In a major boost to Indian economy, the World bank has endorsed an ambitious five-year framework for India under which it is expected to receive USD 25-30 billion financial aid for transition from a low-middle income to high-middle income nation, a senior official from the global lender said.
The World Bank's initiative- the Country Partnership Framework (CPF) is aimed at supproting the nation's transition to a higher middle-income country by addressing some of its key development priorities such as resource efficient and inclusive growth, job creation and building its human capital.
It is expected to bring between USD 25-30 billion in financial support for India from the International Bank for Reconstruction and Development (IBRD), the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA).
"With a fast-growing economy, global stature, and its unique experience of lifting the highest number of poor out of poverty in the past decades, India is well-positioned to become a high middle-income country by 2030," said Hartwig Schafer, World Bank South Asia vice president.
"It's a five-year framework that commits the Bank's engagement in India, both in areas where what we'll do, how we will work in these areas and the level of financial commitment. This is the first country partnership framework written with India," Junaid Ahmad, Country Director, World Bank, India, told PTI in an interview.
"The CPF was preceded by a systematic country diagnostic (SCD) that offered a narrative about India," Ahmad said.
Soon after the World Bank endorsed the CPF for India, Ahmad said, the Bank recognises the incredible growth and development of India over the last several decades.
"It recognises that India has gone from a low-income country status to a low-middle income. And now India is entering the economic transformation from low-middle income to high-middle income (country). This CPS is about how can the Bank support this transition," he said.
Noting that both the SCD is a highly consultative document, Ahmad said, the CPF is a joint document with the Indian government.
"I complement the World Bank Group for aligning the CPF with India's development and investment objectives of high, sustainable and inclusive growth," said Subhash Chandra Garg, Economic Affairs Secretary, in a statement.
Observing that the SCD basically said India's big story is steady growth from very low several decades back to a steady growth of seven per cent plus, Ahmad said, this document also showed that the growth is quite diversified.
"Some of it is based on export. A lot of it is based on an internal consumption and investment, unlike say China, which is highly export led growth. So India's is more broad based, diversified growth path," he said.
"Over time, this growth has become more stable and is resilient. Recently there were shocks on the economy, which included demonetisation and the GST implementation and there was this fall in the growth. But it is now rebounded, and not only has it gone back to seven per cent, this quarter it is at eight per cent," Ahmad said.
Based on the SCD goal of taking the Indian growth rate to eight per cent plus, the World Bank argued that there were several areas of engagement that were very important: natural resource management, jobs and competitiveness, and human development, he said, adding that the framework addresses these issues.
"The first point we make is that India needs to unleash the power of markets and private sector. It needs to leverage the private sector and in particular private capital. The challenge for the Bank is how do you take the little amount of money ultimately you're putting into the country and you go from being a lending bank to being a leveraging bank," Ahmad said.
He said to complement the transformational national programmes, the Bank will also develop strategic state partnerships to address state-specific development priorities and support implementation capabilities at the state and the local level.
"The future of India lies in the states of India. The country's transition to high middle-income status will be determined in large part by the effectiveness of India's federal compact. In this context, an important focus of the CPF will be to deepen engagement with India's states and invest in the institutions and capabilities of the states and local governments to address their development priorities," Ahmad said.
He said the Bank was going for a "Lighthouse India" approach. "Lighthouse India basically means learning from the innovation of the states and sharing with other states. We also recognise that the learning is what India also has to offer the rest of the world. As it goes from low-income to middle-income to high-middle-income, its learning over its development path is going to be very valuable for other nations," he said.
"The Indian economy has evolved to a level where the private sector can be counted on to close large developmental gaps. Through this the CPF, the World Bank Group will help India leverage additional resources from the private sector to help India realise its full potential," said Jun Zhang, Country Head, IFC, India.
India is the largest IBRD client of the World Bank. Between 2015 and 2018, the World Bank lent around USD 10.2 billion to India.