World Bank to provide $3-5 bn funding to India for 4 yrs

The money will be used to push development projects and poverty eradication programmes, said WB president Jim Yong Kim

World Bank today committed annual funding of $3-5 billion to India for next four years to push development projects and poverty eradication programmes.

"The World Bank Group would work towards continuing its level of annual assistance of $3-5 billion to India over the next four years," president of multi-lateral funding agency Jim Yong Kim told reporters here.

During the year ended June 2012, the World Bank Group gave loan of $3.2 billion for various projects including National Mission Clean Ganga.

Kim, who was on a three-day visit to India for the first time after taking over as the president last year, said the Bank will complement its enhanced financial lending with technical assistance and knowledge services to help India improve the implementation of its development programmes.

On whether World Bank is contemplating to close International Development Association (IDA), soft loans window, for India as it has become a middle-income country, he said: "We are in middle of discussions right now about our IDA strategy...We are going to be as creative as possible to maintain our commitment to India at very high levels."   

The bank is concerned about the poor, and about 400 million people live in India, Kim said.

"We hope, especially working through IFC, $3-5 billion can leverage many more billions for investment in India. We believe that India is a good investment and we will deepen our engagement as much as we can, using every bit of flexibility and creativity to get there," he said.

Kim said India has higher potential of growth than 6% projected for the next fiscal. "We have seen signs of the economy having bottomed out. 6% is not a spectacular growth. India has many things going. The challenge is how to go back to the potential."

On the ease of doing business, Kim said it is mostly a procedural issue and it can be tackled.

The government is committed to making it easier to do business in India. India ranks 132, out of 185 economies, in the 'ease of doing business' report of the World Bank.

Stressing that the World Bank Group's mission of ending global poverty will require it to step up support for India's poorest citizens, Kim said: "We have an historic opportunity to accelerate the reduction of poverty in India."

The World Bank Group is committed to supporting the Indian people as they pursue this crucial goal, he said.     India's poorest seven states are home to over 200 million people who have yet to secure access to education, healthcare and other basis services they deserve. Increasing focus on these areas will help India build shared prosperity for all its people, he said.

On the rapid urbanisation, Kim said 10 million people are leaving rural areas each year to move to towns and cities.

"Lack of opportunity in India's rural areas often leads people to look for a better life in the city. The energy and enterprise of people flocking to India's urban areas can help unleash the country¿s economic potential, but this will only happen if cities offer them good jobs and quality public services," he added.

Going forward, the World Bank Group will support India's efforts to more effectively manage the environmental implications of the urbanisation process, by helping officials develop resource-efficient infrastructure and environmentally friendly urban spaces.

India represents the World Bank Group's largest client. Between 2009 and 2013, the Group lent around $26 billion to India.     

This includes a one-year high of $11 billion in 2009-10 when World Bank Group support to India spiked after the 2008 financial crisis. India had requested additional financing to ensure credit growth in the economy and continued access to infrastructure financing.

The support between 2009 and 2013 includes $12 billion from the International Bank for Reconstruction and Development (IBRD); $8.3 billion from the International Development Association (IDA); and a further $5.2 billion in investments from the International Finance Corporation (IFC).