World Bank proposes multi-billion programme to support low income states of India

 

The World Bank has come out with a multi-billion (US$ 12-20 billion) four-year plan aimed at bringing down poverty levels in seven low-income Indian states of Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Odisha, Rajasthan, and Uttar Pradesh, where majority of India 's poor live.

 

The institute’s Country Partnership Strategy (CPS) for India (2013-2017) proposes a lending program of US$3 billion to US$5 billion each year over the next four years. Under the proposal, 60% of the financing will go to state government-backed projects and half of this, or 30% of total lending, will go to low-income or special category states (where public services face high delivery costs). Under the previous strategy, only 18% of lending went to these states.

 

The Bank’s India strategy outlines a scenario in which India improves the inclusiveness of the economic growth to that achieved by its best performing states. This would cut poverty to 5.5% of the population by 2030 from 29.8% in 2010 and increase the share of people living above the threshold where they are at risk of falling back into poverty. Furthermore, the bank said that India 's seven low-income states, with 60% of India 's poor, are now growing faster than the average, and so investments there have the potential for greater impact.

 

Guided by the priorities of the government of India's 12 Five-Year Plan, the strategy sees sustaining high economic growth as critical to lifting millions out of poverty in a country that has the largest number of poor people in the world. According to the Bank, infrastructure needs are massive; urban centers are growing exponentially, with cities adding at least an additional 10 million urban dwellers each year; and social programmes need to be strengthened to generate inclusive growth. Under the proposals the IFC will invest in areas such as innovative renewable and green projects, processed food, logistics and infrastructure, agri business, and finance and insurance.

 

Warm regards,

 

Dr. S P Sharma

Chief Economist