Of the aid, to be spent mainly on power generation and road construction and modernisation, Rs 800-1000 cr will be given to the state by the end of the present fiscal.

However, the World Bank team has set some conditions which the state government has accepted despite opposition from employees. The terms include division of the state Electricity Board and privatisation of these branches. The WB also wants the power sector to be opened to foreign investors.

The WB team also wanted the state government to invite private investment in road construction and stressed the need to control the population, without which rapid development of the state was not possible. The team, during its stay here, reviewed the works so far done with WBaid. The state government team led by Chief Secretary Yogendra Narain assured the 16-member World Bank team that reforms would continue at any cost. It also told the team about the state government's decision to privatise road construction.

The state government may not accept the team's suggestion to prune staff by a whopping 40 per cent to balance the budget and is also finding it difficult to close down loss-making state units.

At the last state Cabinet meeting, a decision to close down six Sugar Corporation mills was taken. But this was resented not only by the Opposition but also ruling party MLAs. Two BJP MLAs even sat in dharna at the GPO Park. It was only after an assurance by the Chief Minister that they ended their dharna.

Meanwhile, in a bid to get out of the red, the state government has decided to impose more taxes and cut the allowances given to employees. There is a plan to deposit even the dearness allowance in the Provident Fund. It has already decided to impose entry tax on 11 goods,including sugar, tobacco and textiles from tomorrow.

The state employees' bonus is also being deposited in the Provident Fund. It has also been decided to discontinue the facility of leave encashment. The coffers of the state government are virtually empty and the Treasury has been instructed not to make payments other than salaries and pensions. The overdraft has already crossed Rs 700 crore. The gap between the revenue and expenditure has skyrocketed to about Rs 5,000 crore.

According to Principal Secretary (Finance) Sushil Tripathi, the state government slipped into the red owing to the payment of the Fifth Pay Commission pay-scales, which has taken the salary bill up by 8,000 crore to 22,000 crore. In fact, the Centre should bear the additional burden as the Pay Commission was set up by the Union Government, he said.