Financial Daily from THE HINDU group of publications
Monday, Sep 27, 2004

Cross Currency

Group Sites

Industry & Economy - Infrastructure

`Innovative funding sources needed for achieving Millennium Development Goals'

Our Bureau

New Delhi , Sept. 26

AS mobilising additional finance to meet the challenges of the Millennium Development Goals remains a priority, increased funding (private and public)by tapping new sources is needed to invest in basic services and infrastructure for human development in the world's poorest countries.

This is the broad conclusion of a policy brief by the Helsinki-based UN University World Institute for Development Economics Research (UNU-WIDER) made by Prof A.B. Atkinson, Project Director and Warden of Nuffield College, University of Oxford.

The study said substantial external funding needs to be mobilised to achieve the Millennium Development Goals. It noted that estimates differ, but a `ballpark' figure is an annual increase of $50 billion. This can be achieved by doubling official development assistance. Though welcome steps have been made in this direction, this could take time, it said, and proposed seven innovative sources of funding.

The sources range from global environmental taxes (carbon use tax), tax on currency flows (the Tobin tax), creation of new Special Drawing Rights (SDR), International Finance Facility to global lottery and global premium bond and increased remittances from emigrants.

The study contended that the two global taxes could yield revenue of the magnitude required (tax on carbon use) or at least half the requirement (the Tobin tax). Besides, the tax rates for this purpose are in magnitude smaller than the tax rates proposed by those advocating these taxes on allocational grounds.

The Tobin taxes, proposed to discourage excessive currency speculation, have been 10 or 20 basis points, whereas what is envisaged by the study is a rate of two basis points. The energy tax has a rate of one-tenth or one-twentieth of that typically considered in the literature on global warming.

The International Finance Facility proposed by the UK Government could, if it attracts sufficient backing from other major donors, yield flows over the crucial period up to 2015.

The creation of SDRs for development has been envisaged to raise $25 billion-$30 billion. This implies that though it can contribute a significant part of the total, it must be complemented with other measures.

One such additional source is global lottery, if agreements could be hammered out with national lotteries. A global premium bond can provide a flow of loan funding not otherwise available. Supporting roles can be played by enhanced remittances from emigrants and, on a more modest scale, increased private donations, the study said.

The study said serious barriers exist to the enactment of the proposals for new sources of funding and they could be overcome by re-design, to make the proposals more compelling.

In the case of global lottery, for instance, the prize structure can be constructed in such a way that it helps differentiate the product from that of national lotteries and avoids the possible negative effects of very large prizes.

More Stories on : Infrastructure | Economy

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Kerala frames service delivery policy

Threat to nature
`Innovative funding sources needed for achieving Millennium Development Goals'
No more excise relief on petro goods supplied to EOUs
BPCL ready for forward trading
IOC's Paradip crude pipeline on the fast track
NTPC expansion project `on course' — Commissions 500-MW unit VII at Ramagundam
New power policy awaits Cabinet nod
VSP may get assured supply of natural gas; to expand capacity
Textiles outsourcing, US' new bugbear
SICA seeks inputs for cotton funding model
`DEPB rate cut unwarranted'
TAPMI offers management training for professionals
FICCI projects 10% growth for food and beverages industry
AP Govt nod for housing board's township development plan
Bengal Govt urged to reopen paper mills
Higher investment needed in farm sector, says CII
DEPB rate cut irks knitwear exporters
Bengal bidi industry calls for 5-day strike
Centre to review incentives for industries in N-E
Promoting India
World Tourism Day

The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |

Copyright 2004, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line