World Bank to lend $5 bn for poverty eradication

Visting World Bank President Jim Yong Kim told a press conference that the multi-lateral agency will deepen its engagement with India for alleviating poverty

The World Bank on Wednesday said it would give $3-5 billion to India in the next four years to push development projects and poverty eradication programmes.

“We hope, especially working through the IFC (International Finance Corporation), that $3-5 billion can leverage many more billions for investment in India,” Jim Yong Kim, World Bank President, who is currently on a tour of India, told a press conference here. The IFC is an arm of the World Bank Group. Another arm, the International Development Agency (IDA), is for lending on concessional terms.

“We are in the 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 World Bank chief said.

He said the reason the World Bank was interested in India is that it would have a huge impact on the world if it make a difference here.

Kim said that the alleviation of poverty in Uttar Pradesh, India’s most-populated state, was vital if poverty was to be ended in the country.

“There are more than 200 million people in Uttar Pradesh, of which 70 million people are below the poverty line. Eight per cent of the world’s poor are in Uttar Pradesh. If we want to end poverty, we have to end poverty in Uttar Pradesh and in other states,” Kim said a day after he visited the state.

He said during his visit he talked to Prime Minister Manmohan Singh, Finance Minister P Chidambaram and Uttar Pradesh Chief Minister Akhilesh Yadav about strengthening the health care system in India. Kim said the Indian government was interested in getting technical help from the World Bank in controlling infectious diseases.

Kim said the World Bank supports cash transfers in India. “We have had broad experiences across the world with cash transfers. The evidence in favour of cash transfers is overwhelming,” he said.

“Though investments in health and education are useful,” he said, “we have to be smart about it. Simple redistribution without growth will get you where it wants to take you. It simply won’t happen.”

The Indian government should be closer to the private sector and there should be more private-public partnership in India, he said.

Kim, who had earlier, pegged India’s economic growth at six per cent for the next financial year, said the economy could expand at a higher pace than this rate. “We have seen signs of the economy having bottomed out. Six per cent is not a spectacular growth. India has many things going. The challenge is how to go back to the potential,” he said.

Kim’s statement comes a day after industrial production looked up a bit by expanding 2.4 per cent in January, following contraction in the previous two months.

India's economic growth slipped to a four-year low of 4.5 per cent in the third quarter of the current financial year, yielding 5 per cent growth in the first nine months.