WORLD BANK GROUP STRATEGY FOR INDIA

The new World Bank Group strategy for India shifts support significantly to low-income states, where most of the poor live, and is the institutions first country strategy to set specific goals on reducing poverty and increasing prosperity. Discussed by the Board of Executive Directors on April 11, 2013, the World Bank Groups 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 Banks 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. 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 governance, 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 Indias cities. The World Bank Groups 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 Groups 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 Indias population only if there is a stronger focus on human development and on policies that help make growth inclusive. Indias 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. Background As of March 2013, total World Bank (International Bank for Reconstruction and Development and International Development Association) net commitments stood at $23 billion (IBRD $13.2 billion, IDA $9.8 billion) across 76 projects. IFCs portfolio contained 221 projects amounting to committed and disbursed exposure of $4.2 billion for its own account and that of participants.