Washington, December 11, 2008 ―The World Bank Group is tailoring its assistance to India both to fast-track much-needed infrastructure development and to support the country's seven poorest states achieve better living standards for their citizens.
The World Bank Group's new Country Strategy for India, discussed by the Institution's Board today, envisagesa total proposed lending program of US$14 billion for the next three years, of which US$9.6 billion is from the International Bank for Reconstruction and Development (IBRD) and US$4.4 billion (SDR 2.982 billion equivalent at the current exchange rate) from the International Development Association (IDA).
The strategy is guided by the priorities of the Government of India as expressed in the Eleventh Five-Year Plan. Among the main challenges for India, it identifies sustaining rapid growth as critical: not only building the infrastructure which underpins growth but also bringing along the 300 million citizens who live in dire poverty. A related challenge is to ensure that development is sustainable, meaning that the environment is cared for in the process. Providing services for all citizens implies much greater effectiveness of public spending.
“India’s rapid growth will not be sustainable if it does not include the 300 million citizens who live below the official poverty line, nearly 60 percent of whom reside in the country’s seven poorest states,”said Giovanna Prennushi, World Bank Economic Adviser.“This strategy is designed to boost support to these states, but also not to forget about the poorest people in India ’s middle income states. The challenge is to target poverty where we can help make the difference.”
Critical to boosting growth and bridging the gap between rich and poor, she said, is addressing India ’s vast infrastructure deficits. No Indian city provides water 24 hours a day, 7 days a week, only half the population has access to safe drinking water, and 40 percent of India ’s 600,000 villages are not connected to a road.
Different Needs, Different Approaches
The tremendous size of India and the sharply different levels of development both within states and between states require a differentiated approach to meeting the country’s development needs. The Bank’s new strategy takes into account these differences. In the seven low-income states- Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Orissa, Rajasthan, and Uttar Pradesh - the Bank Group’s focus will be on poverty reduction and helping these states achieve the Millennium Development Goals.
Support to middle-income states will be on two fronts: fighting poverty in the lagging areas of these states, and addressing the challenges emerging from rapid growth, compounded now by the global economic downturn. The new strategy will support some of India ’s middle-income states like Andhra Pradesh, Karnataka, Punjab, Tamil Nadu, Haryana, Gujarat, and Maharashtra.
It will help them explore and share innovative approaches to reducing poverty: one such example is the Andhra Pradesh’s Indira Kranti Patham, which empowers millions of poor women through self-help groups.
The Bank Group will continue to support policy and institutional changes in central government and the expansion of national programs. One such example is the support for India ’s public education system, the Sarva Siksha Abhiyan (SSA). Schools are now accessible and the program has achieved gender equity. Under the next phase, Bank support will focus on the quality of education. Another example is the Bank’s continued support to PowerGrid, a leading electric transmission network in India.
Focus on implementation
Strengthening project implementation is at the core of the new strategy. We will more closely examine risks and ways of reducing the impact of potential risks on project outcomes.
“At a time when India has experienced rapid growth, choosing activities carefully is crucial if the World Bank is to make the most of its limited resources. The World Bank and the Government will jointly implement a more rigorous project selection process than in the past,”said Rachid Benmessaoud, World Bank Acting Country Director for India.
He said the World Bank will also support analysis of important issues confronting policymakers, including poverty and exclusion, skills and job creation, low-carbon growth, the challenges of rapid urbanization, and the management and development of water resources.
Working with Private Sector
The International Finance Corporation (IFC), the World Bank’s private sector affiliate, has an extensive program for addressing poverty in India through investment and advisory work on economic inclusion, regional integration, rural development and India ’s low income states.
The World Bank and IFC are collaborating to bring cutting-edge expertise for Public-Private Partnerships (PPPs), tailored to India ’s needs. While suchsupport has been most visible in infrastructure - power transmission, roads, irrigation and rural infrastructure - it is being extended to health and education, agribusiness, and renewable energy.
“IFC’s program in India, including support for the infrastructure sector, climate change initiatives and in scaling up access to finance for the under-served is providing critically-needed support to the private sector, particularly at this difficult time,” said Paolo Martelli, IFC’s Director for South Asia
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India was the largest IDA and second largest IBRD borrower from the Bank in fiscal 2008. The Bank's US$ 15.1 billion-portfolio in the country covers 61 active investment projects. During FY08, the Bank's Board approved US$ 2.7 billion in funding for 9 new projects for India spanning a range of sectors including infrastructure, education, health and rural development. Of this, US$ 1.3 billion came from IBRD and US$ 1.4 billion came as interest–free credits from IDA.
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