NEW DELHI: The World Bank has committed to hike its lending to India to about $7 billion this fiscal as compared to an average loan assistance of $2.3 billion in the previous four financial years.
At a luncheon meeting at North Block with the visiting World Bank President, Robert Zoellick, here on Wednesday, Finance Minister Pranab Mukherjee also sought an early completion of the process of voice and quota reforms in the multilateral lending agency so as to increase the effective representation of emerging and developing economies.
During the meeting, according to an official statement, the World Bank chief and Mr. Mukherjee discussed wide ranging issues. Mr. Mukherjee not only lauded the lending agency’s increased funding to India in the wake of financial crisis but also hailed Mr. Zoellick’s personal contribution in this regard as he was instrumental in the Bank board’s approval of several loan packages amounting to $4.3 billion in one single day in September last year.
In response, Mr. Zoellick complimented India on being the single largest borrower of the World Bank and hailed the country’s contribution and the role that it has played in the World Bank group. He also sought India’s support in widening the capital base of the Bank to help it appropriately meet the needs of developmental finance.
The Finance Minister informed the Bank chief that India has always been at the forefront of providing greater capital support to all multilateral development institutions. For instance, it had enthusiastically supported a 200 per cent capital increase for the Asian Development Bank (ADB).
Funds for highways
Road Transport and Highways Minister Kamal Nath, who met Mr. Zoellick, said the World Bank had agreed to examine new ways of raising its funding commitment for India’s highway projects
“The World Bank has agreed to look at funding viability gap and in the annuity projects not only in terms of financing but in terms of institutional support as well… We are also working with the Ministry of Finance for a $2.96-billion loan for converting 6,300 km one-lane roads into two-lane ones. That is now in an advanced stage.” Funds and concessions under the viability gap scheme are provided to developers to make the projects viable. On the other hand, annuity is a funding model under which the project developer finances, builds and maintains the contract in exchange of annual grants from the government.
He said that as there were many projects at hand to be funded by the multilateral agency, the assistance may be provided in tranches and that decision would be taken by the Finance Ministry. “There are so many projects on the social sector...so we may take it in tranches ...there is a limit to what the Bank can give to us as a whole. That appropriation is done by the Finance Ministry.”