US$ 14 billion World bank loans for India

By Richard High16 December 2008

The World Bank has announced a three-year US$ 14 billion pakage of loans for India. Spending priorities under the programme include infrastructure building and poverty alleviation.

The World Bank 's new Country Strategy for India outlines a US$ 14 billion lending program over the next three years, of which US$ 9.6 billion is from the International Bank for Reconstruction and Development (IBRD) and US$ 4.4 billion is from the International Development Association (IDA).

The strategy is designed to support the Indian Governemnt's Eleventh Five-Year Plan. This focusses on building new infrastructure and economic growth especially for the estimated 300 million Indians who live in dire poverty. A related challenge, said the Bank, is to ensure development is sustainable, meaning that the environment is cared for in the process.

Commenting on the programme, World Bank economic adviser Giovanna Prennushi, said, "India's rapid growth will not be sustainable if it does not include the 300 million citizens who live below the official poverty line, nearly 60% of whom reside in the country's seven poorest states. This strategy is designed to boost support to these states, but also not to forget about the poorest people in India 's middle income states. The challenge is to target poverty where we can help make the difference."

Critical to boosting growth and bridging the gap between rich and poor, she said, is addressing India 's vast infrastructure deficits. No Indian city provides water 24 hours a day, 7 days a week, only half the population has access to safe drinking water, and 40% of India's 600000 villages are not connected to a road, explained Ms Prennushi.

The programme will be targeted at the seven low-income states of Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Orissa, Rajasthan, and Uttar Pradesh. There will also be support for some of India's middle-income states, including Andhra Pradesh, Karnataka, Punjab, Tamil Nadu, Haryana, Gujarat, and Maharashtra.

The Bank also said it would look to work more closely with the private sector in delivering infrastructure. The International Finance Corporation (IFC), the World Bank's private sector affiliate, and the Bank will therefore collaborate to bring "cutting-edge expertise" for Public-Private Partnerships (PPPs), tailored to India 's needs, said the Bank.

"The IFC's program in India, including support for the infrastructure sector, climate change initiatives and in scaling up access to finance for the under-served is providing critically-needed support to the private sector, particularly at this difficult time," said Paolo Martelli, IFC's Director for South Asia

India was the largest IDA and second largest IBRD borrower from the Bank in fiscal 2008. The Bank's US$ 15.1 billion-portfolio in the country covers 61 active investment projects. During FY08, the Bank's Board approved US$ 2.7 billion in funding for 9 new projects for India spanning a range of sectors including infrastructure, education, health and rural development. Of this, US$ 1.3 billion came from the IBRD and US$ 1.4 billion came as interest-free credits from the IDA.

For more information about the World Bank Group's work in India, visit http://www.worldbank.org/in

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