First strategy with goals on reducing extreme poverty, raising shared
prosperity

New Delhi, April 12, 2013 – The new World Bank Group strategy for
India shifts support significantly to low-income states, where most of
the poor live, and is the institution’s first country strategy to set
specific goals on reducing poverty and increasing prosperity.

Discussed by the Board of Executive Directors today, the World Bank
Group’s new Country Partnership Strategy (CPS) for India (2013-2017)
proposes a lending program of $3 billion to $5 billion each year over
the next four years. Sixty percent 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, 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 to
41.3% from 19.1%. If India were to grow as it did from 2005 to 2010
without making growth more inclusive, poverty would fall to only 12.3%
while 33.6% would remain above the vulnerability threshold by 2030.

“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,” said Onno Ruhl, World Bank country
director in India. “In our 60 years of working with India, the country
has made great strides in overcoming poverty, and we are excited that
India is the first country strategy to have these goals to reduce
poverty and increase shared prosperity. We hope these goals will
stretch us and our partners to make even greater efforts to help
India’s 1.2 billion citizens enjoy a better future.”

The idea of designing Country Partnership Strategies around specific
poverty goals was announced last week in a speech by World Bank Group
President Jim Yong Kim when he outlined an agenda for the global
community toward ending extreme poverty by 2030.

Guided by the priorities of the government of India’s Twelfth
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. Infrastructure needs are
massive; urban centers are growing exponentially, with cities adding
at least an additional 10 million urban dwellers each year; and social
programs need to be strengthened to generate inclusive growth.

A critical part in the strategy will be played by the International
Finance Corporation (IFC), the World Bank Group’s private sector arm.
IFC will invest in areas such as innovative renewable and green
projects, processed food, logistics and infrastructure, agribusiness,
and finance and insurance. IFC advisory services will work to address
the adverse business climates in the low-income states that discourage
significant levels of private investment.

“Continuing to enhance private investment in India’s low-income
states, home to a substantial section of India’s poor, will remain
central to IFC’s work in India. As part of the World Bank Group
strategy, we remain committed to increasing access to infrastructure,
financial services, and low-income housing for the underserved while
retaining our leadership in renewable energy projects,” said Thomas
Davenport, IFC’s director for South Asia.

In the next five years the strategy will focus on three key areas:
integration, transformation, and inclusion. A common theme across
these areas will be improved governanc e, environmental
sustainability, and gender equality.

Integration – The focus will be on improving infrastructure needs both
through public and private investments. Reforms are needed in the
power sector to rationalize energy pricing and improve the capacity
and reliability of the generation, transmission and distribution
system. A vibrant manufacturing sector – especially small and medium
size enterprises – require reforming labor laws, and improving access
to land and finance. Better integration would result in more-balanced
growth among Indian states, helping low-income states converge more
quickly with their faster-growing neighbors.

Transformation – By 2031, it is projected that 600 million people will
live in India’s cities. The World Bank Group’s engagement on the
rural-urban transformation and particularly on urbanization is
expected to intensify over the strategy period and beyond and
represents a significant shift in the World Bank Group’s strategy. It
will focus on supporting the efforts of national, state, and city
governments to improve the management and livability of medium-sized
cities.

Inclusion – Economic integration and rural-urban transformation can
benefit a large share of India’s population only if there is a
stronger focus on human development and on policies that help make
growth inclusive. India’s weak health care system and poor nutritional
outcomes undermine its competitiveness. The World Bank Group will
support the national government and states in strengthening the
nutrition policy as well as systems and capacities to improve
nutrition. It will support government efforts to improve education
mainly at the secondary and tertiary levels, with a more pronounced
focus on quality. It will also work to improve access to finance and
to enhance social protection coverage for more than 90% of the labor
force, which currently works in the informal sector.

सुरेन्द्र अग्निहोत्री
agnihotri1966@gmail.com
sa@upnewslive.com