World Bank Lending To India Set To Double

The World Banks annual lending to India is likely to double in the coming years contrary to popular perception that aid would diminish, according to a top World Bank official.

Joelle Chassard, point person for India at the Bank, said the relationship between the development agency and India looks set to grow.

A cumulative target of $3 billion dollars a year from IDA (International Development Agency) and IBRD (International Bank for Reconstruction and Development) had been discussed with the government of India which is almost twice than the $1.5 billion in aid this year, Chassard said.

But Chassard qualified, A lot will depend on how we are able to move on agreements regarding policy reforms.

 

Nevertheless, from our side, we are gearing up to deliver, but it is a tall order, she added, noting that the decentralisation of the Banks administrative framework in the recent past had facilitated a more hands-on approach and closer contacts between the New Delhi office and the Indian government.

Chassard, who has been associated with work in India over the last six years said, there has definitely been a big turnaround in the nature of the relationship between the Bank and India since the initiation of the liberalisation process. From the point of view of the Bank, it has been a very challenging period because of the rapid and dramatic changes in India, she said.

We are very pleased by the turn of events and impressed by the policy changes that successive governments have implemented, she said.

At the same time, she identified some problem areas that bedevil Indian development, with infrastructure leading the list. In this sector, she said, India was lagging and the problem is becoming so acute that it threatens the rest of the economic programme.

The World Bank had given enormous resources to this sector in the last three to four years, Chassard pointed out. Obviously it is a very sensitive and political issue and we are adjusting our lending to this, she said. But its a real problem and unless states bite the bullet there is no way out, she stressed. The Bank and India had tried other bitter pills and they had not succeeded, she said.

There is a broad agreement on the nature of the problem and we are all conscious that it requires political courage, and we are hoping that more governments will have that courage, Chassard said about the reforms needed in sectors like power. Another sphere that the Bank was concerned about, she said, was the need for greater private sector participation. But we are conscious that many years of socialist policies cannot be changed overnight.

Other areas needing attention are changes in agricultural policies, the financial sector etc.

The Bank is ready to provide and even increase the level of assistance to India, but it takes two to tango,Chassard asserted.

At the same time, she sounded a positive note on the future of liberalisation. The new policies seem to be well-entrenched, according to her. We are confident that the direction taken in 1991 is going to be maintained. But it is clear that there is a lot to be done and the progress is not even.

Chassard said the Banks increasing dialogue with state-level authorities was a significant change in recent times. We are adjusting to this new situation, she said.