Interview of Rachid Benmessaoud

Acting Country Director and Operations Advisor, India

The World Bank

with

Outlook Magazine, India

December 22, 2008

 

On December 12, the World Bank announced that it has increased its lending to India in 2009-2012 to US $14 billion (up from $10.7 billion in 2005-08). In the country strategy for India (CAS), $3 billion has been added to support India through the economic meltdown. But the bank feels there is urgent need for greater efficiency, transparency and vigilance for projects that it is and will be funding in the country.

 

Q. The World Bank has voiced its concern over the poor performance of projects in sectors like infrastructure and health....

A. There is a definite need to increase efficiency in project implementation and we are working closely with the government to increase accountability and transparency at all levels within the bank-funded projects.

 

We're looking at a number of innovative measures, including civil society oversight and third party monitoring and better grievance mechanisms. Some sectors are more vulnerable than others and the Government of India and the Bank need to be more cautious in those.

 

The main issue is the efficiency of public expenditure and when we see that the performance is under par, our response has to be decisive.

We have voiced our concerns about five poorly performing contracts of the Lucknow-Muzaffarpur national highway project. These concerns relate to delays in project implementation and concerns over safety at the construction sites. It is important to realise that whatever action we take has to have a lasting impact on the system so that the problems which are systemic in nature do not occur again. In the larger context of improving the efficiency of public money, it is the delivery level where the impact has to be made. There also needs to be transparency and accountability about what the outcomes have been.

 

We want to use the systems of the country and work with the government jointly for corrective measures.

Q. Will the Bank be reducing lending to the health sector in India?

 

A. There is funding already in the pipeline which is yet to be disbursed, and we have to see that these are implemented well. In some Bank projects in the health sector we have had a few fiduciary issues arising out of poor governance on the ground. The government shared our concerns and we worked together swiftly to put in safeguards to ensure that future projects are implemented well and that crucial healthcare services reach the people.

 

Q. What are the highlights of the new India strategy 2009-2012 released by the World Bank last week?

A. We support the Indian government's 11th five-year plan. Our main areas of support will focus on sustainable growth, improvement in service delivery and ensuring efficiency in public expenditure. Our focus will be on the low-income states first and then on the middle-income states.

 

Q. Is there any provision for supporting India through the global economic meltdown?

A. Yes, that is a part of the overall package. There are several areas where the Indian government has asked for our support. One of them is to enhance the corpus of the India Infrastructure Finance Corporation to help finance public-private partnership in infrastructure, support to SIDBI to provide credit to small and medium enterprises, and support to the power sector through the Power Grid. There are also proposals to support the National Housing Bank and the recapitalisation of state banks. However, we have not completed our due diligence on these last two and hence the modalities and the scope of the support are not clear yet.

 

Q. What is the amount that has been set aside to assist India?

A. Of the total envelope of $14 billion set aside for India over the next three years, $3 billion is in immediate response to the government's request for $5.6 billion. As this request came just after our country strategy had been finalised, we were able to respond with an initial provision of $3 billion. We are currently reviewing our own capacity to see how fast we can respond to the full request.