The Hindu Business Line : World Bank lending to India may go up to $3 b

THE World Bank Group Country Strategy for India for 2005-08 provides for an increased lending programme of up to $3 billion a year in order to substantially scale up the impact of development efforts on some of the world's poorest people, being undertaken by the Government of India.

The board of directors of the Bank in Washington on Thursday discussed the new strategy involving its soft-lending window International Development Association (IDA) as also its private sector lending arm the International Finance Corporation (IFC).

Even as the Bank's resources are modest in relation to the size of India's economy and the scale of its economic and social development needs, the challenge for the Country Strategy is to leverage the Bank's diverse resources, including both knowledge and lending to help improve the quality of life of poor people in India and to help the country move closer to achieving the Millennium Development Goals (MDGs).

A Bank release said India with its one billion people is still home to over one quarter of the world's poor people. Their average incomes remain low and there has been little improvement on some critical social indicators. There also exists a substantial disparity of opportunity, particularly in the education, health and economic prospects of women and other vulnerable groups.

"Looking at these disparities, what emerges is a picture of India occupying two worlds simultaneously. In the first, economic reform and social changes have begun to take hold and growth has had an impact on people's lives, opportunities have opened up. In the other, citizens appear almost completely left behind by public services, employment opportunities and brighter prospects. Bridging the gap between these two is perhaps the greatest challenge", the World Bank's Country Director for India, Mr Michael F. Carter, said.

As the strategy document commits the Bank Group'swork in India to an increased focus on results, the strategy has identified three programme priorities covering improved Government effectiveness, support investments in people and empowering communities and to promote private sector-led growth.

In line with these priorities, the Bank's programme and lending would be expanded in such sectors as infrastructure (roads, transport, power, water supply and sanitation), irrigation and urban development (to support both accelerated growth and improved service delivery), human development (education, health, social protection) and rural livelihoods with an emphasis on community-driven approaches.

The Bank said an important shift is the greater recourse to co-financing with other development partners under common arrangements for national programmes in the areas most critical to meeting MDGs. It also proposes some important shifts in the approach to India's States.

Since 1977, it has included a focus on States undertaking comprehensive reforms.

For instance, during the last period, the focus was on Andhra Pradesh, Karnataka and Uttar Pradesh. With the widening gulf between India's faster and slower growing States, some shifts in this approach are warranted, it said.

Accordingly, in consultation with the Government of India and other partners, the Bank would seek to ensure that all of the largest and poorest States that so wish are engaged in a dialogue on crosscutting reforms.

Second, the Bank would work proactively to try to build a productive development relationship with four States where poverty is increasingly concentrated in India: Bihar, Jharkhand, Orissa and Uttar Pradesh.

Third, State-level adjustment lending operations aimed at supporting the achievement of the MDGs are also expected to remain a key part of the Bank's programme.

Fourth, instead of confining to "focus states", investment lending will be channelled more broadly to states on the basis of guidelines for each sector, where they set out the sector-specific conditions that experience has demonstrated to be necessary for project success.

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