlier during the seminar discussions, Maharashtra chief secretary Ajit Nimbalkar said that disparity was not just among the states but also within various regions within states.

"There is a feeling that one region was growing at the cost of another but we cannot hold the growth of advancing regions for laggards to catch-up," Nimbalkar added.

Carter expressed concern over the frequent changes in governments at the state level so far as implementation of reforms are concerned. He pointed out that the excess transfers taking place in Uttar Pradesh had an adverse impact in projects supported by the World Bank.

This was especially the case about nine months back, he said, adding that "our major concern is in the area of power, but improvements have taken place and the situation today is more positive."

In response to the adequateness of financial assistance to India, Carter said that considering the size of Indian exports and its reserves position, and looking to the size and requirement of the country, the annual outlay of $3 billion is inadequate.