World Bank to double India loans to $3 bn

The World Bank is likely to double its lending commitment to India this year up to $3 billion, Michael F. Carter, World Bank's country director, India said.

The Bank's financial year runs between July-June, and the $3 billion-commitments are expected to flow beginning next month up to June 2007.

The Bank's lending is largely directed towards projects in the infrastructure sector, human development and projects aimed at improving rural livelihood.

Healthcare projects have been important recipients of the Bank's funds, but fresh funding on healthcare projects has stopped following the Bank's inquiry into allegations of possible corruption in India's Reproductive and Child Health Project (RCH).

"I don't know when the decision will be taken (to revive healthcare funding)," Carter said. The Bank's and Indian government officials have engaged in talks for a while on the issue, but the final decision to revive funding will be taken by the Bank's top brass in Washington.

The only healthcare projects in India that are being funded by the Bank are the ongoing ones is states like Uttar Pradesh. The World Bank's commitment to these projects are spread over a five-year period.

Among the projects that received a World Bank commitment last year, infrastructure projects attracted the biggest amount.

The World Bank's commitment to the power system development project, which received a commitment of $400 million in January 2006, was the largest of its kind in 2005-06 among all of the Bank's power sector commitments across the world.

Among the other large commitments made by the Bank in India in 2005-06 were towards the third Tamil Nadu urban development project ($300 million) and the Karnataka municipal reform project ($216 million).

The World Bank's commitment to projects in India would have been higher if the healthcare funding had not ground to a halt. The Bank recently issued a press release to clarify its position on healthcare funding.

According to the release, "To allow more time for discussion between the Bank and the Government of India on the most effective ways to address these issues moving forward, we have postponed consideration of a second RCH program and two other health sector loans by the Board of the Bank. These are the Second National Tuberculosis Control Project and the Karnataka Health Systems Project."

Jairam Ramesh, Minister of State for Commerce, and Carter released a World Bank report "Reforming Public Service in India: Drawing Lessons from Success." The report analyses 31 success stories in public service delivery across a range of sectors so as to distill common success factors.