A public financial institution, through the appraisal process, tries to select projects for financing that are bankable and also meet certain development objectives. It uses conventional financial tests for the former, whereas the latter is more ad hoc with no clear guidelines except that preference is given to projects creating large employment or investment in backward areas, etc. This paper proposes a two-stage appraisal process, the second stage added to consider the development objectives using a goal programming formulation, after justifying the need to consider such objectives.
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