India: World Bank Group Launches New Strategy For India

E-mail: gchopra@worldbank.org
In Washington:
Karina Manasseh  (202) 473-1729
E-mail:  kmanasseh@worldbank.org

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WASHINGTON, August 26, 2004 —  The new World Bank Group[1] Country Strategy for India envisages an increased lending program of up to US$3 billion a year to substantially scale up the impact of development efforts on some of the world’s poorest citizens.

The Board of Executive Directors of the Bank discussed today the 2005-2008 strategy, a document that both describes the Bank’s strategic approach to helping India achieve its development goals and indicates the level of assistance that will be provided.

World Bank Group 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 for some of the world’s poorest citizens and to help India move closer to achieving the Millennium Development Goals (MDGs).

India has experienced rapid growth in recent years, and its significant economic achievements have helped to lift tens of millions of people out of poverty during the 1990s.  However, this vast country of over 1 billion people is still home to over one quarter of the world’s poor people, average incomes remain low and there has been little improvement on some critical social indicators. Survival rates for young mothers and children under the age of five are stagnant, and HIV/AIDS is spreading quickly, putting the country in danger of a growing epidemic. There also remains a substantial disparity of opportunity, particularly in the education, health, and economic prospects of women and other vulnerable groups. In addition, a growing gulf has emerged between Indian states, with the result that poverty is increasingly geographically concentrated.

“Looking at these disparities, what emerges is a picture of India occupying two worlds simultaneously,” says Michael Carter, the World Bank’s Country Director for India. “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 Indias is perhaps the greatest challenge facing the country today.”

The strategy document commits the Bank Group’s work in India to an increased focus on results, emphasizing selectivity so that resources can be directed to activities where assistance is welcomed and can also be the most effective. A commitment to sharper knowledge services will shape the Bank’s product in ways which can be realistically applied to the Indian context.

The strategy has identified three program priorities:

1. To help improve government effectiveness;
2. To support investments in people and empowering communities; and
3. To promote private sector-led growth.

In line with these priorities, the Bank’s program and lending will be expanded in the following sectors:

• Infrastructure: roads, transport, power, water supply and sanitation, irrigation and urban development – to underpin both accelerated growth and improved service delivery;
• Human Development: education, health, social protection; and
• Rural Livelihoods: with an emphasis on community-driven approaches.

An important shift is the greater recourse to co-financing with other development partners under common arrangements for national programs in the areas most critical to meeting the MDGs.

The Country Strategy also proposes some important shifts in the approach to India’s states. Since 1997, the Bank Group strategy has included a focus on states undertaking comprehensive reforms. For example, 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. These include:

• First, in consultation with the Government of India and other partners, the Bank will seek to ensure that all of the largest and poorest states of India that so wish are engaged in a dialogue on cross-cutting reforms.
• Second, the Bank will 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 an important part of the Bank program. 
• Fourth, instead of concentrating on “focus states,” investment lending will be channeled more broadly to states on the basis of guidelines for each sector, where the guidelines attempt to set out the sector-specific conditions that experience has shown to be necessary for project success.

Carter also noted that this strategy covers a critical period if the MDGs, such as halving poverty by 2015, are to be met globally. “Assisting India, which is home to over one quarter of the world’s poor, with best practice knowledge and financing for development, is central to the Bank Group’s mission to help reduce global poverty.”

The International Finance Corporation (IFC) will continue to provide equity and loan financing, guarantees, and technical assistance to the private sector in India. This will include pioneering investments in infrastructure, where innovative structures are required, and investments in projects which are constrained by the limited appetite of private investors, including medium-sized manufacturing, agribusiness, and companies entering new markets domestically and internationally.

For the World Bank, global knowledge support – policy dialogue, analysis, technical assistance, and advisory services – will be re-focused to better support the program priorities.  The strategy envisions enhanced analytical work on emerging issues of national interest, as well as strengthening demand-driven responses by the Bank.

The strategy was formulated over a period of more than one year, and during its preparation was discussed intensively with the government and relevant line ministries. Inputs were also sought from Bank interlocutors in civil society, the media and private sector through a phased consultation process.

For more information, visit:

http://www.worldbank.org/indiastrategy