The World Bank has come out with an ambitious four-year plan for India under which it would be ready to lend between $3 billion and $5 billion annually for development projects aimed at reducing poverty in seven low-income States.
After a meeting of its Board of Executive Directors on Thursday, the World Bank announced that its new strategy for India will shift support significantly to the low-income States, where most of the poor live. In what is being described as the institution’s first country strategy to set specific goals on reducing poverty and increasing prosperity, thereby improving the inclusiveness of economic growth, the Bank’s plan for India will cover the 2013-2017 period.
In a statement, issued after the meeting, the Bank said 60 per cent of the financing will go to State Government-backed projects, with half of this (or 30 per cent) going to low-income or special category States where public services face high delivery costs.
“Under the previous strategy, 18 per cent of lending went to these States,” it said, noting this approach would cut poverty to 5.5 per cent of the population by 2030 from 29.8 per cent in 2010. “If India were to grow as it did from 2005 to 2010 without making growth more inclusive, poverty would fall to only 12.3 per cent while 33.6 per cent would remain above the vulnerability threshold by 2030,” the Bank noted.
Onno Ruhl, World Bank country director in India, said the seven low-income States hold 60 per cent of India’s poor. They are now growing faster than the average, and so investments there have the potential for greater impact, Ruhl said.
The idea of designing Country Partnership Strategies around specific poverty goals was made public by Bank President Jim Yong Kim last week while outlining an agenda for the global community towards ending extreme poverty by 2030.
The International Finance Corporation, the private sector arm of the World Bank Group, is set to play a critical role in the new strategy. It will invest in innovative renewable and green projects, processed food, logistics and infrastructure, agribusiness, and finance and insurance. “We remain committed to increasing access to infrastructure, financial services, and low-income housing for the underserved while retaining our leadership in renewable energy projects,” said IFC’s South Asia director Thomas Davenport.