With an aim to help enhancing the quality of urban infrastructure in Tamil Nadu, the World Bank has approved a loan of $ 300 million to implement various schemes in the state.

This includes water supply, sanitation, underground sewerage and street lighting.

The Third Tamil Nadu Urban Development Project will continue to mobilise resources on a sustainable basis for urban infrastructure investments, the World Bank said.

It will provide funding for urban infrastructure such as water supply and sanitation, underground sewerage schemes, solid waste, street lighting, and urban roads.

Access roads in the city will be widened, and over and under-passes built. In addition, road congestion will be addressed through improved traffic management, the Bank said in a statement.

The loan, from the International Board of Reconstruction and Development, the World Bank's lending arm, has a 5-year grace period, and a 20-year maturity.

With nearly 300 million urban residents, India's cities contribute over 60 per cent of GDP and account for more than 90 per cent of government revenues.

In Tamil Nadu, approximately 47 per cent of the population lives in urban areas, one of the highest percentages in India.

India's cities could contribute more effectively to the country's economic growth and poverty reduction if they did not suffer from severe infrastructure bottlenecks, service deficiencies, distorted land and factor markets, weak finances, and poor local governance, the World Bank said.

"While urban efficiency has a significant and direct bearing on the country's overall economy, few cities are able to provide the kinds of urban services required on a regular and sustainable basis," World Bank Country Director Michael Carter said.

"This project will continue to build on the achievements of the previous project, consolidating urban reform, strengthening local capacity, and improving urban infrastructure services," he said.