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T.E. Raja Simhan

Chennai, Dec. 4 Private sector projects in India supported by the International Finance Corporation (IFC) have a ‘high development outcome ratings’ than in China. The success rate in India — per cent of tracked companies with successful development results ratings — was 72 per cent compared with 43 per cent in China.

The IFC, a part of the World Bank group helping the private sector, said three quarters of its $2.6-billion regional portfolio (South Asia) in fiscal 2007 was in India. In China, which comes under East Asia and Pacific, the investment was $1.6 billion ($1.5 billion).

However, India was behind Russia, Pakistan and Turkey in the success rate, according to the corporation’s fiscal 2007 annual report.

IFC’s investment in Russian Federation was $2.2 billion ($1.9 billion), and the country had an 89 per cent success rate. Investment in Pakistan was $522 million ($345 million) with success rate of 75 per cent and in Turkey it was $1.3 billion ($1.2 billion) with a success rate of 76 per cent.

In fiscal 2007, IFC invested over $8 billion for its own account and mobilised nearly $4 billion more in its client countries.

The corporation said the high success in South Asia (consisting of India, Bangladesh, Sri Lanka, Maldives, Nepal and Bhutan) was due to a strong performance in manufacturing and information technology and due to Indian companies’ restructuring and cost-cutting efforts in early 2000.

A small number of financial markets projects with weaker outcomes moderate the overall success somewhat. In particular, the Indian housing finance companies have struggled to compete with commercial banks. Building on these lessons the IFC has shifted its focus to help build the mortgage insurance sector and facilitate funding alternatives, such as securitisation. The environmental and social performance of IFC’s projects has been solid, the annual report said.

IFC is investing risk capital to promote the growth of commercial microfinance in India. It invested $1.6 million in Aavishkaar Microfinance and has taken a $5-million equity stake in Financial Information Network and Operations.

IFC is also helping rural productivity in India. Its investment of $11 million in equity in Suguna Poultry Farms, a first in the country’s poultry sector, will help the company expand its breeder farms, hatchery and feed mill capacity.

The project will create opportunities for more than 10,500 contract poultry farmers, who will benefit from the company’s guaranteed prices and purchase volume, as well as from hands-on advisory services in poultry rearing, the IFC said.

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