Remarks by South Asia Vice President in India

New Delhi, 25 June 2004

Friends,

A warm welcome to you all and thank you for accepting our invitation today. I have been in India for 10 days and have plenty to share with you.

We had the pleasure of hosting His Excellency the President of India, Dr APJ Abdul Kalam, in these very premises this Monday on the occasion of the India Country-level Development Marketplace. He visualized what he called a “win-win relationship” between the World Bank and India, and inspired by that vision, I am placing before you my thoughts on the Bank’s partnership with India.

India Country-level Development Marketplace

Let me begin by telling you a little about the Development Marketplace, which many of you attended. This was an initiative we took to reward innovative ideas to overcome India’s development challenges. Along with partners from the private sector and the donor community, we ran an Innovation Competition on the theme of “Improve Rural Services – Access and Quality”.

We received some 1500 proposals from NGOs, trusts, community organizations and others who had some amazing ideas to combat poverty and deliver services such as health, education, electricity and sanitation to rural communities. After a rigorous process, a jury selected 20 winners.

The purpose of the marketplace was to facilitate an exchange of ideas, help social innovators network, and link people with ideas to partners with funds – in the hope that such creativity could be scaled up to have maximum impact on poverty. We have been inspired by the response to this initiative, and feel the World Bank has been able to play a valuable role of facilitating and mobilizing grassroots innovation in India. 

Field visits to Uttar Pradesh and Maharashtra

In the same vein, I will describe my visit to Uttar Pradesh on Tuesday. Along with Michael Carter, I visited two villages, one in District Barabanki covered under the World Bank-supported Diversified Agricultural Support Project, and another in District Sultanpur covered under the Sodic Lands Reclamation Project.

I was hugely impressed with the results these projects had achieved on the ground, in terms of the range of outputs being marketed, the improvements in crop intensity, the rise in per capita incomes, and the reduction in the number of households below the poverty line. More important was the remarkable enthusiasm and pride of accomplishment displayed by farmers, women's groups, NGO field workers and state government project staff.  I have seen so many different development programs in several countries, but rarely this kind of enthusiasm, especially among women.

I must say I felt personally very proud to see World Bank support make this sort of difference. I am not exaggerating, and I urge you all to visit the project areas whenever you can.

Similarly, Michael and I visited the Bank-supported Maharashtra Rural Water Supply and Sanitation Project in two villages around Thane last week. I saw for myself the importance of the “process” of building community ownership and transparency in implementing the scheme.  The participation and involvement of women in implementing the project was very evident in both villages, which has also generated greater empowerment. Community involvement has helped reduce project cost—in the first village, the village women themselves shopped around for the best price for the pipes.  I think you have another very uplifting story there.

Country Assistance Strategy 2005-08

This brings me to the World Bank’s Country Assistance Strategy for India – or CAS – for the period 2005 to 2008. After an intense process which included discussion with the Department of Economic Affairs and line ministries, we have put up the first draft on our website this week for public review. This draft will be up till the 14th of July and we welcome comments from interested members of the public. We will use these inputs to refine the draft, which will then be finalized and discussed by the Bank’s Board of Executive Directors in late summer.  

This draft benefited greatly from the feedback we received from a detailed survey of Bank interlocutors that we commissioned late last year. I believe several of you participated, and we thank you for your contribution.

The Prime Minister’s address to the nation yesterday was brilliant both for the breadth and depth of his vision for India, and his frontal recognition of the country’s development challenges. His message that equity and efficiency are not contradictory, that reform means both freeing private enterprise and improving government effectiveness, and that social objectives and fiscal discipline are actually complementary is one we fully agree with.

I am therefore very happy to report that the CAS draft emphasizes exactly these points: Improving Government Effectiveness; Investing in People and Empowering Communities; and Promoting Private-Sector Led Growth. All of these reflect India’s own priorities and development goals.  Similarly, the CAS is consistent with the vision projected in the government’s Common Minimum Program. You will be glad to know that the Finance Minister has personally agreed with the strategic principles and lending criteria suggested in this draft.

The core aim of this new CAS is – how can we maximize and leverage the diverse resources of the Bank Group – IBRD/IDA, IFC and MIGA combined – to dramatically scale up our impact, help to improve the quality of life for some of the world’s poorest citizens, and help India move closer to achieving the Millennium Development Goals.

To achieve this enhanced impact, three Strategic Principles will underpin the Bank Group’s work:

Focusing on outcomes, to ensure that all of the work of the Bank Group is explicitly geared towards supporting India’s achievement of its development goals; selectivity to target limited resources to activities where assistance is welcomed and where contributions can also be the most effective; and, to substantially expand our role as a knowledge provider and generator.

Given India’s enormous needs – and also responding to the messages received from our survey and discussions with government –  we will substantially expand our support, primarily in:

(i) infrastructure -- roads, transport, power, water supply and sanitation, irrigation and urban development – to underpin both accelerated growth and improved service delivery;
(ii) human development -- education, health, social protection; and
(iii) rural livelihoods with an emphasis on community-driven approaches. 

Scaling up will require expanded Bank support at the national level. A large part of this expansion will be in the form of advisory work, but the increase will also involve more national level lending (for roads, power, education, HIV/AIDS, etc.) compared to recent years.

Cross-cutting reforms at the state level will remain an important focus. We will also pro-actively actively seek to work with more states, with a special attention on the states with the greatest number of poor persons.

An important emphasis of Bank support will continue to be improved fiscal and public expenditure management that enables state and local governments to maintain or increase public resource allocation towards high priority areas. 

This is a big agenda and requires an expansion in the volume of lending. The CAS suggests a new way of looking at IBRD lending.  Rather than the practice of establishing low, base or high case scenarios, and structuring triggers to shift from one case to another, under this CAS the Bank program will fall within a range limited by an upper bound for IBRD lending. Getting to this upper bound will require strong reform performance as well as a strengthened pace of project preparation. For FY05-08, the upper bound for IBRD lending is $2.15 billion per year. In addition, there is India’s IDA allocation, currently at about US$850 million a year.

I believe with these figures I have given you your headline, but my purpose of sharing all this with you was to describe to you the high quality partnership that the Bank enjoys with India, the results already visible on the ground, and the great promise for the future. I will be happy now to take your questions.

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