The World Bank, and Its Work in India

Func­tions of World Bank

The World Bank Group was estab­lished after World War II with the objec­tive of rebuild­ing the coun­tries dam­aged due to the war.

• With time, it encour­aged the devel­op­ment of lower and mid­dle-income coun­tries and improved the stan­dard of liv­ing there.
• It also focused on encour­ag­ing long-term cap­i­tal invest­ment.
• World Bank Group pro­motes invest­ment in devel­op­ing coun­tries. It offered finan­cial sup­port, exper­tise and tech­ni­cal assis­tance.

Devel­op­ment Insti­tu­tions

There are five Devel­op­ment Insti­tu­tions under it:

• Inter­na­tional Bank for Recon­struc­tion and Devel­op­ment (IBRD)
• Inter­na­tional Devel­op­ment Asso­ci­a­tion (IDA)
• Inter­na­tional Finance Cor­po­ra­tion (IFC).
• Mul­ti­lat­eral Guar­an­tee Agency (MIGA)
• Inter­na­tional Cen­tre for the Set­tle­ment of Invest­ment Dis­putes (ICSID)

a. Inter­na­tional Bank for Recon­struc­tion and Devel­op­ment(IBRD)- World Bank Group

IBRD is a global devel­op­ment coop­er­a­tive, and it was founded as one of the Bret­ton Woods Insti­tu­tions in 1944. There are 189 mem­bers of the Inter­na­tional Bank for Recon­struc­tion and Devel­op­ment.

• IBRD is the largest devel­op­ment bank in the world, which was estab­lished to help the post-World War II recon­struc­tion. After every­thing got back on track, IBRD changed its focus to other areas.
• Cur­rently, IBRD is focus­ing on help­ing coun­tries with low and mid­dle income. It aims to reduce poverty, deal with regional con­cerns, and boost sus­tain­able devel­op­ment.
• IBRD is one of the 5 insti­tu­tions under the World Bank Group, and it invests in var­i­ous sec­tors and also offers tech­ni­cal assis­tance.
• 60% of IBRD’s port­fo­lio is con­cen­trated in mid­dle and low-income coun­tries.
• India bor­rowed money from IBRD in 1949 for the rail­way project. Since 1960 IBRD has helped India with fund­ing. India has become the largest IBRD client of the World Bank.

b. Inter­na­tional Devel­op­ment Asso­ci­a­tion (IDA) – World Bank

IDA was founded in 1960 to help the poor­est coun­tries in the world and to com­ple­ment IBRD. The main motive of IDA was to reduce poverty through inter­est-free loans. The mech­a­nism of IDA enhanced eco­nomic growth, qual­ity of life, and reduced inequal­ity. The World Bank includes IBRD and IDA.

C. Mul­ti­lat­eral Invest­ment Guar­an­tee Agency (MIGA) – World Bank

MIGA was estab­lished in 1988. The objec­tive of MIGA was to pro­mote for­eign direct invest­ment in devel­op­ing coun­tries.

• Mul­ti­lat­eral Invest­ment Guar­an­tee Agency low­ers poverty and enhances the qual­ity of life.
• Just like its name, MIGA guar­an­tees to pro­tect invest­ments against non-com­mer­cial risks.
• Polit­i­cal risk insur­ance prod­ucts by MIGA offer cov­er­age against Losses due to ter­ror­ism, war and civil dis­tur­bance, Breach of con­tract, Expro­pri­a­tion by the gov­ern­ment, and Losses due to the inabil­ity to legally con­vert local cur­rency to hard cur­rency.

d. Inter­na­tional Finance Cor­po­ra­tion (IFC) – World Bank

The Inter­na­tional Finance Cor­po­ra­tion is the sis­ter orga­ni­za­tion of the World Bank. IFC is majorly focused on the pri­vate sec­tor in devel­op­ing coun­tries.

• It is the largest global devel­op­ment orga­ni­za­tion.
• IFS sup­ports growth in devel­op­ing coun­tries by fund­ing invest­ments, rais­ing money, and also pro­vid­ing com­mer­cial advi­sory ser­vices.
• IFC is involved with the pri­vate sec­tor to increase entre­pre­neur­ship and boost busi­ness growth.

e. Inter­na­tional Cen­tre for Set­tle­ment of Invest­ment Dis­putes (ICSID)

ICSID is an inter­na­tional orga­ni­za­tion that deals with the res­o­lu­tion of invest­ment dis­putes. One of the major func­tions of ICSID is to set­tle dis­putes between gov­ern­ments and investors. In addi­tion, it also set­tles dis­putes between states. How­ever, India is not a mem­ber of ICSID because it thinks that this orga­ni­za­tion is biased toward devel­oped coun­tries only.

India and World Bank

Coun­try Part­ner­ship Frame­work for India

The World Bank lends around US$27.1 bil­lion to India, which makes it the largest coun­try of IBRD sup­port. In Sep­tem­ber 2018, the World Bank Group began a new part­ner­ship with India. The part­ner­ship empha­sizes an effi­cient and sus­tain­able growth path and fos­ters com­pet­i­tive­ness to cre­ate new job oppor­tu­ni­ties and invest­ments in human cap­i­tal. It is embed­ded in the Sus­tain­able Devel­op­ment Goals of the United Nations and focuses on strength­en­ing of pub­lic-sec­tor insti­tu­tions in order to cre­ate strong gov­er­nance. The coun­try part­ner­ship frame­work between the World Bank and India is the largest coun­try part­ner­ship frame­work in the World Bank Group and it sup­ports Indi­a's tran­si­tion to a mid­dle-income coun­try.

Sarva Shik­sha Abhiyan (SSA)

The Sarva Shik­sha Abhiyan is a gov­ern­ment pro­gram which was first issued in 2001. The pro­gram aimed to pro­vide ele­men­tary edu­ca­tion for around 200 mil­lion chil­dren across the coun­try. The pro­gram is sup­ported by the World Bank, the Euro­pean Com­mis­sion and the United King­dom DFID, but is gov­ern­men­tal led. Dur­ing the first phase in 2001 - 2003, the World Bank con­tributed US$500 mil­lion, before the World Bank increased its con­tri­bu­tion in a sec­ond phase by addi­tional US$600 mil­lion. In 2009, India passed its Right of Chil­dren to Free and Com­pul­sory Edu­ca­tion Act that man­dated ele­men­tary edu­ca­tion as a fun­da­men­tal right. The num­ber of out-of-school chil­dren declined in India by 29.1 mil­lion from 2001 to 2013 and the num­ber of chil­dren in ele­men­tary edu­ca­tion increased steadily to 200 mil­lion. In 2012, 95 per­cent of the chil­dren had access to pri­mary edu­ca­tion. The Indian gov­ern­ment and the World Bank agreed on a new credit agree­ment with a total vol­ume of US$1006 mil­lion to sup­port and finance SSA III. The pro­gram focuses on improv­ing qual­ity and devel­op­ing learn­ing indi­ca­tors by the National Coun­cil for Edu­ca­tion Research and Train­ing in order to eval­u­ate chil­dren's progress in acquir­ing edu­ca­tional knowl­edge. A recent sur­vey con­ducted by the National Sta­tis­ti­cal Office (NSO) revealed that the lit­er­acy rate among indi­vid­u­als aged seven years and older in the coun­try was recorded at 77.7 per­cent from July 2017 to June 2018.

The Prad­han Mantri Gram Sadak Yojana Project

The Prad­han Mantri Gram Sadak Yojana aims to con­nect uncon­nected habi­ta­tions with all-weather roads. Key to the pro­gram is an all-weather access to the respec­tive roads.

The pro­gram was first set into place in Decem­ber 2000 and has con­nected more than 80% of com­mu­ni­ties in the coun­try. The pro­gram was launched by then min­is­ter Atal Behari Vaj­payee and is under the con­trol of the min­istry of rural devel­op­ment. To guar­an­tee proper exe­cu­tion of the pro­gram, three man­age­ment mech­a­nisms have been put in place. There­fore, the pro­gram empha­sizes in house qual­ity con­trol, a struc­tured inde­pen­dent qual­ity mon­i­tor­ing and inde­pen­dent national qual­ity mon­i­tors which are arranged by the National Rural Roads Devel­op­ment Agency to inspect the progress and pro­vide guid­ance to the local author­i­ties. The World Bank ini­tially started to finance the pro­gram in 2004. The World Bank Group agreed on an addi­tional US$500mil­lion loan to finance the PMGSY in May 2018 and now has invested US$1.8bil­lion into the pro­gram. The pro­gram has con­verted around 35,000 km of rural roads to all-weather roads to the ben­e­fit of 8 mil­lion peo­ple.

Uttarak­hand Health Sys­tems Devel­op­ment Project

The Uttarak­hand Health Sys­tems Devel­op­ment Project (UKHSDP) is a project intended to be imple­mented over a period of six years, begin­ning with its approval by the World Bank in 2017 and end­ing with an expected com­ple­tion date of Sep­tem­ber 2023. The UKHSDP was issued through the Inter­na­tional Devel­op­ment Asso­ci­a­tion (IDA) in con­junc­tion with the Depart­ment of Med­ical Health and Fam­ily Wel­fare of the gov­ern­ment of Uttarak­hand. The goal of the project is to "sup­port Uttarak­hand in improv­ing the access to and qual­ity of health ser­vices, and pro­vid­ing health finan­cial risk pro­tec­tion" and the project has a total project cost of USD$125 mil­lion, USD$100 mil­lion of which was awarded by the World Bank. The remain­ing USD$25 mil­lion was funded by the local gov­ern­ment.

Tamil Nadu Health Sys­tem Reform Pro­gram

The Tamil Nadu Health Sys­tem Reform Pro­gram is a rel­a­tively new project hav­ing been approved in March 2019. If all goes as planned the expected clos­ing date for the reform project would be May 2024. A large scale project in size, the cost esti­mated for the total project is USD 5.515 bil­lion. The con­tri­bu­tion by the World bank to the project is USD 287 mil­lion. Cur­rently as the project stands, it seeks to expand on a project the Tamil Nadu gov­ern­ment just com­pleted with the World bank in 2015. This pre­vi­ous project, known as the "Tamil Nadu Health Addi­tional Financ­ing project" sought to extend financ­ing for a project started in 2004 called the Tamil Nadu Health Sys­tems project. This project estab­lished the goals to fix many of the sys­tem wide issues the region was fac­ing. The orig­i­nal goal was to improve health­care sec­tor effec­tive­ness and effi­ciency in pro­vid­ing aid to many of the poor and under­rep­re­sented groups.