Click here for search results

India Country Overview September 2010

Overview | World Bank Program | Inclusive Growth | Improving Infrastructure | Sustainable Development | Service Delivery | Lending

Overview

Key Development Indicators

GROWTH:
Population Growth ( 2001- 2007) : 1.4%
GDP Growth (2007- 2008): 9.0%
GDP Growth (Govt. Estimates for 2008-2009): 7.1%
……………………………………………………………………………………

Poverty (Below National Poverty Line)

Rural: 28 %
Urban: 26 %

Fertility rate: 2.5 births per woman

Life expectancy at birth:
 64 years

Infant mortality (per 1000 live births): 57

Maternal Mortality
 (per 100,000 live births):450

Children Underweight
 (below 5 years): 46%

Primary school enrollment, net: 90%

Male Adult literacy (age 15 and older): 73%

Female Adult literacy (age 15 and older):
 48%

Access to improved water source (% of pop): 89%

Access to improved sanitation: 33%……………………………………………………………………………………

Source: World Development Indicators 2008, NFHS 3 2005-06, and World Bank's 'India at a Glance'

 With a population of just over 1 billion, India is the world’s largest democracy. In the past decade, the country has witnessed accelerated economic growth, emerged as a global player with the world’s fourth largest economy in purchasing power parity terms, and made progress on most of the Millennium Development Goals.

However, poverty remains a major challenge. According to the revised official poverty line, 37.2% of the population (about 410 million people) remains poor, making India home to one third of the world’s poor people.

Resources generated from recent growth are now being invested into a set of very ambitious programs to deliver services to the poor. These programs -- to provide elementary education, basic health care, health insurance, rural roads and rural connectivity, and other services -- aim at realizing the fundamental rights of the people.

These programs are achieving partial results on the ground. Between 2003 and 2009, the number of out-of-school children declined from 25 million to 8 million (less than 5% of the 6-14 age group). Leprosy, polio, and TB are almost under control and the spread of AIDS has been kept in check. Large numbers of women have been mobilized into self-help groups to generate new livelihood opportunities. Massive new initiatives are being pioneered that are revolutionizing the way services are being delivered to low-income groups.

The urgency of addressing India’s development challenges has been exacerbated by the global economic crisis of 2007/09. Although India’s economy grew at 6.1% in the last quarter of 2009, which was among the highest growth rates in the world, this still represents a significant dip from the peak of 9.7% growth in fiscal year 2006/07. With a mix of monetary and fiscal tools, the Government responded fairly quickly to the financial crisis, and was successful in shielding the country from the fallout felt throughout the world. Nevertheless, although the Mid-Term Appraisal of the Eleventh Five-Year Plan (2007-2012) shows India’s economy to have rebounded, there are indications that economic uncertainty may affect the remainder of the Eleventh Plan period. It is now clear that a number of targets will only be met under the next Plan.

The World Bank Program in India

To support India in achieving its long-term vision of a country free of poverty and exclusion, the World Bank Group’s Country Strategy for India for FY 2009-2012 (CAS) is closely aligned with the objectives outlined in the country's Eleventh Plan.

World Bank lending to India has diverged from initial plans spelt out in the Country Strategy due to the impact of the global financial crisis, the World Bank’s efforts to refocus, realign and consolidate the India program, and the increased demand from the Government for more financing.

In FY10, the World Bank lent a record $9.2 billion to India, compared to $2.3 billion in FY09. Fourteen new projects were added in FY10, and the project pipeline has grown in light of increased demand from the Government of India. The average size of requested projects has increased. And, the volume of Bank lending has shifted further towards infrastructure, the delivery of essential social services, and increasing engagement on urban issues and agriculture.

World Bank lending to India is organized around the following key challenges:

1. Achieving Rapid and Inclusive Growth

India’s integration into the global economy has been accompanied by impressive economic growth that has brought significant economic and social benefits to the country. Nevertheless, disparities in income and human development are on the rise. A large section of the population - especially the poor, Scheduled Castes, Scheduled Tribes, Other Backward Classes, minorities and women - lack access to the resources and opportunities needed to reap the benefits of economic growth. To assist the government in achieving rapid inclusive growth, the World Bank is supporting activities which address both cyclical and structural impediments to growth, as well as the constraints to making growth inclusive:

Building Strong Partnerships with Low-Income States

While India’s higher-income states have successfully reduced poverty to levels comparable with the richer Latin American countries, its seven poorest states - Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Orissa, Rajasthan, and Uttar Pradesh -lag behind their more prosperous counterparts and are home to more than half of India’s poor. The World Bank is increasing support to kick-start development in these low-income states by helping them to develop into attractive investment destinations, and raise the standards of living of their people by improving the delivery of public services.

In Bihar, the World Bank is supporting critical structural reforms (recently closed Bihar Development Policy Loan I), infrastructure development, and the building of rural livelihoods (Bihar Rural Livelihoods Project). It is helping the state recover from the devastating 2008 Kosi river floods (Bihar Kosi Flood Recovery Project, $220 million), and supporting the development of a comprehensive disaster management program. A grant for Flood Management Information System is helping to reduce the state’s vulnerability to floods. Several Bank-supported national programs – such as the Sarva Shiksha Abhiyan and the National Highways program - also assist Bihar.

Orissa, until the turn of the millennium, was among the poorest and the most highly indebted states in the country. Today, it is recognized as a state in transition. The World Bank has supported the state for over a decade. Two World Bank Development Policy Loans/credits have supported the state’s own efforts at structural reform in public financial management, investment climate, governance and accountability. A third Development Policy Loan will focus on inclusion and service delivery, where critical challenges remain. The Bank is also supporting investments in the state in core areas of infrastructure development (Orissa State Roads Project) and poverty reduction (Orissa Rural Livelihoods Project; Community Tanks Management Project).

Agricultural and Rural Development

In the last two years, the agriculture sector has grown at only about 2.5-3% on account of lower rainfall and the worst drought since 2002/03. Going forward, it will be essential for India to build a productive, competitive, and diversified agricultural sector and facilitate rural, non-farm entrepreneurship and employment. Encouraging policies that promote competition in agricultural marketing will ensure that farmers receive better prices. The World Bank is supporting the sector through the following initiatives:

Raising agricultural productivity: In a number of states including Andhra Pradesh, Karnataka, Kerala, Madhya Pradeh, Maharashtra, Orissa, Rajasthan, Tamil Nadu, and Uttar Pradesh, the World Bank is improving soil and water conservation on degraded lands, rehabilitating and modernizing surface irrigation systems and reviving traditional rain water harvesting systems, and assisting farmers to diversify crops and reclaim saline lands. The Bank is also working to raise agricultural productivity by linking public research organizations and farmers to promote the use of agricultural innovations.

Improving rural livelihoods: The World Bank's rural livelihoods projects (in Andhra Pradesh, Bihar, Chattisgarh, Karnataka, Madhya Pradesh, Orissa, Rajasthan, and Tamil Nadu) support the empowerment of the rural poor and the development of livelihoods in both the agriculture and non-agriculture sectors.

Providing technical assistance to the Government of India to reform and improve its agriculture insurance program: Given that agriculture remains highly dependent on the vagaries of nature, this support is helping to improve the agriculture insurance program, providing better risk mitigation and social protection options to the 110 million farmer households in the country, most of whom are small and marginal farmers.

Infrastructure

India’s rapidly growing economy has been placing huge demands on power supply, roads, railways, ports, transportation systems, and water supply and sanitation. But, bottlenecks in both urban and rural infrastructure have been eroding the country’s competitiveness.

The Government of India has increased infrastructure investments under the Eleventh Five Year Plan. However, with India's low taxation base – only some 15-16% of GDP is collected as taxes in India compared to 25-40% in developed countries - the country is unable to invest the required amounts through its budgetary resources. As such, World Bank support to improving India’s infrastructure is critical, and the Bank's country strategy advocates greater investments in infrastructure as a priority to attract investment and generate employment. World Bank support to the sector includes:

Improving Infrastructure: The Government is encouraging private participation in the expansion of critical infrastructure. To support this, the World Bank, in September 2009, agreed to extend $1.195 billion to the India Infrastructure Finance Company Limited (IIFCL) to help finance public-private partnerships in infrastructure, especially in the roads, power and ports sectors.

Transport: The World Bank has supported the states of Gujarat and Andhra Pradesh to upgrade their state highways. It is now helping to upgrade rail and road connectivity in Mumbai; improve state highways in Andhra Pradesh, Himachal Pradesh, Kerala,  Mizoram, Orissa, Punjab, Tamil Nadu and Uttar Pradesh; construct a section of the Golden Quadrilateral in Uttar Pradesh and Bihar; and upgrade rural roads in select districts of Himachal Pradesh, Rajasthan, Jharkhand and Uttar Pradesh. The Bank is also supporting the improvement of urban transport in the cities of Pune and Pimpri-Chinchwad in Maharastra, Indore in Madhya Pradesh, Mysore in Karnataka and Naya Raipur in Chattisgarh. Finally, the Bank is planning to support the improvement of narrow national highways through the National Highway Interconnectivity Improvement Program. It also proposes to support the Eastern Dedicated Railway Freight Corridor which aims to increase the railway’s share of the freight market, thus reducing transport costs, as well as fuel consumption which could directly contribute to a reduction in carbon emissions.

Energy: The Government of India is increasingly tapping its vast hydropower resources. It has set the target for an optimum power mix at 40% from hydropower and 60% from other sources. In the past, the World Bank has supported India in building its largest hydropower plant at Nathpa Jhakri in Himachal Pradesh and is now helping the country augment the supply of hydropower. Support for the 412 MW run-of-the-river Rampur Hydropower plant on the Satluj river in Himachal Pradesh is ongoing. Two other hydropower projects are in the pipeline; a 444 MW project on the Alakananda river in Chamoli district in Uttarakhand, and the other at Luhri, further downstream from Rampur in Himachal Pradesh. The Bank is also supporting the efficient transmission and distribution of power to consumers. It has helped Powergrid, the national power transmission agency, to emerge as a world class agency. In September 2009, the World Bank extended a loan of $1 billion to Powergrid to strengthen and expand five transmission systems in the northern, western and southern regions of the country. At the state level, improvements in transmission and distribution are being supported in Haryana and Maharashtra.

Urban Development: In the next 20-25 years, India’s urbanization level is expected to rise from the present 30% to 40- 50%, with over 60 cities of 1 million plus population contributing about 70% of India’s GDP. Yet, India’s growing cities and towns face major challenges in creating adequate infrastructure including in the transportation, water, solid waste, and power sectors. The World Bank is helping streamline urban transport in Mumbai and improve the delivery of urban civic services in Andhra Pradesh, Tamil Nadu, and Karnataka. The Bank has also sought to bring in global best practices in the urban water sector. A successful pilot has helped to provide continuous, reliable water supply in three urban areas in Karnataka. Going forward, it will be essential for India to introduce policy and institutional reforms in land use planning, municipal finance, institutional models, and invest in infrastructure and service delivery to manage its cities efficiently. While state governments have the more critical role in transforming India’s cities, the Government of India’s support through national programs is significant. World Bank support for the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) is under preparation.

Financial Sector Development and Support to Small and Medium Enterprises: Longer-term local currency financing, which could fund large scale infrastructure projects, is in short supply in India. Moreover, poorer households and small and medium enterprises (SMEs) have limited access to banking services, while insurance and equity market penetration in rural areas remains very low.

In September 2009, the World Bank agreed to extend budgetary support of $2 billion to the Government of India in support of its economic stimulus measures to counter the effects of the global financial crisis. This included the injection of capital into some public sector banks to help ensure the expansion of good credit to the SME sector, as well as for the development of infrastructure and the rural economy. The Bank also continues to fund the implementation of the Government of India’s financial sector reform program, support rural credit cooperatives - which are crucial for channeling agricultural credit to farmers, and provide technical assistance for improving the Government's agricultural insurance program, including weather-indexed insurance for farmers. It is also supporting SIDBI in scaling up sustainable and responsible microfinance to the under-served areas of the country.

 2. Ensuring Development is Sustainable

India’s remarkable economic growth has been clouded by a degrading environment. The country is also very vulnerable to climate change on account of its high levels of population density, poverty, stressed ecological systems, and a substantial dependence on natural resources of much of India’s population. The following areas will thus require long-term vision and urgent action: 

  • Protecting India’s fragile environment - air, water, forests and bio-diversity - in the face of the rising pressures created by economic success
  • Adapting to climate change and the growing scarcity of water
  • Coping with accelerating urbanization through strengthened urban governance and environmental management
  • Improving energy efficiency and ensuring adequate energy supplies

The World Bank is in the process of articulating a vision for an environmentally sustainable future for India (India 2030), and has projects in the pipeline to support the National Ganga River Basin Authority and industrial pollution management. Support to the sector includes:

Water: Climate change could impact India more than most other countries, and its impact will most likely be felt first and foremost in the water sector. The World Bank has therefore piloted a new Drought Adaptation Initiative in Andhra Pradesh that will help farmers adapt to warmer and more drought-like conditions. An Integrated Coastal Zone Management Project that seeks to protect India's coastal areas while also ensuring the livelihoods of the people living along the coastline is in the pipeline. The Bank has also completed studies on groundwater resources and low carbon growth.

Energy: The World Bank is supporting India in its efforts to produce clean, efficient, and renewable energy. It is helping the country to tap the hydropower resources in the Himalayan region, as well as supporting the rehabilitation of old and inefficient coal-fired power plants in West Bengal, Maharashtra, and Haryana. The Bank is also helping to strengthen Powergrid's power transmission networks to ensure that the power produced reaches consumers efficiently and losses in transmission are reduced. It is also seeking to expand support for promoting energy efficiency in various sectors ranging from small and medium enterprise, to chillers.

3. Increasing the Effectiveness of Service Delivery

Most public programs suffer from varying degrees of ineffectiveness, poor targeting, and wastage of resources. In the current economic climate, India will have to dramatically improve the impact of every rupee spent. The World Bank is working with the Government of India to improve the delivery of key public services through systemic governance and institutional reforms of public sector service providers, decentralization of responsibilities, promoting effective systems of transparency and accountability, effective monitoring of service delivery, and expanding the role of non-state service providers.

Elementary Education: Since 2001, India has brought some 20 million children into school under the world’s largest elementary education program – the Sarva Shiksha Abhiyan (SSA). Many of India’s states are now approaching universal primary enrollment or have already achieved it. Since 2003, World Bank support has helped scale up the program, improve the quality of learning, and assess learning outcomes. World Bank evaluations and research have provided recommendations for improvements. The program is now focused on bringing the hardest-to-reach children into primary school, raising access to upper primary education, and improving retention and learning outcomes.

Secondary Education: With improved enrolment and retention in elementary school, the need for universalizing secondary education as a means to break the cycle of poverty has gained importance. The World Bank is preparing to support the Government of India’s new centrally sponsored scheme for secondary education, the Rashtriya Madhyamik Shiksha Abhiyan (RMSA), with an estimated $650 million. This support is largely based on its analysis of secondary education published in 2009 (Vol 1; & Vol 2 )

Skills: Equally important is the building of skills among India’s rapidly rising work force, whose ranks are joined by some 8-9 million new entrants each year. Presently, nearly 44 % of India’s labor force is illiterate and only 17 % has secondary schooling. Moreover, the quality of most graduates is poor and employers offer very little upgrading of skills; only 16% of Indian manufacturers offer in-service training compared to over 90% in China. To help produce engineers of international standards, the World Bank has supported improvements in the quality of education in engineering institutes in 13 states. It is also supporting 400 Industrial Training Institutes (ITIs) to become centers of excellence in technical skills that are in demand. Much of this support is based on research conducted by the World Bank on improving the vocational education and training system for skill development in India.

Health: The health sector in India presents a mixed picture. Despite continuous improvements in health indicators, progress is slow and has not matched the impressive gains in economic growth during the past decade. Inadequate access to effective and good quality health services for a large proportion of the population largely accounts for the slow improvement in health outcomes. To help India achieve the MDGs for health, the World Bank increasingly focuses on improving governance and accountability in the delivery of health services. Ongoing World Bank projects support national programs for disease control - such as kala azar, polio and malaria, HIV/AIDS, and TB. They also support child nutrition and reproductive and child health programs. Other projects are working to strengthen state-level systems for rural healthcare (Rajasthan, Tamil Nadu, Karnataka), as well as national programs for food and drug regulation, and disease surveillance. The Bank has previously successfully supported India in eliminating leprosy as a national health problem, and in bringing the WHO- recommended DOTS TB treatment to all districts in the country.

Safety Nets: The global economic crisis has lent new urgency to strengthening safety nets for the poor and vulnerable. The World Bank is in the process of extending support to the Government of India for the Rastriya Swasthya Bima Yojana - or National Health Insurance Scheme - to expand and improve the effectiveness of health insurance for households below the poverty line. Once the project is completed, it is expected that the number of beneficiaries receiving treatment under the program would reach around half a million per annum.

Water Supply and Sanitation: The Bank’s Water Supply and Sanitation projects focus on improving access to water and sanitation services in a cost effective and sustainable manner.

 Rural Water Supply and Sanitation: Since 1991, World Bank support has helped India first pilot and then scale up the RWSS Reform Program, supporting the evolution of models for the provision of efficient and sustainable services. Bank projects (in Maharashtra, Karnataka, Uttar Pradesh, Kerala, Uttarakhand, Punjab, Andhra Pradesh) have continued to increase the role of the Panchayati Raj Institutions and improve the recovery of operations and management costs. In all, the Bank will soon have provided over $1 billion in support to the sector, benefiting about 25 million rural people so far.

Urban Water Supply and Sanitation: The Karnataka Urban Water Supply Improvement Project has demonstrated that 24x7 water supply is indeed possible in urban India. This has led to increased demand for such services around the country. In addition, comprehensive studies are being undertaken in Maharastra, Rajasthan and Haryana to design the water supply and sanitation aspects of the proposed JNNURM+ project. 

Lending

At the end of June 2010, the Bank group had 75 active projects with a net commitment of about $21.4 billion.

Total IBRD/IDA Commitments as of end FY10: $21.4 billion

(by fiscal year, in nearest $ billion)

  Commitments

 FY05

FY06

FY07

FY08

FY09

FY10

  New Lending

2.9

1.4

3.7

2.1

2.3

9.3

Total Commitments (Active Projects)

12.8

11.3

 14.3

13.8

14.9

21.4

Total No. of Active Projects

64

56

67

60

61

75

Note: The World Bank’s Fiscal Year (FY) runs from July to June i.e. FY '09 runs from July 1, 2008 to June 30, 2009. 

India's Debt Service Payments




Permanent URL for this page: http://go.worldbank.org/NLCX7C1VC0