Citing flouting of norms, the Bank has reportedly said this to the government in so many words, when it was approached to clear funding for half-a dozen mega-projects worth Rs 10,000 crore.

Andhra Pradesh, followed by Rajasthan, Gujarat and Orissa have edged past Maharashtra, which over the last few years, has been the Bank's chosen destination for major fundings and investments.

Though the decision is unlikely to affect ongoing projects financed by the Bank, the new projects submitted by the alliance government are likely to be delayed. But the real cause for worry, as one state government official pointed out, was the fact that the Bank's observations will damage the painstakingly acquired credibility of the state in the international market, a handicap which will take along time to get corrected.

The State has been receiving external aid for several of its projects to develop infrastructure. Along with the World Bank, financial assistance is also sought from the United States Agency for International Development, European Economic Community, Overseas Economic Cooperation Fund and International Fund for Agriculture Development.

At the end of the eighth Five Year plan, 18 projects worth Rs 8000 crore were under implementation. Out of these, nine are assisted by the World Bank and the remaining by other international financial institutions.

Talking to The Indian Express, a senior government officials admitted the setback. ``It is true that Maharashtra is now not on the priority list of the World Bank. Apparently, the Bank was irked by the policies of the alliance government, in particular, with its failure to privatise the Maharashtra State Electricity Board (MSEB) as also with the announcement on providing free power to the farmers,'' he revealed.

As perofficial records, in view of the poor resource position, the alliance government has submitted at least half a dozen projects for World Bank funding. Some of these are the Rs 6,000-crore Mumbai Urban Transport Project (II), the Rs 2,000 -crore Maharashtra Water Supply and Sanitation Projects, black topping of roads (Rs 1,000 crore) and State Road Project (Rs 1,000 crore). ``All these projects are awaiting the approval of the World Bank. We are not sure if these projects will be cleared in routine course or will be delayed in view of the changed approach of the World Bank. We will impress upon the World Bank to clear these projects on top priority,'' the official stated.

However, the Bank's censure has not come overnight. When it had suspended loan for the MSEB's Chandrapur power project two years ago, it had made clear that unless the necessary steps were taken, it would not revoke the suspension. Then, the Bank had asked the government to hike the power rates, stop subsidy for the farm sector, ensure abetter rate of return and partially privatise the Board as recommended by the high-level Rajadhyaksha Committee.

In fact, following these recommendations, the government made a budgetary provision of Rs 700 crore and also hiked the power tariff. Apparently, this was enough and the Bank did not revoke the suspension.

The Bank was particularly unhappy over the huge quantum of subsidy being given to the farm as well as domestic sector. However, as per records of the MSEB, the subsidy released last year was Rs 3,200 crore, which is much less compared to states like Haryana, Punjab and Madhya Pradesh.