‘India plays a crucial role in kick-starting the global economy'
The World Bank's total financial commitment to India's development agenda is set to touch $9.3 billion by the end of its fiscal year ending June. Spread across 25 new projects, the loan assistance is aimed at helping the country sustain the much needed high growth to lift millions out of poverty.
At a press conference here on Wednesday, World Bank Country Director in India Roberto Zagha said the total expected lending this year (July-June 2010) would include $2.6 billion as interest-free credits from the International Development Association (IDA) and $6.7 billion in the form of long-term, low interest loans from the International Bank of Reconstruction and Development (IBRD).
Till date, both IBRD and IDA-aided projects with a total new commitment of $8.3 billion had already been approved, while the remaining projects worth $1 billion were to be presented before the Bank's board over the next few days, he said.
Mr. Zagha noted that while a part of this lending was in support of the government's response to the global financial crisis, another significant portion was aimed at helping India in removing infrastructure constraints to high growth and expand the delivery of essential social services such as better schools, roads and electricity to the people. “The Government of India is accelerating its response to its development challenges and so are we,” he said.
The loan assistance also includes a $2 billion package to provide capital to some of the public sector banks to help them in maintaining their credit expansion and prevent a shortfall of capital from affecting the country's economy in the wake of the global economic crisis.
Pointing to the huge funding needs of India's fast growing economy such as the estimated requirement of $500 billion for infrastructure development alone during the current Plan period, Mr. Zagha said: “While our annual lending this year represents a significant contribution for the Bank Group, it accounts for less than one per cent of India's gross domestic product (GDP), and is a modest sum given India's vast needs.”
The increase in Bank commitments is also in line with the guidance from G-20, which had, during the summit of November 2008, directed international financial institutions (like the World Bank) to step up lending to the emerging economies to sustain their growth and thus help global recovery. “India has played a crucial role in kick-starting the global economy by maintaining high levels of growth and it is important for the Bank to have been able to respond to India's request for additional support,” Mr. Zagha said.