91199 Country Partnership India Strategy for FOR THE PERIOD 2013–2017 THE WORLD BANK GROUP Country Partnership India Strategy for FOR THE PERIOD 2013–2017 THE WORLD BANK GROUP Country Partnership Strategy for India: 2013–17 Acknowledgments The World Bank Group greatly appreciates the close collaboration of the Indian authorities in the preparation of this Country Partnership Strategy. The preparation of the document involved extensive discussions with government representatives at the federal and state levels, as well as civil society. The strategy is the result of a team effort that relied on knowledge, experience, and guidance from individuals across the World Bank Group. We thank them for their contributions. Rights and Permissions The material in this work is subject to copyright. As The World Bank Group encourages dissemination of its knowledge, this work may be reproduced, in whole or in part, for non-commercial purposes as long as full attribution to this work is given. Any queries on rights and licenses, including subsidiary rights, should be addressed to World Bank Publications, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: pubrights@worldbank.org. iv Country Partnership Strategy for India: 2013–17 Foreword This India Country Partnership Strategy for the World Bank Group comes at a moment where both India and the World Bank are at important points in their history: India has crossed the threshold to become a middle-income country and is poised to lift millions out of poverty in years to come, in all likelihood more than any other country in the world. The World Bank Group has committed itself to the goal of eliminating extreme poverty by 2030 and boosting shared prosperity. For our team it was clear that our strategy should aim squarely at supporting India’s and the World Bank Group’s shared goal to eliminate poverty. We therefore analyzed what would be the best ways of maximizing the impact of growth in India on poverty alleviation. We did this by comparing the performance of Indian states over the last decade and analyzing why those states that lifted more people out of poverty succeeded in doing so. We also looked at historic performance of other large federal countries at times when they had long periods of sustained growth and lifted many people out of poverty. And we took India’s own 12th Five-Year Plan as our basis, as both our goals are fully aligned. Through this work we came to a number of important shifts compared to previous strategies: 1. In order to help eliminate poverty, we should shift our resources (limited though they are in comparison to India’s needs) to where the battle against poverty must be won: in India’s low income states; 2. We should see India’s rapid rural to urban transformation as a tremendous opportunity, both for agriculture and for poverty alleviation and competitiveness; 3. All parts of the World Bank Group - IBRD, IDA, IFC, MIGA - should work as one, not by accident but by design; 4. We should not be content just to provide financing. Our limited resources can only have meaningful impact when they bring something new that can be tested and after that rolled out in other programs. With our partners in the Government of India, we hope to use this strategy as the basis for a continued strong engagement with India for years to come. In order to justify the resources that this requires, we understand that our primary focus should be on using the available resources in the best way possible and faster. Development in India is a rapidly moving process, so anyone who wishes to contribute to it must move fast. We also understand that we need to keep learning to adjust to India’s unique and complex path and to understand some of the fundamental challenges the country faces: How will cities become sources of competitiveness and efficiency? How will India keep growing rapidly and have enough water and energy to keep that growth going? How can India lift more people out of poverty faster without them being at risk of falling right back when a family member gets sick? We will not answer these questions alone, and these are not the only questions that need answering. But we will work hard to add our experience and knowledge to help answering them and others. I am grateful to all those who contributed to this strategy, in the Government of India, IFC, MIGA, IBRD and IDA. We all understand that this is just a document. The hard work starts now. Onno Ruhl Country Director, India v Country Partnership Strategy for India: 2013–17 vi Country Partnership Strategy for India: 2013–17 Contents 1. Executive Summary / 2 Achievements and remaining challenges / 3 A vision for India in 2030 / 4 Development challenges / 6 The World Bank Group program / 7 2. Introduction / 10 3. Achievements / 12 4. Vision: India in 2030 / 16 5. Challenges / 20 Platform for growth / 21 Spatial transformation / 24 Human potential / 27 6. World Bank Group India Country Partnership Strategy (FY2013–17) / 30 Strategic engagement area 1: Integration / 33 Strategic engagement area 2: Transformation / 40 Strategic engagement area 3: Inclusion / 48 7. Implementing the WBG Country Partnership Strategy / 56 Guiding principles of engagement / 56 Lessons from country strategy 2009-12 / 59 Current WBG portfolio / 60 Collaboration and partnerships / 62 8. Financing the strategy / 64 9. Monitoring of results / 68 10. Managing risks / 70 List of tables Table 7.1. Low-income and special category states / 57 List of boxes Box 3.1. India and the WBG: A unique relationship spanning six decades / 14 Box 4.1. Government vision: India’s 12th Five-Year Plan / 17 Box 5.1. India’s economic outlook / 22 Box 6.1. Health in India / 51 Box 6.2. Addressing gender issues / 53 vii Country Partnership Strategy for India: FY 2013–17 List of figures Figure 4.1. Poverty and prosperity in India in 2030 / 18 Figure 5.1. Correlates of fast economic growth: the rate of urbanization / 25 Figure 5.2. Correlates of shared prosperity: off-farm employment in rural areas / 26 Figure 6.1. India CPS results chain: engagement areas and outcomes / 32 Figure 8.1. Impact of IDA Graduation on India, by IDA Replenishment, IDA15-19 / 65 Figure 8.2. Annual IDA and IBRD lending to India, FY09-24 / 66 Country strategy annexes Annex 1: CPS results framework / 73 Annex 2: Progress towards the Millennium Development Goals / 80 Annex 3: Poverty in India / 85 Annex 4: IFC indicative non-lending activities / 88 Annex 5: Overview of main trust funds activities / 92 Annex 6: Country financing parameters / 96 Annex 7: Government of India Project Screening Criteria / 97 Annex 8: Consultations Held to Inform the Preparation of the CPS / 99 Annex 9: The Indian statistical system / 107 Standard annex tables Annex A2: India at a glance / 110 Annex B2: Selected indicators of Bank portfolio performance and management / 115 Annex B3A: CAS Annex B3A - IBRD/IDA Program Summary: India / 116 Annex B3B: IFC investment operations program / 118 Annex B4: Summary of World Bank Knowledge Services - India / 119 Annex B5: Social indicators / 123 Annex B6: Key economic indicators / 125 Annex B7: Key exposure indicators / 129 Annex B8A: Operations portfolio (IBRD/IDA and Grants) / 130 Annex B8B: India: Committed and Disbursed Outstanding Investment Portfolio / 135 viii Country Partnership Strategy for India: 2013–17 The last Country Strategy (CAS) Report No. 46509 was discussed by the Board on November 14, 2008, and the last CAS Progress Report (CASPR) Report No. 58433 was discussed by the Board on December 14, 2010. CURRENCY EQUIVALENTS US$1 = Rupees (Rs.) 54.57 as of March 7, 2013 GOVERNMENT FISCAL YEAR April 1—March 31 WORLD BANK FISCAL YEAR July 1—June 30 IBRD/IDA MIGA IFC Vice President: Isabel Guerrero Vice President: Michel Wormser Vice President: Karin Finkelston Country Director: Onno Ruhl Director: Kevin Lu Regional Director: Thomas Davenport Task Team Leader: Dorota Nowak Task Team Leader: Paul Barbour Task Team Leader: Gunjan Gulati Abbreviations and Acronyms AAA Analytical and Advisory Activities ICT information and communication BRICS Brazil, Russia, India, China, and South Africa technologies CAS Country Strategy IDA International Development Association CPS Country Partnership Strategy IFC International Finance Corporation CTF Carbon Trust Fund IT Information Technology DFID United Kingdom Department for LIS low-income state International Development M&E monitoring and evaluation FDI Foreign Direct Investment MDG Millennium Development Goal GAAP Governance and Accountability Action OECD Organisation for Economic Co-operation Plan and Development GDP Gross Domestic Product PMGSY Pradhan Mantri Gram Sadak Yojana GFATM Global Fund to Fight Aids, Tuberculosis, and PPP public-private partnership Malaria PRI Panchayati Raj institution GSDP gross state domestic product RWSS rural water supply and sanitation GST Goods and Service Tax SBL Single Borrower Limit HIV/AIDS Human Immunodeficiency Virus/Acquired SPPB Special Placement Private Bonds Immunodeficiency Syndrome SSA Sarva Shiksa Abhiyan IBRD International Bank for Reconstruction and UN United Nations Development WBG World Bank Group ICDS Integrated Child Development Services Dollar amounts ($) are U.S. dollars. 1 Country Partnership Strategy for India: 2013–17 1. Executive Summary India is uniquely placed to help reduce global poverty and boost prosperity. The country has the largest number of poor people in the world, as well as the largest number of people who have recently escaped poverty but are still vulnerable to falling back. India’s encouraging results in recent years on the dual challenges of fighting poverty and boosting prosperity justify strong support for India as a key part of the global effort to bend the arc of history by accelerating the decline in poverty. India’s per capita income remains low, and its development challenges are deep and complex. As the country strives to bring about quicker and deeper changes, this strategy lays out an approach for the World Bank Group to support India in achieving even more ambitious results in the near future. Aware that World Bank Group finances will always be modest compared to India’s challenges, that support can be a catalyst for change at this crucial time. For that reason, this strategy makes the case for continued high levels of World Bank Group financial support for India. 2 Country Partnership Strategy for India: 2013–17 Achievements and remaining challenges India is home to globally recognized companies in India’s economic and human development is one of the most significant global pharmaceuticals, achievements of recent times. Between 2005 and 2010, India’s share of global steel, and space GDP increased from 1.8 to 2.7 percent, and 53 million people were lifted out of technologies, and the poverty. Growth has steadily accelerated over time, showing resilience even in country is a leader in the aftermath of the global crisis. In the last decade, India’s economy expanded the use of information at an average annual rate of 7.6 percent, placing it in the top 10 of the world’s technologies for fastest growing nations. Exports account for 21.5 percent of GDP, three times e-government more than in 1990, and net inflows of foreign direct investment (FDI) make purposes and public up another 1.6 percent. India is home to globally recognized companies in service delivery. pharmaceuticals, steel, and space technologies, and the country is a leader in In line with these the use of information technologies for e-government purposes and public transformations, India service delivery. In line with these transformations, India is now among the top is now among the 10 percentile of fast growing nations and has become a prominent global voice. top 10 percentile of Progress on human development has been remarkable; life expectancy more fast growing nations than doubled from 31 years in 1947 to 65 years in 2012 and adult literacy more and has become a than quadrupled, from 18 percent in 1951 to 74 percent in 2011. prominent global voice. While India has made significant progress in reducing absolute poverty, it remains home to one-third of the global poor. On the positive side, India has already achieved the first Millennium Development Goal (MDG 1) by halving the proportion of people living on less than $1.25 a day. Most notably, rural poverty has decreased by 14 percentage points, and the less well-off are increasingly reaping the benefits of shared prosperity, with consumption growth of the bottom 40 percent rising to catch up with average consumption growth. But with GDP per capita at $1,410 in 2011, India remains at the bottom of the group of middle-income countries. More than 400 million people still live in poverty. With population growth, the absolute number of poor people actually increased in some of India’s poorest states between 2004–05 and 2009–10, with poverty rates three to four times higher than those of the most advanced states—Haryana, Kerala, and Punjab. Despite rapid economic growth and positive human development, Indian society remains highly segmented and income inequality is rising. Inequalities vis-à-vis disadvantaged groups such as so-called scheduled castes, scheduled tribes, and women persist. Structural inequalities have kept entire groups trapped, unable to take advantage of opportunities that economic growth has offered. While much progress has been made in education, health, maternal mortality, and fertility, gender inequality remains high. The ratio of girls to boys has decreased steadily over the last fifty years—a trend associated with the “missing women” phenomenon; it is particularly low in some of India’s more advanced states. A middle class is emerging, but only a fifth of the population has firmly escaped vulnerability. Even above the threshold for the World Bank Group’s global indicator of shared prosperity (defined as consumption growth of the bottom 40 percent of the population), a large number of people have consumption levels that are very close to the poverty line. Many of India’s newly non-poor, especially in rural areas, remain vulnerable and minor 3 Country Partnership Strategy for India: 2013–17 Helping India address shocks—illness, natural disasters, poor crop yields, indebtedness—can easily its development push them below the poverty line. People who are no longer vulnerable challenges is central are defined as those living in households with an income that is at least to the World Bank twice the poverty line. India’s continued progress is not only significant Group’s goal of for its people, especially those still living in poverty, but also for the global reducing poverty achievement of the MDGs. Helping India address its development challenges and boosting shared is central to the World Bank Group’s goal of reducing poverty and boosting prosperity. shared prosperity. A vision for India in 2030 The overarching objective of the World Bank Group’s Country Partnership Strategy (CPS) for the period FY2013–17 is to support poverty reduction and shared prosperity in India. That objective is closely aligned with the vision for development outlined in the country’s 12th Five-Year Plan (FY2013–17), which calls for “faster, sustainable, and more inclusive growth” focusing on poverty reduction, group equality, regional balance, empowerment, environmental management, and employment. It foresees annual GDP growth of 8.2 percent, with all states growing faster than they did under the 11th Plan. It envisions a reduction of the poverty rate by 10 percentage points, building on the generation of 50 million new work opportunities in the non-farm sector and an increase in the average schooling of the population to seven years. The Plan also targets the elimination of gender and social gaps in schooling, a decline in the infant mortality, and a gradual improvement of the ratio of girls to boys. 4 Country Partnership Strategy for India: 2013–17 Continued rapid economic growth is a precondition for poverty reduction and Although India has shared prosperity. Its role cannot be overstated. Before the industrial revolution done better than most India was one of world’s wealthiest countries, accounting for more than a countries in terms quarter of global GDP, but by the time of Independence in 1947 its economy of economic growth, was universally stagnant. Since then the country has emerged out of the low the degree of poverty “Hindu rate of growth,” and has the potential to become a global economic reduction associated powerhouse once again. But growth will also have to be more inclusive than in with one percentage the past. If growing numbers of people are to benefit from economic growth, point of GDP growth regardless of their gender, caste, or state of residence, more will be needed. has been less than Although India has done better than most countries in terms of economic in countries such as growth, the degree of poverty reduction associated with one percentage point Brazil and China. of GDP growth has been less than in countries such as Brazil and China. The diverse experience of Indian states is revealing of what could be accomplished—and what would be realistic—in striving to attain the overarching objectives of the CPS. Some states have done better than others in terms of economic growth; others have done better in terms of poverty reduction and reducing vulnerability. Differences are to be expected in the short term, but these differences have persisted over extended periods. The CPS scenarios to 2030 are predicated on the observed performance between 2005-2010, a period of high growth and poverty reduction. Two scenarios are presented in the CPS: • Base scenario. Under the base scenario, India’s GDP growth rate, as well as the speed at which the numbers of poor and vulnerable people decline for every percentage point of growth, remain the same as in 2005–2010. In this scenario, the GDP growth rate would be sustained at 8.2 percent. Income per capita would reach $5,283 in 2030 at 2010 prices, compared with $1,375 in 2010, poverty would drop from 29.8 to 12.3 percent, and the share of people above the vulnerability threshold would increase from 19.1 to 33.6 percent. • Ambitious scenario. Under the ambitious scenario, India sustains rapid GDP growth in the base scenario but improves its performance to that of the best-performing state at the 80th percentile of the distribution in terms of poverty reduction and reduced vulnerability. Over the period 2005–2010 those states were Rajasthan and Karnataka, respectively. Matching, at the national level, the performance of these high-achievers would be an extraordinary accomplishment. Under the ambitious scenario, the poverty rate would decline to 5.5 percent, and the share of people who are no longer vulnerable would reach 41.3 percent. India has the potential of making a dramatic contribution to poverty reduction and shared prosperity globally. In principle, the new global target to “bend the arc of history” could be attained through a combination of successes across other countries. But it is unlikely that this will happen unless India continues to make substantial inroads. The CPS scenarios to 2030 also reveal the implications of India’s sustained, high growth on the number of people living below the poverty line and above two poverty lines or the vulnerability line (those no longer vulnerable of falling into poverty). If the base scenario were realized, the number of global poor 5 Country Partnership Strategy for India: 2013–17 At present only would fall by 191 million and the number of people above the vulnerability 16 percent of the line would increase by 277 million. If the ambitious scenario were realized, workforce derives its the corresponding figures would be 304 and 394 million. The former is income from regular comparable to China’s contribution to global poverty reduction over the last wage employment, two decades and the latter amounts to raising to prosperity the equivalent of and more than 50 the combined present populations of France, Germany, Italy, Japan, and the percent are engaged United Kingdom. in agriculture. The female labor force, already low as a Development challenges proportion of the total labor force, India’s recent development experience shows that achieving the ambitious decreased from 34 to vision by 2030 will require addressing a wide range of challenges. With a 29 percent between young population and 8 million people entering the labor force every year, 2000 and 2010, India could reap a substantial demographic dividend, but there could also be with the drop being considerable stress if employment opportunities are not commensurate with particularly marked expectations. At present only 16 percent of the workforce derives its income for women at higher from regular wage employment, and more than 50 percent are engaged in levels of education. agriculture. The female labor force, already low as a proportion of the total labor force, decreased from 34 to 29 percent between 2000 and 2010, with the drop being particularly marked for women at higher levels of education. Constraints across three main areas could make India miss its potential demographic dividend: • Platforms for growth. Infrastructure needs are massive. Only 20 percent of the national highway network is four-lane, ports and airports have inadequate capacity, and trains move very slowly. One-third of the rural population lacks access to an all-weather road. Road safety is a growing concern in a country that is adding new drivers at a record pace. An estimated 300 million people are not connected to the national electrical grid, and those who are face frequent disruptions. The manufacturing sector remains underdeveloped and has grown at a pace that is below expectations. The size distribution of firms in India is characterized by a “missing middle,” which is a source of concern given that small and medium enterprises are typically an important source of wage employment. Improving and maintaining a healthy investment and business climate is also crucial to growth. • Managing spatial transformation. The number of urban centers has grown from about 5,000 in 2001 to 8,000 in 2011, and 53 cities already have a population in excess of one million. There is a need to accommodate an additional 10 million urban dwellers every year and to provide them with adequate basic services. Success at meeting this challenge has so far been partial. The number of slum dwellers increased from 75 million in 2001 to 93 million in 2011—a quarter of the urban population. The rural space is not well connected to cities, resulting in weak value chains for agricultural products and an insufficient creation of off-farm employment. Although half of the Indian population derives its income from agriculture-related activities, agricultural output has grown below government targets. 6 Country Partnership Strategy for India: 2013–17 • Human development potential. Health outcomes compare poorly with The development those of countries at similar levels of development. At 65.4 years, life of a vibrant expectancy is more than 5 years lower than the world average. Malnutrition manufacturing sector rates remain high: 40 percent of the world’s malnourished children live requires reforming in India. Maternal and infant mortality as well as fertility rates remain outdated labor laws, high compared with those of other growing economies in Asia. Out-of- improving access pocket health expenditures are among the highest in the world and make to land, removing households, especially the very poor, highly vulnerable to health shocks. pervasive red tape Primary education has been largely universalized, but progress on learning and increasing access outcomes has been limited. Secondary education is the new bottleneck. At to finance. 4.4 years, educational attainment is low, and India still accounts for one- third of all illiterate people worldwide. Enrolment rates for grades 9–12 are just 40 percent; of those enrolled, approximately 15 percent drop out and one-third fail their examinations. Inequity in all dimensions, including caste and gender, is a major concern. The World Bank Group program To help India address these challenges, the CPS will contribute to three main engagement areas: integration, transformation, and inclusion. Effective engagement will require actions at the national level, at lower levels of government, and through partnerships with the private sector, civil society and development partners. • Integration. The focus is on physical connectivity and the strengthening of market mechanisms. India’s infrastructure needs cannot be addressed through public investments alone. A tested model for private participation exists for highways and electricity generation, but elsewhere failures are many, suggesting that more needs to be done to assess viability gaps and identify adequate risk-transfer mechanisms. Reforms are needed in the power sector, where low energy prices, expensive coal (central to producing electricity in India), and inefficiencies in transmission and distribution are crippling the system. The development of a vibrant manufacturing sector requires reforming outdated labor laws, improving access to land, removing pervasive red tape and increasing access to finance. Greater regional and global integration is critical to open up market opportunities and foster competition. Intraregional trade would increase from the current $5 billion to $20 billion if restrictions to trading with neighbors were removed. • Transformation. The goal is to reap the benefits from agglomeration in parallel with raising agricultural productivity. India’s urban development is hampered by the fragmentation of service delivery across a range of uncoordinated agencies. Local bodies in urban areas need to become institutionally stronger and increase their capacity to mobilize financial resources. In rural areas, stressed natural resources, inadequate technology, underdeveloped extension services, and limited access to credit contribute to the lackluster performance of the agricultural sector. At present, in urban areas, poverty is highest in secondary cities, where the growth of wage 7 Country Partnership Strategy for India: 2013–17 A special effort should employment has been disappointing. But if they were properly developed, be made to ensure secondary cities could become the linchpin between urban and rural access to education areas. Spatial transformation also implies an efficient use of India’s limited for underprivileged resources, in particular land, forests, and water, as well as a shift towards children, retain climate resilience. girls in secondary education, and open • Inclusion. The ambition of the program is to promote human development opportunities in and strengthen social programs, so that economic integration and spatial higher education for transformation generate inclusive growth. In relation to health, this requires all youth. better accountability arrangements in service delivery, adequate regulation and oversight of private health care providers, and expanded coverage of health insurance among disadvantaged groups. In education, incentives and community participation are needed to reduce absenteeism. A special effort should be made to ensure access to education for underprivileged children, retain girls in secondary education, and open opportunities in higher education for all youth. A focus on learning outcomes is warranted across all levels of education. Meanwhile, social programs should be better targeted and delivered in ways that improve coverage and efficiency. Improving access to finance and social protection can also help households, especially the poor, benefit from economic growth. Across all three areas of engagement, a focus on improved governance, environmental sustainability, and gender equality is envisioned. IFC’s efforts to strengthen India’s private sector also cuts across all three areas. The implementation of the CPS program will be guided by the Government’s approach to working with multilateral institutions: “Innovation Impulse with Investment” (see Annex 8). The approach lays out the Government’s vision of how best to use the financing and expertise from multilateral institutions to address India’s development challenges and places significant importance on the value-added of the World Bank’s program that goes well beyond financing. The Government wants World Bank support for projects that have a systemic or transformational impact, those that help innovate and pilot new approaches, and finally those that introduce innovative financing instruments and leverage resources. The approach provides an impetus towards working together to shape a pipeline of projects that takes advantage of the World Bank’s international expertise, while addressing financial sustainability and overall funding for the CPS program. Adherence to these principles will result in greater country-led program selectivity. Guided by this approach, the World Bank will rebalance its portfolio toward state-level activities and, within that segment, toward low-income and special category states. Delivering on the overarching goals of the CPS also requires a strong focus on low-income states, where a majority of the poor and the vulnerable live. Other major economic powers, such as the United States and the European Union, have experienced an unambiguous long-term convergence in living standards across their constituent parts. In India, by contrast, divergence across the states has remained the norm. Convergence is supported by economic integration, and this in turn requires policies at the national level. But it can also be supported through a greater emphasis on policy reforms and investments in the low-income states themselves. 8 Country Partnership Strategy for India: 2013–17 Moreover, India’s seven low-income states are now growing faster than the There is growing average. Investments in those states thus have higher economic returns than demand to learn investments elsewhere. The impact is even greater when considering the from India’s diverse payoffs in poverty reduction. IFC will continue to expand its investments and development advisory program in the low-income and northeast states. Engagement under experience. India the CPS will focus on extensive capacity building, technical assistance, analytical is emerging as work, and knowledge exchanges that underpin lending operations. a key provider of development The World Bank Group can help India realize the CPS vision to 2030, building experience in South– on a strong partnership in development stretching back 60 years. Since the South knowledge first IBRD loan to the Indian Railways in 1949, India has made extensive use exchange and of financing, knowledge, advisory services, and technical assistance from the investment capital. World Bank Group. Over these six decades, IBRD, IDA, and IFC financing to India reached approximately $160 billion at 2010 prices—far more than any other country. But the World Bank Group has also benefitted enormously from the partnership. India has been home to major innovations in development, from the Green Revolution to the Mahatma Gandhi National Rural Employment Guarantee program to the promotion of the right to information. There is growing demand to learn from India’s diverse development experience. India is emerging as a key provider of development experience in South–South knowledge exchange and investment capital. Although the World Bank Group’s contributions to the government’s overall development financing is small, its support can be catalytic and transformative when financing is combined with knowledge and experience. To make a meaningful contribution on the assault on poverty, especially in low-income states where over 200 million of India’s poor reside, the volume of support from the World Bank Group should be about $5 billion per year. However, World Bank Group estimated financing levels could average about $4 billion annually during the CPS period, when one includes India’s purchase of Special Private Placement Bonds, IFC financing and assumes that India receives transitional IDA. At their first IDA17 replenishment meeting in Paris, IDA Deputies broadly agreed with the proposal that India receive transitional support after it graduates from IDA; a final decision will not be taken until the end of 2013, including on the volume and terms of transitional support. While transitional IDA support would help boost World Bank Group financing, it still falls short of levels needed and net flows from IDA and IBRD combined turn negative by FY2018. 9 Country Partnership Strategy for India: 2013–17 2. Introduction The overarching goals of the World Bank Group India Country Partnership Strategy (FY2013–17) are to help India accelerate poverty reduction and increase shared prosperity, so that more and more people, regardless of gender, caste, or whether they live in villages or cities, or in low- income or more advanced states, can enjoy the benefits of more balanced growth and development. With one-third of the world’s poor people, India is central not only to the World Bank Group’s goal of reducing poverty and boosting shared prosperity, but also to the world’s progress toward achieving the Millennium Development Goals. India has made significant progress in reducing absolute poverty during the last two decades. It has already achieved the first Millennium Development Goal by halving (to less than 30 percent) the proportion of people whose income is less than $1.25 a day. The less well-off are increasingly reaping the benefits of shared prosperity, with a considerable narrowing of the gap between average consumption growth and growth of the bottom 40 percent. Most notably, rural poverty has decreased by 14.5 percentage points. Given that India is predominantly rural, however, a huge concentration of the nation’s poor people (four out of every five) still live in rural areas. 10 Country Partnership Strategy for India: 2013–17 Poverty remains widespread. With population growth, it has proved difficult to Gender inequality reduce the number of poor at a rapid pace; 400 million Indians still live in poverty.1 remains high Poverty rates also vary significantly across and within states. Each of the seven low- despite progress in income states2 has poverty rates that are two to three times higher than those of education, health, the more advanced states. Poverty reduction in the poorest states—which are also maternal mortality, the most populous—has been slow (Annex 3). Higher-income states also have and fertility. The ratio pockets of extreme poverty; Karnataka’s per capita income, for example, varies of girls to boys has nearly five-fold across districts. decreased steadily over the last 50 years India’s rapid growth in the last decade has not benefited everyone and is particularly low uniformly. India’s consumption inequality as measured by the Gini coefficient is in some of the more 0.34 and is on the rise, with widening disparities between urban and rural areas. advanced states and Despite accelerated social mobility and urbanization, Indian society remains urban areas. exclusionary, and income inequality alone does not reflect the depth and range of social inequities. Structural and persistent inequalities by gender, caste, and tribe persist, and indicators of poverty and human development for these groups lag behind those of the general population. Poverty rates are especially high among scheduled tribes (46.1 percent in 2009–10), and scheduled castes (40.8 percent). Literacy rates for males and females from scheduled castes are 67 and 42 percent respectively, compared to the all India average of 82 and 65 percent. On a range of human development indicators, India lags behind world averages. The country ranks 134 out of 187 on the UN’s 2011 Human Development Index. At 65.4 years, life expectancy is more than 5 years lower than the world average, and persistently high rates of malnutrition contribute to other health problems and undermine productivity. At 4.4 years, educational attainment is low, and India still accounts for one-third of the globe’s illiterate people. Gender inequality remains high despite progress in education, health, maternal mortality, and fertility. The ratio of girls to boys has decreased steadily over the last 50 years and is particularly low in some of the more advanced states and urban areas.3 Lifting people out of poverty is not enough. Even above the threshold for the World Bank’s global indicator of shared prosperity (defined as consumption growth of the bottom 40 percent of the population), a large number of people, especially in rural areas, have consumption levels that are very close to the poverty line. These vulnerable people live on more than $1.25 and less than $2.50 per day or between one and two official poverty lines.4 Minor shocks—illness, poor crop yields, indebtedness, high inflation—can easily push them below the poverty line. Poverty reduction efforts need to be accompanied by social protection initiatives to protect people from falling back into poverty. The end goal is to increase shared prosperity—that is, to increase the number of people who are not poor, who are socially included, and who are reasonably secure. 1. World Bank estimate of people living on $1.25 or less per day in PPP terms. 2. Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Odisha, Rajasthan, and Uttar Pradesh. 3. The so-called child sex ratio measures the number of girls per 1,000 boys aged 0–6. In India the ratio has decreased steadily over the last three decades from 962 in 1981 to 914 in the 2011 census. 4. The official poverty line for India (currently under revision) is set at the equivalent of $1.17 per person per day in PPP terms. The unofficial lower bound of prosperity is set at two poverty lines. This choice is based on two independent but coincident local criteria. The National Commission for Enterprises in the Unorganized Sector classifies all population groups in five categories, and those between one and two poverty lines are considered “vulnerable”. The threshold to pay personal income tax is such that a family of five, with one taxpayer, would also be close to two poverty lines. 11 Country Partnership Strategy for India: 2013–17 3. Achievements Despite the large remaining challenges, India’s development is one of the most significant global achievements of the 20th century. Over the last two decades, progress toward many of the Millennium Development Goals has been creditable given the sheer scale of the challenge. In addition to halving poverty (MDG1), India has universalized primary education (MDG2). By 2015, India is also likely to halve the number of people without sustainable access to safe drinking water and achieve gender parity at all levels of education, while also making strong progress in fighting infectious diseases, such as AIDS, tuberculosis, and polio and achieving environmental sustainability. India has been free of polio for two years now. Life expectancy has more than doubled from 31 years in 1947 to 65 years in 2012 but remains low compared with other countries. Adult literacy more than quadrupled from 18 percent in 1951 to 74 percent in 2011. Widespread famines are a thing of the past, even when the monsoon fails, although chronic malnutrition remains pervasive. While maternal mortality has been reduced by 33 percent over ten years, almost 20 percent of all maternal deaths worldwide still occur in India, and much faster progress on the MDGs pertaining to child mortality and access to sanitation facilities (Annex 2). The WBG has contributed to India’s development achievements, contributing where and when it was most needed. Since the first IBRD loan to 12 Country Partnership Strategy for India: 2013–17 the Indian Railways in 1949, India has made extensive use of WBG financing, In the last decade, knowledge, advisory services, and technical assistance to tackle fundamental India grew faster than developmental challenges and build a modern economy (box 3.1). Over 92 percent of the 60 years, India has benefited from approximately $160 billion IBRD/IDA/ world’s nations. Real IFC financing at 2010 prices)—far more than any other client country. In the GDP expanded by 1.5 process, the WBG has learned a lot. Many of its current policies, practices, and percentage points per thinking about development have been influenced by its experience in India. year during 2005-10. Rapid economic growth over the past ten years has contributed to this substantial reduction in poverty and progress on MDGs. In the last decade, India grew faster than 92 percent of the world’s nations. Real GDP expanded at an average annual rate of 7.3 percent between FY2003 and FY2012, helping the country reduce poverty (at the official poverty line) by 1.5 percentage points per year during 2005–10. India also weathered the 2008–09 global crises relatively well, with GDP growth slowing somewhat to 6.7 percent in FY2008–09 and rebounding strongly to 8.4 percent in the two subsequent years. Although growth in FY2011–12 slowed to a nine-year low of 6.5 percent, India remains one of the fastest-growing economies in the world. Recent reforms of diesel pricing, foreign direct investment in the retail sector, and public sector disinvestment plans have helped to improve the investment climate. Growth has been in double digits for some states—well above the all-India average. Under the 11th Five-Year Plan, some of India’s low- income states grew at a record pace, with Bihar (one of the poorest states) outperforming even the most advanced states. Madhya Pradesh, Rajasthan, and Uttar Pradesh—all low-income and highly populous states—have also grown rapidly, with their gross state domestic product growing significantly faster than India’s overall GDP. Recent Government policy reforms are intended to translate economic growth into palpable improvements in living standards. The Government has promoted rights-based development policies through the 2005 Right to Information Act, a 2005 right-to-work measure (part of the Mahatma Gandhi National Rural Employment Guarantee Act), and the 2009 Right to Education Act. The roll-out of the Unique Identification Document will give a legal identity for all residents of India and improve the delivery of social services. The Right to Public Service Act, which grants citizens recourse when the state fails to deliver basic services in a timely fashion, has been enacted in several states, and similar legislation is being prepared at the national level. More and more Indians participate in the democratic process. The 73rd Amendment Act of 1993 introduced wide-ranging reforms of panchayati raj institutions (local governing bodies) that play a central role in India’s efforts at democratic decentralization and rural self-government. The measure reserved seats in panchayati raj institutions for women and people from scheduled castes and tribes. More recently, the Government empowered women politically by expanding to 50 percent the number of seats for women in local governments and state assemblies. India’s civil society is vibrant and very active, with aspirations to play a greater role in policy making and implementation. Each year the Right to Information Act generates several 13 Country Partnership Strategy for India: 2013–17 Box 3.1. India and the World Bank Group: A unique relationship spanning six decades The International Development Association (IDA) has contributed to improving outcomes in health, education, and rural devel- opment, with cumulative assistance totaling close to $43.5 billion since 1961 (current prices). It supported India’s efforts to tackle polio, tuberculosis, leprosy, river blindness, and HIV/AIDS, improving the lives of millions of people and contributing immensely to global efforts to control these diseases.a WBG financing (particularly credits from IDA) and technical assistance played a key role in the Green Revolution—a landmark in India’s development that freed the country from dependency on food imports, turning it into a net food exporter and helping millions escape poverty. And in education, IDA together with the European Union and United Kingdom’s Department for International Development played an important role in universalizing primary education. Likewise, both IBRD and IFC have contributed to the development of India’s financial sector. The Housing Development Finance Corporation—India’s leading source of housing finance, has now mainstreamed long-term financial instruments for the middle class. India is now one of the few developing countries where a middle-class family can borrow long-term (up to 25 years) for housing without government subsidy. IBRD/IFC financing of more than $4 billion, coupled with capacity building, has helped PowerGrid evolve into the world’s third largest transmission utility. a. A Collaborative Partnership: India and IDA, Government of India (2013) Accountability million requests for information disclosure from ordinary citizens, media, institutions have and research scholars; it has proved to be an effective instrument in fighting become more corruption and red tape. assertive, as indicated by their active The Government has pushed forward on the governance agenda, role in uncovering recently introducing a series of reforms and programs. Corruption in instances of fraud India remains a concern, according to a draft national anticorruption strategy and corruption. And released by the Central Vigilance Commission.5 Since 2009, the Government the general public is has rolled out a performance management system under which each ministry increasingly vocal in or department has to prepare and disclose a results framework. The system demanding enhanced has already been replicated in six states. The national e-governance program accountability. will improve the accessibility of government services for everyone and at affordable costs. Corporate governance has been enhanced through the 2010 mandatory guidelines for central public sector enterprises, and public financial management is being strengthened by the newly introduced Central Plan Scheme Monitoring System—a real-time tracking system for plan expenditures, and by initiating electronic transfer of funds for social protection programs. The Government has introduced a national public procurement bill, and across India e-procurement is being rolled out aggressively. Accountability institutions have become more assertive, as indicated by their active role in uncovering instances of fraud and corruption. And the general public is increasingly vocal in demanding enhanced accountability. India is an emerging global power and a prominent voice for development. India is an important player in the global information- technology revolution, and is on the frontier of using IT for e-government and for the delivery of services. It is home to globally recognized companies that have become global industry leaders in pharmaceuticals, steel, and space technologies. India has become a prominent voice in global forums, advocating for the establishment of a new “BRICS Bank,” as well as increased 5. Central Vigilance Commission. Draft National Anti-Corruption Strategy (2010). 14 Country Partnership Strategy for India: 2013–17 capital to enable multilateral development banks to meet the infrastructure- Governments in financing needs of the developing world. Recently, India has been one of the developing countries most vocal advocates for expanding the role of multilateral institutions to help have been keen to countries reach the MDGs, finance developing countries’ infrastructure and the learn from India’s development of human resources, manage global financial crises, and ensure successful experience a balanced, prosperous, and inclusive economy. With the ratification of the in public policy, social UN Convention on Anti-Corruption in 2011 and full membership in the OECD and development Financial Action Task Force on money laundering in 2010, India is increasingly programs, local active in the global governance agenda. governance for improved The world continues to learn from India’s remarkable development accountability experience. India has been an important source of learning and innovation and services, and for other countries (developing and industrialized alike), for development building an enabling practitioners and policymakers, and for multilateral institutions such as IDA. framework for private Governments in developing countries have been keen to learn from India’s sector–led growth. successful experience in public policy, social and development programs, local governance for improved accountability and services, and building an enabling framework for private sector–led growth. Rural livelihood projects, for example, have been replicated in other parts of the world. There is growing demand to learn from India’s thematically diverse and tested development practices, and India is emerging as one of the main providers of development experience in exchange of South–South knowledge and investment capital. In the past four years, India has shared its development experience in agriculture, education and skills development, health care, information and communication technology, inclusive business models, and public-private partnerships. 15 Country Partnership Strategy for India: 2013–17 4. Vision: India in 2030 Before the industrial revolution, India was one of world’s wealthiest countries, contributing 27 percent to global GDP.6 On gaining independence after two centuries of colonization, however, India’s economy was stagnant. During the ensuing 65 years it worked to escape from the low “Hindu rate of growth,” to rebuild the foundation of a modern economy, and, in recent years, to become one of the fastest-growing economies in the world. Today India is among the largest economic powers in the world. At market exchange rates, its share of world GDP has increased by 50 percent in the past 30 years from 1.8 to 2.7 percent and is expected to reach 11 percent by 2050. India is also a net contributor to global demand. India’s economic growth over the past 30 years, at 6.2 percent, has been twice that of the world. Its ratio of exports to GDP has tripled since 1990 to 21 percent, and its share of world imports has more than doubled over the past decade. India is the fourth-largest destination for FDI among developing countries, with net FDI inflows at 1.7 percent of GDP. Looking forward, the national vision for development is detailed in the 12th Five-Year Plan (FY2013–17) (box 4.1). 6. Angus Maddison, The World Economy: Historical Statistics. Paris: OECD, 2004. 16 Country Partnership Strategy for India: 2013–17 Box 4.1. Government vision: India’s 12th Five-Year Plan Faster, sustainable, and more inclusive growth is the overarching objective of the Government’s development strategy. Faster growth. Topping the Government’s agenda is to remove domestic constraints to growth so as to spur investment and reverse the recent downward trend. Under the 12th Plan, India aims to increase its GDP at an average annual rate of 8.2 percent, while aspiring to return to its full growth potential of 9 percent per year by the end of the Plan period. Annual growth rates of 4 percent in agriculture and 10 percent in manufacturing—both important sources of employment and livelihood—are required to achieve the target. Productivity increases in the public and private sector, in micro, small and medium enterprises, among farmers, and in large companies are expected to help India realize its potential. Growth will also benefit from improvements in the business climate and in governance at all levels, from a massive increase in infrastructure investment (power, telecommunications, roads, airports, railways, ports), and from better use of technology for innovative solutions to the country’s most daunting development challenges. All states are expected to contribute. It is envisioned that on average each state will grow at a rate higher than that achieved under the 11th Plan. Urbanization is also central to India’s inclusive growth objective, as it is an important source of economic efficiencies and employment. The urban development strategy focuses on strengthening five “enablers of urbanization”: governance, planning, financing, capacity building, and innovation. Sustainable growth. Staying on a high growth trajectory will require more effective management of natural resources, as rapid growth continues to put pressure on India’s water, land, and forests. Management of India’s dwindling water resources is especially critical and requires measures to induce industry, farmers, and households to use water more efficiently. Rational pricing, especially for commercial, industrial, and agricultural purposes, is necessary, as are regulatory measures and their enforcement to limit water pollution. Effective land management and acquisition is a major bottleneck for the development of industry and infrastructure. The Plan recognizes that environmental sustainability is no longer a peripheral issue and must be mainstreamed and “addressed squarely.” A land-management strategy will be developed to strengthen land acquisition and resettlement and rehabilitation processes, rationalize land use in urban areas, and promote farmland titling and leasing. The Government is also committed to reducing the intensity of greenhouse gas emissions by 20–25 percent by 2020 against a 2005 baseline, and to adding 30,000 MW of renewable energy capacity. Inclusive growth. Inclusiveness has many dimensions. It is as much about ensuring that growth benefits the very poor and socially excluded groups (women, scheduled castes and tribes, and the disabled), as it is about more-balanced growth across the country to help low-income states catch up with their more advanced neighbors. Inclusiveness also involves empowerment and participation. It means greater attention to inequality—both in outcomes and opportunities—and ensuring access to good- quality education and healthcare. In education, the mean years of schooling are targeted to increase to seven years, and higher education will be expanded and better aligned to the skills needed in a fast-growing and fast-changing economy. Jobs are central to the inclusion story, and 50 million new work opportunities in the non-farm sector are envisioned under the 12th Plan. Efforts will be made to eliminate gender and social gaps in school enrolment at all levels. On health, the infant mortality ratio is targeted to decrease to 25 per 1,000 live births and the maternal mortality rate to 100 per 100,000 live births, while the ratio of girls to boys is expected to rise 914 to 950. By the end of the Plan period, undernutrition of children up to three years of age should decrease to 27 percent from the 2005–06 level of 40 percent. India has the potential to—once again— become one of the largest economies in the world, while reducing poverty and vulnerability, by increasing shared prosperity. The dependency ratio will fall from 55 percent of the working-age population in 2010 to 47 percent in 2030, allowing for a higher output per capita even if output per worker was to remain constant. Savings rates are likely to rise as the relative share of the working-age group expands, allowing for faster capital accumulation. (Annex B6, Figure B6.1) Even in the aftermath of the global crisis, gross domestic capital formation has been sturdy, never falling below 34 percent of GDP. The average schooling of the population aged 25 years and above is expected to increase from 4.4 years in 2010 to 6.0 years in 2030. Total factor productivity has grown by around 2.5 percent per year, and this rate could increase as markets integrate further and workers shift from low- to high-productivity jobs. While less than 30 percent of the population lived in cities in 2010, the 17 Country Partnership Strategy for India: 2013–17 Figure 4.1. Poverty and prosperity in India in 2030 a. Base scenario b. Ambitious scenario 100 100 90 90 80 80 70 70 60 60 50 50 40 40 30 30 20 20 10 10 0 0 2010 2015 2020 2025 2030 2010 2015 2020 2025 2030 Non-vulnerable Poor Non-vulnerable Poor Ensuring that ratio is expected to attain 40 percent in 2030. Combining all these trends, growth benefits an average growth rate around 8.2 percent per year could in principle be all will require sustained over the next two decades. strengthening the implementation of The realization of this potential cannot be taken for granted, however, economic and social as it will critically depend on decisions to be made in the coming programs to better years. Maintaining high rates of growth will require continued efforts to target the very poor remove key structural constraints to growth and increase public investment and excluded, pro- in infrastructure, education and health. The ongoing structural transformation poor policies across of an economy from agriculture to manufacturing, and from rural to urban a range of issues, employment, has to be managed effectively; product markets have to be and accelerated job further liberalized, and flexible labor laws introduced. Ensuring that growth creation. benefits all will require strengthening the implementation of economic and social programs to better target the very poor and excluded, pro-poor policies across a range of issues, and accelerated job creation. Finding an approach that combines recent rapid growth and inclusiveness of Rajasthan and Karnataka may hold the key to faster poverty reduction and increased prosperity. What would it take for India to accelerate poverty reduction, decrease vulnerability, and increase shared prosperity by 2030? In the base scenario7, India would continue on its trajectory of 2005 to 2010, during which it has been one of the most rapidly growing economies in the world. Its economy would grow at 8.2 percent per year, and by 2030 income 7. The base and ambitious scenarios developed for the India CPS provide a numerical illustration to a long-term vision for India. The objective of these scenarios is to provide some back-of-the-envelope estimates of the likely impact of the continuation of India’s recent performance on growth and poverty reduction through 2030. Because the scenarios seek to extend the historical performance into the future, they are not driven by any explicit assumptions about the rest of the world, the types of policies pursued by the authorities, or the specific pattern of growth. However, given that India’s recent success in achieving high growth and rapid poverty reduction demonstrated a clear break from history, the scenarios implicitly assume that the external and internal enabling environment which was conducive to these developments in 2005-10 will continue to be equally stimulating in the future. 18 Country Partnership Strategy for India: 2013–17 per capita would reach $5,283 (at 2010 prices), more than triple the 2010 The India of 2030, level of $1,375. The impact on poverty of such a rate of growth would be therefore, would significant: just one percentage point increase in growth per capita would have 5.5 percent result in a 0.6 percentage-point decrease in poverty, and a 0.4 percentage-point of its people living increase in the share of the population not vulnerable to falling into poverty. in poverty and a Approximately 12 percent of the population would live under the official significant increase poverty line, compared with 30 percent in 2009–10, and the percentage of in the share of the people who were neither poor nor vulnerable would increase from 19.1 percent population (41.3 to 33.6 percent (figure 4.1). percent) no longer vulnerable to falling What would it take for India to “bend the curve”—to decrease poverty into poverty. and increase shared prosperity at a rate significantly above current averages? In the ambitious scenario, India would continue to grow rapidly at 8.2 percent per year. The ambitious scenario would also aim to reduce poverty and vulnerability at a rate close to that of Rajasthan and Karnataka between 2005 and 2010. Growth elasticity of reducing poverty would double to 1.2 percent, and elasticity of escaping vulnerability would rise to 0.6 percent. The India of 2030, therefore, would have 5.5 percent of its people living in poverty and a significant increase in the share of the population (41.3 percent) no longer vulnerable to falling into poverty. The implications for the rest of the world would be significant. India is central to global prospects for “bending the arc of history” and rapidly reducing poverty and increasing shared prosperity. The global benchmarking exercise estimates that poverty in India has fallen by 7.2 million people per year8, placing India in the 63rd percentile of the distribution of poverty reduction across countries. If India were to move to the 70th percentile, poverty would decline by 9.2 million people per year. Under the base scenario, this would mean that 191 million people would be lifted out of poverty and 277 million people would escape vulnerability. Under the ambitious scenario, the corresponding figures would be 304 and 394 million, raising to prosperity the equivalent of the combined population of France, Germany, Italy, Japan, and United Kingdom today. 8. World Bank staff calculations. 19 Country Partnership Strategy for India: 2013–17 5. Challenges Achieving this vision of India in 2030 will require addressing a wide range of development challenges. For India to realize its growth potential of $5,283 per capita GDP by 2030, it will be necessary to address even more forcefully than in the past key structural constraints such as inadequate and poorly maintained infrastructure (especially transport and energy), an underperforming manufacturing sector, below-target growth in agricultural productivity, and inefficient land use and natural resource management.9 With its declining dependency ratio and 8 million people entering the workforce annually, India stands to benefit exponentially from a demographic dividend. To collect that dividend, however, significant obstacles will have to be overcome. India’s rate of job creation is low. Half of the population derives its income from agriculture and only 16 percent from wage employment. The government estimates that 93 percent of Indian workers are informally employed, with limited or no job security and no benefits. Female labor participation has decreased and, at 24 percent, remains low compared with other emerging economies. To exploit its demographic advantages and attain the ambitious vision of India 2030, three broad categories of challenges will have to be addressed: (i) strengthening India’s platform for growth; (ii) managing the spatial transformation; and, (iii) realizing human potential. A sluggish global economy and the domestic economic slowdown may hinder India’s efforts to address some of these issues, but only in the short- and medium- term (box 5.1). 9. $93 billion worth of investments was shelved during 2011–12, mainly due to difficulties in obtaining land (CMIE CapEx database). 20 Country Partnership Strategy for India: 2013–17 Platform for growth Over the past decade, India has nearly doubled installed Creating a stronger platform for faster, socially and regionally inclusive, and generation capacity, sustained growth will require India to tackle a range of constraints. become a global leader in renewable India’s infrastructure gap remains massive and is one of the most energy, improved significant impediments to growth and poverty reduction. Although its transmission India’s transport network is one of the most extensive in the world, accessibility network, developed and connectivity are limited. Only 20 percent of the national highway network electricity exchanges, (which carries 40 percent of traffic) is four-lane, and one-third of the rural and enacted major population lacks access to an all-weather road. It is estimated that the transport energy-related sector alone will require an investment of nearly $500 billion (3.6 percent of legislation. Despite GDP) over the next 10 years.10 Ports and airports have inadequate capacity these achievements, and often poor transport connectivity. Trains move very slowly owing to poor an estimated 300 maintenance, and the entire railway system is grappling with issues of financial million people do sustainability. Poor transport safety, especially road safety (133,000 road fatalities not have access to recorded in 2010), is a growing concern in a country that is adding new drivers electricity, while at a record pace. those who are connected to the Despite significant achievements in the energy sector, key challenges grid must cope with remain. Over the past decade, India has nearly doubled installed generation unreliable supply. capacity, become a global leader in renewable energy, improved its transmission network, developed electricity exchanges, and enacted major energy-related legislation. Despite these achievements, an estimated 300 million people do not have access to electricity, while those who are connected to the grid must cope with unreliable supply. Sixty percent of firms resort to costly backup power generation. The sector continues to be hobbled by a range of problems—among them energy demand that far outstrips supply, below market pricing of electricity, constraints in coal and gas supply that force generation stations to operate below capacity, and high rates of loss (technical, commercial, and financial) in distribution. The continued unreliability and poor quality of electricity supplied to firms and households sap investment and growth and reduce India’s competitiveness. Manufacturing remains underdeveloped and has grown more slowly than expected. Accounting for just 15 percent of GDP, India’s manufacturing sector is small compared with that of the other BRICS. China’s manufacturing, for example, accounts for 34 percent of that nation’s GDP. Under the 11th Plan, annual manufacturing growth was only 7.7 percent, far below the target of 11 percent. Inadequate infrastructure, which disproportionately penalizes small- and medium-scale enterprises, is one of the main constraints to growth in the sector. The size distribution of firms in India is characterized by a missing middle that, in most developing countries, accounts for a significant share of wage employment. Whereas large firms can internalize the costs of dedicated infrastructure (e.g., captive power or water treatment plants, or even rolling stock), small and medium-size firms have no access to the financing that would make it possible to develop their 10 The National Transport Development Policy Committee. 21 Country Partnership Strategy for India: 2013–17 Box 5.1. India’s economic outlook Real GDP growth is likely to slow further in FY2012–13 to under 6 percent, significantly below the 9–10 percent growth rates recorded just before the financial crisis. Given the continued weakness in high income economies, India’s growth will increasingly have to come from domestic sources, which will require resolving key supply-side bottlenecks—among them banks’ high exposure to delayed power projects, financially struggling utilities, delayed mining projects, and the cancellation of telecom licenses. With a gradual improvement in the global economy and progress on the domestic reform agenda, growth is expected to recover to close to 7.1 percent by FY2014–15. Key Economic Indicators 2006/ 2007/ 2008/ 2009/ 2010/ 2011/ 2012/ 2013/ 2014/ 2015/ 2016/ 07 08 09 10 11 12 13 14 15 16 17 Projections Real Income and Prices (% change) Real GDP (at factor cost) 9.6 9.3 6.7 8.6 9.3 6.2 5.4 6.4 7.1 7.3 7.5 Agriculture 4.2 5.8 0.1 0.8 7.9 3.6 1.0 2.0 2.0 2.0 2.0 Industry 12.2 9.7 4.4 9.2 9.2 3.5 3.0 5.2 7.0 7.5 8.0 Wholesale Price Index 6.6 4.7 8.1 3.8 9.6 8.9 7.4 7.0 6.5 6.0 5.5 Consumption and Investment (% of GDP) Consumption 72.6 72.4 71.8 73.7 72.5 72.8 75.3 73.1 72.2 72.9 72.9 Public 10.3 10.3 10.9 11.9 11.4 11.6 13.8 13.0 12.8 12.8 13.0 Private 62.3 62.1 60.9 61.8 61.0 61.2 61.5 60.1 59.4 60.0 59.9 Investment 31.3 32.9 32.3 31.7 31.7 30.6 32.0 33.1 33.3 32.1 31.2 Public 7.9 8.0 8.5 8.4 7.8 7.4 7.4 8.4 8.5 8.5 8.5 Private 23.4 24.9 23.8 23.3 24.0 23.2 24.6 24.7 24.8 23.6 22.6 External Sector Current Account Balance -1.0 -1.3 -2.3 -2.8 -2.7 -4.2 -4.5 -4.0 -3.6 -3.2 -2.9 (% of GDP) Foreign Exchange Reserves 191.9 299.2 241.4 254.7 274.3 260.1 238.5 255.9 308.4 340.5 381.9 (US billion) 1/ General Government Finances (% of GDP) Revenue 2/ 20.0 21.0 19.4 18.2 18.6 18.4 18.1 18.5 18.5 19.0 19.5 Expenditure 25.4 26.0 27.8 28.0 27.7 26.6 26.3 26.1 25.7 26.0 26.0 Deficit 3/ 5.4 5.0 8.4 9.8 9.1 8.2 8.2 7.6 7.2 7.0 6.5 Total Debt 77.2 74.1 74.6 72.5 67.7 65.9 66.7 66.2 65.3 64.4 63.3 Notes: 1/ Excluding gold, SDR and IMF reserve position. 2/ Excludes receipts from 3G spectrum auctions. 3/ General government deficit, including center and states. Sources: Central Statistical Organization, Reserve Bank of India, and World Bank Staff Estimates. Although depreciation of the rupee and pressure from food and fuel prices could add to the inflation momentum in the near term, inflation and the current account deficit are likely to moderate over the medium term. Owing to softer import demand and improving export performance, the current account deficit is expected to decline to 3.6 percent of GDP by FY2014–15. Although the total subsidy bill exceeded the budgeted amount despite recent reductions in fuel subsidies, the authorities were able to limit the central government deficit to 5.2 percent of GDP in FY2012-13, better than the (revised) target of 5.3 percent. While the pace of fiscal consolidation remains behind the adjustment path recommended by the 13th Finance Commission, the authorities are committed to bringing the deficit down further to 4.8 percent of GDP in FY2013-14 and 3.0 percent by FY2016- 17. However, as deficits remain elevated, debt sustainability could come under pressure. The debt-to-GDP ratio fell from nearly 80 percent in FY2002–03 to 66 percent in FY2011–12 owing to high nominal GDP growth, fiscal consolidation, and declining real interest rates on government debt. Maintaining that ratio in an environment of slower growth and a possible uptick in real interest rates will require sustained reductions in fiscal deficits. India’s long-term prospects remain bright owing to favorable demographics, rising average educational attainments, and high savings rates. However, near- and medium-term downside risks are high. During the global financial crisis, higher public spending set in at exactly the right time, largely because of the implementation of recommendations of the 6th Pay Commission, and the Reserve Bank of India was able to lower policy rates significantly when inflation fell in line with international commodity prices. Should India face another global shock in the near future, room for a similar policy response would be much more limited. Continued progress on the domestic reform agenda is critical to supporting domestic drivers of growth and returning the economy to a high growth trajectory. 22 Country Partnership Strategy for India: 2013–17 own dedicated infrastructure and, in any case, the scale of their operations To benefit from does not make it economically feasible. Outdated labor laws, inadequate economies of scale, access to land, and a dearth of skilled workers all have contributed to slow sharpen India’s manufacturing growth. Those manufacturing entities that are trapped in international the informal sector have difficulty raising finance and are constrained in competitiveness, and their productivity. The plethora of necessary forms, licenses, inspections, improve economic and clearances especially hinders the growth of small and medium-size growth and income enterprises—which, if unleashed, could be a key driver of India’s economic levels, there is a need growth and an important source of jobs. for better integration of markets in goods Improving and maintaining a healthy investment climate is crucial for and services, labor, India’s development. In the aftermath of the global financial crisis, India’s and finance. gross domestic savings rate declined significantly to around 32 percent of GDP, constraining much-needed investment to address the infrastructure gap, alleviate capacity constraints, and raise potential output. The reduced availability of domestic financing sources, combined with the need to maintain high investment rates to support and accelerate economic growth, highlights the importance of a healthy investment climate that creates opportunities for domestic and foreign investors. Policies that distort key markets (e.g., agriculture, land, food retail, fuel, and so on) have a significant impact on India’s investment climate. Net inflows, after peaking at 1.8 percent of GDP in FY2008–09, have averaged about 1.0 percent of GDP since then and have further weakened by 22 percent (year-on-year) because of global uncertainties. Recent reforms to promote FDI (e.g., a relaxation of limits on foreign ownership in airlines and media, clarification of rules for FDI in single-brand retail, and allowing FDI in multi-brand retail in September 2012) are likely to raise investor appetites and could lead to a strengthening of FDI inflows. India is a diverse country, with poorly integrated markets. To benefit from economies of scale, sharpen India’s international competitiveness, and improve economic growth and income levels, there is a need for better integration of markets in goods and services, labor, and finance. At present, the efficient functioning of India’s domestic markets is impeded by physical and policy barriers. Poor infrastructure—a limited national highway system, insufficient air and water transport—translates into higher transport costs. A cumbersome and multilayered system of taxation across states further impedes the flow of goods, as do state-specific restrictions on agriculture trade. A new goods and services tax, proposed in 2010 but not yet approved, is a major Government effort to streamline the unwieldy tax system. Experience among states in the United States and among countries in the European Union—the ultimate “income convergence machine”—shows the strong link between economic integration among confederated states and income convergence.11 The more integrated the country, the more balanced the growth. 11 Robert Barro and Xavier Sala-i-Martin (“Convergence,” Journal of Political Economy, 100:2, April 1992) find strong convergence among states in the United States, while a 2012 World Bank study finds that economic integration has led to convergence among countries in the European Union (see Golden Growth: Restoring the Luster of the European Growth Model, Washington DC, World Bank, 2012). 23 Country Partnership Strategy for India: 2013–17 Although some Faster economic growth has accelerated the degradation of the progress has been environment and the depletion of scarce natural resources that are made, South Asia essential for sustaining growth and eliminating poverty. India’s long-term remains one of the growth is predicated on its ability to address environmental problems such as least integrated soil erosion, water and air pollution, growing water scarcity, and the declining regions in the world quality of forests. In Northern India the aquifer is receding by an alarming 4 cm with regard to annually. The challenge is further exacerbated by environmental stresses resulting policy, trade, and from urbanization processes that are often chaotic, and from development of the infrastructure. This private sector. The cost of environmental degradation in India was estimated in lack of integration 2009 to be 6.6 percent of GDP.12 directly affects India’s economic India and its neighbors have not fully realized their potential for growth development derivable from further regional and global integration. Although some and hampers progress has been made, South Asia remains one of the least integrated regions management of in the world with regard to policy, trade, and infrastructure. This lack of integration shared natural directly affects India’s economic development and hampers management of resources, such as shared natural resources, such as cross-boundary river basins. It aggravates the cross-boundary river isolation of the underdeveloped northeastern states from trade and transit routes basins. and limits access to necessary energy resources, such as oil and power. Estimates show that intraregional trade would increase from the current $5 billion to $20 billion if restrictions on trading with neighbors were removed. India could also do more to tap into global markets and better explore the potential for increased trade with East Asia and Africa. Spatial transformation India is undergoing a massive rural-urban transformation—one of the largest of the 21st century. For the first time since Independence, India has seen a greater absolute growth in urban population. The number of towns increased from about 5,000 in 2001 to 8,000 in 2011, and some 53 cities now have a population exceeding 1 million. Today, 31.1 percent of the population lives in cities, and the share is expected to rise to 50 percent in the next 20 years. Accelerating urbanization is central to India’s growth, development, and poverty reduction (figure 5.1), but it cannot be done without an equally pronounced focus on rural development. Rural areas are often poorly connected to cities, resulting in weak value chains for agricultural products and slow rates of off-farm job creation. While agriculture remains the main source of livelihoods for half the population, annual agricultural growth has been below the government target. Accommodating the needs of an additional 10 million urban dwellers each year will be a strategic policy issue for many years to come. Providing them with adequate services such as water, sewerage, drainage, and transportation, and 12 World Bank estimates, 2009. 24 Country Partnership Strategy for India: 2013–17 Figure 5.1. Rural areas are often Correlates of fast economic growth: the rate of urbanization poorly connected to cities, resulting in 7 weak value chains for GDP per capita annual growth rate (percent) agricultural products 6 and slow rates of 5 off-farm job creation. While agriculture 4 remains the main source of livelihoods 3 for half the 2 population, annual agricultural growth 1 has been below the 0 government target. 0 10 20 30 40 50 Urbanization rate creating opportunities for further economic development will be a challenge. The needs are particularly dire in India’s growing slums. (The population of slum dwellers swelled from 75 million in 2001 to 93 million in 2011,13 accounting for a quarter of the urban population.) Investments—both public and private—have not kept up with demand. Weak urban planning, ineffective regulations governing land management and use, and distorted land markets hinder the development of vibrant, livable cities. Urban governance is a major issue across all states and cities. Local urban bodies are weak and financially unsustainable, with limited capacity to raise their own financial resources. Urban service delivery institutions have limited autonomy, accountability, and incentives or client orientation. Furthermore, the responsibility for financial management and delivery of basic services is fragmented across a range of agencies that often are not held accountable and have few incentives to perform on a sustainable basis. The linkages between institutions at different levels of government—center, state, and local—are weak, resulting in duplication and sometimes an inefficient division of labor. For example, investment decisions and implementation of urban infrastructure projects are frequently made at the state level, while the liabilities (including debt incurred) and responsibility for operations and maintenance are left to the local bodies. The rapid expansion of cities beyond current municipal boundaries is a particular concern. The peri-urban areas of the larger Indian cities have grown at a faster pace than cities themselves—both in terms of population and manufacturing. In addition to the challenges faced by most urbanizing areas, the largely unplanned development of city outskirts involves changes in land use from agricultural to residential and industrial/commercial, changes in the use of natural resources (deforestation, water depletion and pollution), and land degradation. Urban sprawl has also had a negative impact on abutting agricultural land and livelihoods. Prospects for a more systematic development of these areas are limited, as many lie beyond 13 Committee on Slum Statistics, Planning Commission (2011). 25 Country Partnership Strategy for India: 2013–17 Urban sprawl has urban administrative authority. Second-tier cities face a serious lack of basic also had a negative municipal infrastructure, such as adequate safe drinking water, drainage and impact on abutting sewerage, and paved roads.14 agricultural land and livelihoods. Prospects India’s spatial transformation is likely to result in larger disparities in for a more systematic welfare levels—between the rich and the poor, and between rural and development of these urban areas. Consumption inequality is on the rise, with widening disparities areas are limited, between urban and rural areas. Disparities in human development indicators, as many lie beyond especially as they relate to socially excluded groups are also pronounced. urban administrative While urbanization is inevitable, the persistence of these gaps and inequalities authority. Second- is not. The challenge for India will be to develop policies and programs to tier cities face a ensure that a large part of the population—especially the most vulnerable— serious lack of is not left behind. India’s spatial transformation also requires the effective basic municipal development of the rural economy through the expansion of farm and non- infrastructure, such farm employment and income opportunities (figure 5.2). Despite the injection as adequate safe of huge resources, mainly through centrally sponsored flagship schemes, such drinking water, as the Mahatma Gandhi National Employment Guarantee Act (MGNREGA) and drainage and the National Rural Livelihoods Mission, rural incomes have not grown apace sewerage, and paved with urban incomes, and job creation in the nonagricultural has been slow. roads. Figure 5.2. Correlates of shared prosperity: off-farm employment in rural areas 0 (annual percent of the population) -1 Change in vulnerability -2 -3 -4 -5 0 10 20 30 40 50 60 70 80 Off-farm employment (percent of total employment) India is highly vulnerable to climate change because of high levels of poverty, high population density, heavy reliance on natural resources, and an environment already under stress. Under a moderate climate- change scenario (an increase in mean annual temperatures of 1.1 to 2.3º Celsius), the risk of increased frequency and severity of natural hazards is likely to increase, and densely populated cities will be at extreme risk. Kolkata is among the six fastest-growing cities worldwide that are classified to be at extreme risk, whereas Mumbai, Delhi, and Chennai are among the ten that are classified as high risk. Overall, India is ranked the second most vulnerable 14 Small and medium-size cities are home to 80 percent of India’s poor, and access to services tends to be far more limited than that in India’s large cities. Perspectives on Poverty in India: Stylized facts from Survey Data, World Bank (2010). 26 Country Partnership Strategy for India: 2013–17 country in the world.15 Institutions and mechanisms for enhanced disaster Greater concentration risk management and climate resilience, especially in agriculture and water- of people and intensive sectors, are either weak or nonexistent. economic activity in and around India’s While India has a relatively low-carbon economy today, greenhouse gas large cities can also emissions are projected to grow over the next decade. India’s GHG emissions have a positive impact proportional to GDP are on par with the global average, and its per capita on the environment emissions are among the lowest in the world. However, due to the size of its and climate change economy, India is the third-largest emitter in the world, and its GHG emissions because cities are are projected to grow. Energy is key to India’s climate-change challenge, as an important source well as its ambition to sustain high growth. The demand for energy, however, far outstrips the domestic supply in a country with a poor natural resource of efficiencies. endowment and foreign sources are costly. To keep emissions from increasing If managed at a fast rate, India will have to maximize the use of clean energy and improve systematically and energy efficiency, taking into account higher relative costs. Although densely with long-term populated areas are often associated with congestion, pollution, and a high planning in place, level of emissions, with potentially significant adverse impact on public health, cities can help greater concentration of people and economic activity in and around India’s hold down India’s large cities can also have a positive impact on the environment and climate emissions and change because cities are an important source of efficiencies. If managed improve air quality. systematically and with long-term planning in place, cities can help hold down India’s emissions and improve air quality. Agriculture has grown below Government targets. India remains predominantly rural, and about half of its population derives its income from agriculture or related activities. Government stepped-up efforts to develop agriculture are slowly yielding results; between 2000-01 and 2010- 11 agriculture grew at an average rate of 3.1 per annum. The target for the last two five-year plans was 4.0 percent. Stressed natural resources, poor rural infrastructure, inadequate technology, limited access to credit, underdeveloped extension and marketing services, and insufficient agricultural planning at the local level contribute to the lackluster performance. Ongoing global food security concerns, pronounced food-price volatility, and concerns about climate change all highlight the urgency of boosting India’s agriculture productivity. Human potential As a country with a population of 1.2 billion people (projected to increase to 1.5 billion by 2030), India has tremendous human potential—a source of immense creativity and innovation. To take full advantage of its demographic dividend and to unlock the human potential of all its people, India needs to overcome daunting challenges across a range of sectors, including health and nutrition, education, social protection, and skills development. Poor access to water and sanitation puts a huge burden on people (particularly women and children), who spend a good portion of each day securing sufficient water for the household. 15 Maplecroft’s Climate Change Risk Atlas, 2011. Available on www.maplecroft.com 27 Country Partnership Strategy for India: 2013–17 Although public Although India’s health indicators have continued to improve, financing for health progress has not matched the country’s economic growth over is expected to the past decade. Despite increasing rates of decline, maternal and child double under the mortality rates remain on par with rates in much poorer countries, and 12th Plan, increased malnutrition is among the highest in the world. India faces an unfinished public funding is agenda of tackling childhood and infectious diseases and malnutrition, as not enough; it must well as an emerging and rising burden of non-communicable and chronic be accompanied diseases (India and China vie for the largest number of diabetics in the world). by improved Progress on tackling communicable diseases such as AIDS, tuberculosis, effectiveness of and polio has been significant, but continued attention is needed to secure spending at all levels, the gains. Poor people are highly vulnerable to health shocks, with medical greater access to expenses contributing to household poverty and compromising efforts to quality health care, improve health outcomes. and more effective delivery of health Despite the central government’s increased focus on and financial services. commitment to health issues, a major challenge is to implement the funding effectively. Although public financing for health is expected to double under the 12th Plan, increased public funding is not enough; it must be accompanied by improved effectiveness of spending at all levels, greater access to quality health care, and more effective delivery of health services. The many systemic constraints include weak accountability arrangements and incentives for performance, weak quality assurance, a largely unregulated private health care sector, limited mechanisms for financial protection, and weak information and surveillance systems, combined with inadequate use of evidence-based planning, programming, and management. Out-of- pocket health expenses are high (on average accounting for 70 percent of total health spending) and affect poor households disproportionately. New government-sponsored health-insurance schemes, especially those aiming to reach people living below the poverty line, may make a difference. Improving the nutritional status of India’s children is particularly important. Child malnutrition remains high, and widespread. India accounts for 40 percent (217 million) of the world’s malnourished children. The variation across states is particularly striking: The percentage of malnourished children under five years of age varies from 23 percent in the more advanced state of Kerala to 60 percent in the low-income state of Madhya Pradesh. Despite India’s impressive economic growth in the past decade, malnutrition has declined very little. Stunting rates in India are two to seven times higher than those in other BRICS countries. While nutrition has recently received increased attention with the restructuring of the Integrated Child Development Services scheme, there remain very significant programmatic, institutional, technical, implementation, and capacity constraints. An effective multisectoral response is critically important and has to go beyond the health sector to include agriculture, education, industry, water, and sanitation. Access to adequate water and sanitation is critical to improving the quality of life and economic potential of all Indians. Although the government at the national and state level spends $4 billion annually on improving access to rural water supply and sanitation, only one-third of rural 28 Country Partnership Strategy for India: 2013–17 households have access to piped water and sanitation.16 The economic impact Access to primary of inadequate sanitation in India is estimated at $54 billion or 6.4 percent of education has been GDP in 2006. Most of that cost is attributed to premature mortality and health- largely universalized, related costs. The opportunity cost for women and children who spend an the challenge ahead inordinate amount of time securing water for their household each day is huge is to improve quality, and takes away from time that could be spent on more productive economic learning outcomes, activities or study. retention, and access to education India’s efforts to improve access, equity, and quality of education at by underprivileged the primary, secondary, and tertiary levels remains a work in progress. children, often in very Now that access to primary education has been largely universalized, the remote areas. challenge ahead is to improve quality, learning outcomes, retention, and access to education by underprivileged children, often in very remote areas. As the success of elementary education has resulted in demand for education beyond elementary level, there is increasing focus on improving access to secondary education. Of those children who finish primary education, 83 percent transition to the next level. Enrolment rates for grades 9–12 are just 40 percent and of those enrolled, approximately 15 percent drop out and one-third fail their examinations. While inequities are declining in terms of access and participation at all levels of education for all socioeconomic and ethnic groups, manifold inequities persist in the type of education facilities and exposure to and availability of modern techniques of education. Girls make up 45.6 percent of secondary students. Jobs are an important component of poverty reduction and a cornerstone of development. Over the last two decades, 8 million people annually entered the labor force in India. Job creation, which has remained relatively flat over a long period, will continue to be a tremendous development challenge as India grapples with how best to provide opportunities to its burgeoning young workforce. At present only 16 percent of the workforce derives its income from regular wage employment, and more than half are engaged in agriculture. The female labor force, decreased from an already small 34 to 29 percent of the total labor force between 2000 and 2010. The drop was particularly pronounced among women with higher levels of education. India’s continued economic growth demands more skilled workers across many sectors, higher rates of employment, and higher wages. The country now faces a massive shortage of skilled labor, which stymies productivity. Less than 10 percent of the working population has completed secondary education or above, and too many secondary graduates have skills and knowledge that are poorly matched with the needs of the labor market. The extent and quality of higher-education opportunities need to be scaled up urgently to sustain high growth of the economy and make it inclusive. Empowering youth, especially in rural areas, with skills that are better matched with the demands of the labor market—informal or formal—will also help facilitate migration to city centers where wage jobs are more readily available. 16 Indian National Census 2011. 29 Country Partnership Strategy for India: 2013–17 6. World Bank Group India Country Partnership Strategy (FY2013–17) | Integration | Transformation | Inclusion A vision of the nation The World Bank Group Country Partnership Strategy (FY2013–17) will as a global economic support the Government’s development goal of growth that is faster, powerhouse where no more socially and regionally inclusive, and more sustainable as detailed more than 5.5 percent in the 12th Five-Year Plan (FY2013–17). The strategy helps India lay the of the population foundation for a longer-term vision of India in 2030—a vision of the nation lives in poverty and as a global economic powerhouse where no more than 5.5 percent of the 41.3 percent of the population lives in poverty and 41.3 percent of the population are no longer population are no vulnerable to falling into poverty. It sets out a program of engagement— longer vulnerable to and makes key strategic shifts—that are designed to contribute to India’s falling into poverty. transformation into the India of 2030. The strategy builds on India’s recent It sets out a program achievements, but also incorporates lessons learned from WBG’s longstanding of engagement— engagement in the country, to develop transformational and innovative and makes key solutions to tackle India’s most pressing development challenges, especially strategic shifts— in the poorest, least developed, and most isolated states. It takes into account that are designed to lessons learned under the previous CAS (FY2009–12) (Annex 2), and is informed contribute to India’s by findings from multistakeholder consultations, as well as a client-perception transformation into survey (Annex 9). And finally, the strategy is aligned with the WBG regional the India of 2030. strategy for South Asia. 30 Country Partnership Strategy for India: 2013–17 The strategy’s overarching goal of rapid poverty reduction and The World Bank increased shared prosperity will be achieved by focusing on three will work with broad engagement areas: (i) integration; (ii) transformation; and (iii) counterparts at inclusion (figure 6.1). A focus on improved governance, environmental the national and sustainability, and gender equality runs across all three engagement areas. state levels to On governance, many of the actions required to foster economic integration scale up support in concern public investments and government regulation. Institutional performance-based development plays a key role in the case of spatial transformation, whereas public management, strengthened accountability is critical for social inclusion. More specifically, e-governance, the World Bank will work with counterparts at the national and state levels to public procurement scale up support in performance-based public management, e-governance, and financial public procurement and financial management, M&E, implementation of the management, M&E, right to service law, strengthening India’s anti-corruption framework, and implementation of supporting social accountability mechanisms. On environmental sustainability, the right to service economic integration has important implications for natural resource law, strengthening management, whereas the priority in relation to spatial transformation is to India’s anti-corruption minimize congestion, improve resource use efficiency, and reduce pollution framework, and impacts, including greenhouse gas emissions. Efforts to improve disaster risk supporting social management help households cope with natural disasters, reducing their accountability chance of falling back or deeper into poverty. Finally, economic integration and mechanisms. spatial transformation should lead to greater paid employment opportunities for women, whereas social inclusion can be promoted by enhancing voice and tackling discrimination A range of high-level intermediate development objectives provide both the rationale for the content of the World Bank Group program as well as a clear line-of-site to higher order country goals. Analytical work underpinning this CPS shows a strong correlation between select development outcomes: human development (infant mortality), gender equity (female job participation), jobs (off-farm employment), urban development, policies (business climate) and transfers (public spending) and the three overarching goals. The rate of urbanization (as measured by population growth of secondary cities) is correlated with economic growth, while creation of jobs (more specifically off-farm employment) is correlated with increased shared prosperity. Both these aspects are addressed through activities under the rural-urban transformation engagement area. Similarly, human development (education, health, nutrition and especially, infant mortality) is strongly linked to rapid poverty reduction. Support under the third engagement area of inclusion will aim to help the Government of India ensure inclusive growth by improving human development outcomes as well as gender parity. 31 Country Partnership Strategy for India: 2013–17 Figure 6.1. India CPS results chain: engagement areas and outcomes Overarching goals: Economic growth Poverty reduction Shared prosperity Engagement area: 1 Engagement area: 2 Engagement area: 3 Integration Transformation Inclusion Country Long-Term Objectives* • Increased GSDP growth • Increased population of • Improved access to services in low-income& special secondary cities to excluded segment of category states • Increased off-farm population • Increased trade and employment • Increase female labor force investments in the region participation • Decreased infant mortality Outcomes: Outcomes: Outcomes: • Improved transport • Strengthened institutional • Improved access to connectivity capacity of urban electricity • Improved inter-regional government • Strengthened public & power transmission • Improved urban transport private health-delivery • Improved market-driven services systems skills for productive • Improved access water • Improved child nutrition CPS Outcomes employment supply and sanitation services delivery systems • Enhanced private • Increased agricultural • Improved access & quality of investment in low-income productivity education states • Improved environment • Increased coverage of social • Strengthened regional protection and biodiversity protection programs integration conservation • Enhanced rural livelihood • Reduced Greenhouse Gas opportunities emissions through energy • Increased access to financial efficiency and renewable services energy production • Enhanced disaster risk management system *Analytical work completed as part of the CPS indicates strong correlation between these country long-term objectives and economic integration, spatial transformation and social inclusion. 32 Country Partnership Strategy for India: 2013–17 Strategic engagement area 1 Integration Enhanced efforts to increase India’s market integration can significantly To benefit from boost India’s economic growth. Better integration would result in more- economies of balanced growth among Indian states, helping low-income states converge scale and increase more quickly with their faster-growing neighbors. To benefit from economies competitiveness, of scale and increase competitiveness, there is a need to remove physical and there is a need to policy barriers across states (notably the multilayered system of taxation) that remove physical impede markets from functioning efficiently. India’s massive infrastructure and policy barriers gap must be bridged so that people can get to jobs and goods to markets. across states (notably Reforms in the power sector are also needed to rationalize energy pricing the multilayered and improve the capacity and reliability of the generation, transmission, and system of taxation) distribution system. Efficient intermediation to channel household savings into that impede markets infrastructure finance is critical to achieving investment targets in infrastructure. from functioning Mobilizing financing for public-private partnerships (PPPs) through innovative efficiently. structures and appropriate government support is needed to attract investors. The development of a vibrant manufacturing sector—especially small and medium-size enterprises—will require reforming labor laws, improving land access and management, cutting bureaucratic red tape, and better access to financing. As jobs are created, India’s youth will need skills and knowledge that are better tailored to the needs of a fast-growing economy. 33 Country Partnership Strategy for India: 2013–17 The capacity of India’s As the largest and most-populous country in the region, India is central railways, especially to many efforts toward regional economic integration and cooperation. for freight, will be Despite steady and unprecedented progress, South Asia remains one of expanded in an effort the least economically integrated regions in the world. Further integration to accommodate with neighbors in South Asia and beyond can contribute exponentially to increasing demand India realizing its 2030 growth potential, while also greatly benefiting other and to promote the countries in the region.17 Possible areas for increased regional collaboration use of rail for freight include management of common natural resources (most importantly water), transport, thereby transport, and power. Supporting the Government to help states converge and reducing India’s grow more evenly through improved market integration is one of the main carbon footprint. development objectives of the WBG strategy for India. Infrastructure remains a priority for the Government. The 12th Plan’s strategy is to develop a more balanced multimodal transport network that links the northeast and special-category states to the rest of the country. Where possible, public-private partnerships (PPPs) will be pursued to develop national highways and rural roads. The capacity of India’s railways, especially for freight, will be expanded in an effort to accommodate increasing demand and to promote the use of rail for freight transport, thereby reducing India’s carbon footprint. The Government will strive to improve asset management and increase efficiency by encouraging competition in the provision and maintenance of infrastructure and services. Higher emphasis will be placed 17 A World Bank study shows that both India and Bangladesh would gain from improve access. World Bank. 2012. Unlocking Bangladesh-India Trade: Emerging Potential and the Way Forward. 34 Country Partnership Strategy for India: 2013–17 on safety (including making transport safer for women), energy efficiency, The potential for environmental conservation, and social impacts. By the end of the 12th India to reap returns Plan, all villages will be connected to an all-weather road, most national of increased regional and state highways will be upgraded to a two-lane standard or better, and trade is great, as the flagship projects—the eastern and western freight corridors—will have shown by recent been completed. On energy, the Government’s priority is to ensure energy export growth. India’s availability, promote energy efficiency, and significantly expand and strengthen exports to its South the transmission network for electricity and oil and gas. The Plan envisions Asian neighbors increasing energy capacity by an additional 88,000 MW. To do this, sources increased from $4.6 of energy will have to be expanded, notably through the exploration of billion in FY2005 renewable energy (wind and solar) and the implementation of critical corrective to $11.7 billion in policies to improve the financial sustainability and efficiency of the system, FY2011. promoting increased investment in domestic hydrocarbon production and the implementation of critical corrective policies to improve the financial sustainability and efficiency of the system. The Government’s regional economic integration goal is focused on seizing opportunities for increased trade and investment in South Asia, but also in emerging East Asian economies. The potential for India to reap returns of increased regional trade is great, as shown by recent export growth. India’s exports to its South Asian neighbors increased from $4.6 billion in FY2005 to $11.7 billion in FY2011. Progress has been incremental. For example, in 1996 India granted MFN status to Pakistan, which was reciprocated in 2011, but still awaiting formalization and a September 2012 India-Pakistan agreement to reduce tariffs to no more than 5 percent and to remove all nontariff barriers by 2020. In the global arena, the Government aims to engage more proactively with the global community at the bilateral, regional, and multilateral levels. The Plan notes that energy security and the need to develop long-term and stable energy sources are key considerations of India’s engagement with the rest of the world. Outcome 1.1 Improved transport connectivity The WBG’s support for the transport sector will focus on the reform and development of railways, highways, and rural roads, and on improving road safety and ensuring asset sustainability. Engagement will be informed by lessons learned from the Bank’s support of ongoing transformative projects and in state-level interventions in Andhra Pradesh, Karnataka, Punjab and Tamil Nadu. The Bank’s contribution to rural connectivity will come mainly through its support for the Government’s flagship roads program, the Pradhan Mantri Gram Sadak Yojana (PMGSY),18 which now focuses on six low-income and special category states, as well as Punjab. Support is likely to evolve into a more broad-based engagement that aims to strengthen the overall rural road system for the expansion of all-season rural roads. Strengthening institutions, enhancing accountability, and building capacities among the various state and national highways agencies will be a strategic priority of the Bank. This will be accomplished through ongoing state highway improvement projects and 18 PMGSY highlights the importance that India’s Government gives to reducing disparities in physical access, encouraging economic and social development in rural areas, and adequately funding rural road maintenance. 35 Country Partnership Strategy for India: 2013–17 Through its proposed technical assistance to national highway agencies. The WBG will also look for transmission opportunities to support projects that focus on the integration of low-income investments in the states, as well as those supporting shifts to more efficient modes of transport, low-income states including ports. of Bihar and Uttar Pradesh and through Outcome 1.2 Improved inter-regional power transmission connectivity the Northeast Power Transmission Project, The WBG will support the Government in promoting financially the Bank will help sustainable access to electricity by addressing bottlenecks in improve overall generation, transmission, and distribution at both the state and electricity services national levels. It will support Government and private sector efforts to in states and regions (i) increase access to modern energy, particularly in low-income states; with the lowest access (ii) increase the availability of power to underpin growth while balancing levels in the country sustainability and climate change concerns; and (iii) strengthening institutions and significantly and financial sustainability in the sector. Three ongoing projects (Rampur increase the power Hydropower, Haryana Power, and Vishnugad Pipalkoti Hydroelectric) support exchange between the provision of sustainable energy by strengthening transmission and states and regions of investing in clean energy. Through its proposed transmission investments in the country. the low-income states of Bihar and Uttar Pradesh and through the Northeast Power Transmission Project, the Bank will help improve overall electricity services in states and regions with the lowest access levels in the country and significantly increase the power exchange between states and regions of the country. Technical support for rural feeder segregation will inform Government efforts to design a centrally sponsored scheme on improved rural power services. The WBG’s knowledge and advisory work will play a prominent role, especially technical assistance to strengthen institutional capacity to manage the planned five-fold increase in infrastructure investments, and improve service delivery. Outcome 1.3 Improved demand-driven skills for productive employment The WBG will contribute to the 12th Plan target of providing vocational training to 500 million workers by 2022. The ongoing Vocational Training and Improvement Project—the largest vocational training project in the world—will continue providing training to post-secondary and pre-employment–level youth. Assistance for implementing reforms and development of the technical vocational education and training sector in West Bengal will continue, with replication expected in other states. The Technical Education and Quality Improvement Project II (TEQIP-II), is helping the Government reform a large number of institutions. A multiyear programmatic analysis of skills will explore new models for PPPs in technical and vocational education. This work will feed into a multi- sectoral engagement, including IFC, to help India scale up its work on building skills for the new economy. Analytical work on financing, equity, quality, and governance in higher education at the national and state level are also being undertaken. Bank-supported livelihood projects at the state and national level focus on skills training for rural youth and connecting young people to jobs, often in small and medium-sized cities. IFC is partnering with the National Institute of Entrepreneurship and Small Business Development to develop and deliver a country-wide ‘training of trainers’ program to address the pressing lack of quality trainers. The program will establish a new standard of excellence for entrepreneurship and business skills 36 Country Partnership Strategy for India: 2013–17 training by improving skills and knowledge transfer from trainers to MSMEs. The program will IFC is also working with larger private sector firms to impart business skills to establish a new MSMEs in their supply chain. standard of excellence for entrepreneurship Outcome 1.4 Enhanced private investment in low-income states and business skills training by improving Enhancing private investment is important for WBG strategy and is skills and knowledge at the center of IFC’s engagement in India’s low-income states. IFC transfer from trainers investments will leverage these states’ strong growth rates, pent-up demand to MSMEs. IFC is also and natural resource advantages to address their many development working with larger challenges—massive poverty, weak investment climate, low FDI, and private sector firms to inadequate infrastructure. Low-income states have high economic potential, impart business skills which makes them attractive to private sector investors, but often weak to MSMEs in their business climate hinder significant levels of private investment. IFC’s advisory supply chain. service will help catalyze growth in low-income states by improving investment climate such as those highlighted in the Doing Business report, PPP regulatory frameworks and sector-specific policy reform. Two state-level engagements--in Odisha and Rajasthan--support Government efforts to improve the investment climate to increase private investment in the states. In terms of investments, IFC will invest from its own account and mobilization, in areas such as innovative renewable and green projects, processed food, logistics and infrastructure, agribusiness, and MSME finance and insurance. Support to the Government of Meghalaya will help improve access to finance to households, farmers, and micro and small businesses. Ongoing support to the Government of Bihar and local tourism investors will improve tourism in the Buddhist Circuit, which includes major Buddhist sites and pilgrimage destinations in India and Nepal, and generate increased revenue. 37 Country Partnership Strategy for India: 2013–17 The WBG will continue Outcome 1.5 Strengthened regional integration to support regional trade in power The WBG will promote regional integration, especially in (i) the integrated between India and management of natural resources and regional public goods (such as river Pakistan and India basins, ecosystems, and wildlife preserves); (ii) the pooling of power resources; and Nepal as well (iii) trade and transport regional facilitation; and (iv) business dialogue. In as inland water particular, the WBG will continue to support regional trade in power between transport between India and Pakistan and India and Nepal as well as inland water transport Bangladesh and India. between Bangladesh and India. Analytical work will underpin dialogue on critical regional issues. IFC will help facilitate trade between Bangladesh, India and Nepal by strengthening chambers of commerce and associations of truckers and freight forwarders and standardize and harmonize procedures and documentation, introduce risk management, automation, and create opportunities for regional peer-to-peer exchanges (through the South Asia Regional Integration in Trade and Investment Project). IFC will promote reforms to increase intra-regional and global FDI flows, financial infrastructure, trade finance, and South–South investments by helping to build partnerships between strong players in emerging economies. The Nepal-India Power Transmission and Trade Project (financed by IDA and IFC) finances construction of a cross-border transmission line to increase the trade of electricity between these two neighboring countries. MIGA may support critical cross-border infrastructure investments. 38 Country Partnership Strategy for India: 2013–17 Finally, the World Bank Group will focus on facilitating the exchange The WBG will provide of knowledge and experience in a more systematic manner, in the analytical support region and beyond, so that international good-practice examples can inform and non-lending India’s development while showcasing India’s development successes to the technical assistance rest of the world. The work will involve facilitating knowledge exchanges to state governments (particularly South–South) in which India is increasingly the knowledge and third-tier local provider. Three regional pieces of analytical work—on overcoming barriers governments, to trade and cooperation, commodity price transmission, and manufacturing especially local competitiveness—will be instrumental in sharing knowledge across the urban bodies, to countries in the region. IFC will provide sector-specific knowledge to Indian expand their revenue companies in sectors such as infrastructure, banking, and microfinance to bases. Labor laws help them better understand the opportunities and risks of investing in other that facilitate the emerging markets. movement of people to jobs, without Domestic market integration is a new area of focus under the CPS, and discrimination will expand to include analytical and technical assistance as well as based on location financing in three areas: taxation, procurement, and labor markets. The or industry, are successful implementation of the long-delayed Goods and Services Tax (GST) important. is central to Government efforts to integrate the domestic market. Building on the implementation of the GST, the WBG is ready to provide policy advice and facilitate knowledge exchange with countries, such as Brazil, that have been successful in tackling the same issue. On the fiscal front, the WBG will provide analytical support and non-lending technical assistance to state governments and third-tier local governments, especially local urban bodies, to expand their revenue bases. Labor laws that facilitate the movement of people to jobs, without discrimination based on location or industry, are important. And, as workers move across state boundaries and from villages to cities, the portability of social security benefits (made easier with the introduction of the unique identification number) will assume great importance. A multiyear study on growth, inclusion and global competitiveness will address issues related to the labor market, while parallel programs to support implementation of the national manufacturing policy and improvements in the business climate will drill deeper. Ongoing technical assistance to the planning commission on manufacturing competitiveness will help inform the national manufacturing policy and underpin possible state-level operations in the future. As the public sector is a major consumer of goods and services produced in the domestic economy, reform and standardization of the procurement system at the national and state levels are key measures to foster domestic market integration and competition. The World Bank will help develop public procurement certification courses and procurement-related management information systems, facilitate networking among public procurement resource institutions, and engagement with audit institutions to undertake procurement audits. 39 Country Partnership Strategy for India: 2013–17 Strategic engagement area 2 Transformation Accomplishing The faster a country urbanizes, the faster it grows—and, with the that acceleration right policies in place, the faster the same country can reduce poverty and will require a focus increase shared prosperity. An acceleration of India’s ongoing transformation on both rural and from a largely agrarian economy to one that depends on an ever-expanding urban development, manufacturing sector, and from a predominantly rural to an increasingly urban on improving the population, would significantly boost India’s potential for growth and poverty livability of cities reduction. Accomplishing that acceleration will require a focus on both rural and villages, on and urban development, on improving the livability of cities and villages, on creating more jobs creating more jobs in manufacturing and more off-farm jobs in rural India, and in manufacturing on improving agricultural productivity, especially among smallholders. and more off-farm jobs in rural India, Effective, flexible, and accommodating urban planning, land and on improving management, and land-use regulations are essential to addressing agricultural the urbanization challenge. Improving the investment climate to induce productivity, increased private sector investment (from domestic and foreign sources) and especially among improving access to credit will allow small and medium-size enterprises—an smallholders. important growth engine in India—to flourish. This transformation also calls for further empowering local governing bodies—Panchayat Raj institutions in rural areas and local urban bodies in cities across India—so that they are able to identify and respond to local needs and to plan long-term for a more 40 Country Partnership Strategy for India: 2013–17 systematic rural-urban transformation. If developed and managed well, cities Universalizing safe in India can be a source of greater efficiencies—resulting in more-efficient use drinking water and of natural resources and lower carbon intensity. sanitation remains a priority, as is By 2031, it is projected that 600 million people will live in India’s cities. ensuring that all Current and future needs and challenges of India’s cities and their burgeoning Indian cities are free populations, figure prominently in the 12th Plan. Government priorities of open defecation—a include increasing investment in new urban infrastructure (e.g., expanding contributor to the metro rail network and the bus rapid transit system); strengthening urban malnutrition, as well governance; strengthening human and organizational capacities; developing as a major public long-term, strategic urban planning capacities; addressing the needs of the health risk. urban poor and improving slums; and raising environmental sustainability. On urban transport, the Government’s goal is to increase the share of public transport to at least 50 percent of all motorized trips. Private, and often very expensive, urban transportation exacts a huge cost on the urban population, especially the very poor. Universalizing safe drinking water and sanitation remains a priority, as is ensuring that all Indian cities are free of open defecation—a contributor to malnutrition, as well as a major public health risk. The Government strives for 100 percent metering of water supply and 24-7 access where possible and feasible. The Jawaharlal Nehru National Urban Renewal Mission (JNNURM) remains the main vehicle for the Government’s urban development and reform. State governments also have their own urban development plans. The 12th Plan calls for a series of reforms at the national and state level, as well as interventions to strengthen the institutional framework. The Government recognizes the need for an equally strong focus on agricultural and rural development. Under the 12th Plan, agricultural productivity is targeted to grow by 4 percent annually, and irrigated areas are expected to increase from 90 million to 103 million hectares. Income opportunities in agriculture, which includes horticulture, animal husbandry and fisheries, are expected to expand, while simultaneously creating more off-farm employment. Strengthening the implementation of major centrally sponsored schemes that cover everything from rural employment and social security to rural sanitation and water supply is central to the Government’s rural development strategy. Environmental sustainability and the sound management of natural resources—air, water, forests, and biodiversity—is rapidly emerging as the next major development and policy challenge for India, and it is central to the 12th Plan. The Government and organized citizens recognize that sustaining a high annual growth rate of 8.2 percent under the 12th Plan and beyond will require placing environmental and resource management issues front and center in India’s development. The WBG’s focus on the rural-urban transformation—and particularly on urbanization—represents a significant shift in its strategy, and engagement in this area is expected to intensify over the CPS period and beyond. The strategy will focus on supporting the efforts of national, state, and city governments to improve the management and livability of second- tier (medium-sized) cities as well as larger metropolises. As 85 percent of the urban poor live in small and medium-size cities across India, efforts are 41 Country Partnership Strategy for India: 2013–17 The Bank is currently likely to contribute to the ambitious scenario’s poverty reduction target. The developing with the multi-sectoral engagement will focus on urban management and planning, Ministry of Housing infrastructure and service delivery, financing systems and frameworks, and and Urban Poverty capacity building at the national, state and city levels. Analytical work to inform Alleviation an urban sector policy and initiatives will supplement a growing operational Informal Settlements engagement. Improvement Project that will incentivize Outcome 2.1 Strengthened institutional capacity of urban government in situ upgrading of slums and thereby The WBG’s work will focus on (i) strengthening urban management, encourage private infrastructure, and service-delivery systems across the urban hierarchy; (ii) investment in in situ slum upgrading; and (iii) selective developments in metropolitan the incremental cities. The Bank is currently developing with the Ministry of Housing and improvement of the Urban Poverty Alleviation an Informal Settlements Improvement Project that existing housing will incentivize in situ upgrading of slums and thereby encourage private stock. investment in the incremental improvement of the existing housing stock. The project will aim to improve basic services (water, sanitation, sewage, electricity, paving, and street lighting), connect neighborhoods to trunk infrastructure, and mobilize community support and participation. IFC’s work on affordable housing—a relatively new focus of its engagement in India— entails collaborating with regulators, financial institutions, and developers to explore business models that will enable growth and profitability of the industry, including supporting governments with the structuring of housing projects on a PPP basis particularly in low income states. 42 Country Partnership Strategy for India: 2013–17 Supporting PPPs will be central to IFC’s urban work, particularly to address the Supporting the solid waste management challenges faced across most cities, as well as to help modernization of government improve its energy efficiency and climate change profiles through city bus services for example improved street lighting systems and increased renewable energy including improved generation. IFC will explore the use of new technologies to address challenges fuel efficiency, in India’s cities through: (i) information technology applications for enhancing rehabilitation of efficiency in the power, water, solid waste, and gas sectors; (ii) e-governance infrastructure, use software for public sector and SMEs; (iii) mobile payment and e-payment of new technology solutions; (iv) smart metering; and (v) e-learning systems and improve digital initiatives and inclusion to benefit more people. In the telecom and information technology technical assistance sectors, IFC will extend selective support to companies offering solutions for greater targeted at SMEs, banks, financial companies, and educational institutions. operational and Lastly, IFC will continue its dialogue with the Government on direct financing financial viability, for credit-worthy municipal entities through the WBG sub-national lending institutional and program.19 capacity development will be a key aspect Outcome 2.2 Improved urban transport services of the Bank’s urban transport strategy. Public transport in Indian cities is predominantly run by public sector transport monopolies and suffers from poor service quality, inefficient operations, deteriorating finances and dramatically declining mode shares. Supporting the modernization of city bus services including improved fuel efficiency, rehabilitation of infrastructure, use of new technology initiatives and technical assistance for greater operational and financial viability, institutional and capacity development will be a key aspect of the Bank’s urban transport strategy. The Global Environmental Facility’s Efficient and Sustainable City Bus Services Project currently under preparation underlies these principles of improved efficiency. Outcome 2.3 Improved access to water supply and sanitation services Making India’s cities more livable will require improvements in the reliability, financial and environmental sustainability, and affordability of water supply and sanitation services. Although more than 90 percent of the urban population has access to drinking water and more than 60 percent to basic sanitation, piped water is only available for a few hours per day and raw sewage often overflows into open drains. The already stressed water supply and sanitation delivery system will have to be revamped to respond to the urbanization challenge—an additional 250 million people will migrate to cities in the next 20 years. To improve service delivery, the WBG’s work will focus on strengthening governance and institutional arrangements for water supply and sanitation services; piloting service delivery models that are efficient, accountable, and customer- oriented (incorporating best practices from well-run public companies); and improving financial sustainability of providers. A successful 24-7 water supply pilot will be scaled up in three cities in Karnataka. IFC will help address efficiency and conservation issues in municipal, agricultural and industrial water. For example, a new program will focus on water-use efficiency in major 19 Financial capacity of urban local bodies, however, is comparatively very weak, with total revenue amount to less than 1 percent of the GDP (as compared to 6 percent in South Africa and over 7 percent in Brazil). 43 Country Partnership Strategy for India: 2013–17 The overall emphasis water-intensive commodities such as rice, and will also help private sector will be on innovative partners adopt water efficient technologies. Advisory and implementation approaches programs plan to support water audits, business systems diagnostics, and systems footprint assessments, risk filters, cost-effective water technology solutions strengthening. and benchmarking with industry good practices. Investment opportunities Strengthening in water-saving, harvesting and treatment technologies, service delivery and collective action improving operational efficiency will be also explored. Lastly, MIGA stands (especially ready to support investors into municipal services either directly or through among women) to local and foreign financial intermediaries. facilitate access to better economic Engagement in rural areas will include the Maharashtra Rural Water opportunities, and Supply and Sanitation Project using the new performance for results key services will instrument and a multistate Rural Water Supply and Sanitation (RWSS) remain a hallmark of project focused on low-income states. In addition to supporting the Bank engagement decentralization of programs and policies under ongoing RWSS projects, key in India’s rural strategic shifts under this CPS include: (i) piloting an array of management development. models for large or multi-village schemes; (ii) supporting sustainable RWSS programs by linking Gram Panchayats with higher levels of government and strengthening the capacity of Panchayati Raj institutions; (iii) integrating water supply and sanitation interventions into catchment-protection schemes, household and village environmental sanitation programs, solid waste management, and health and hygiene awareness promotion; (iv) piloting the use of PPP models for efficient and accountable service provision, and (v) institutionalizing and scaling up proven policies and strategies demonstrated through various Bank-supported projects. Outcome 2.4 Increased agricultural productivity The WBG will engage across five operational business lines: (i) inclusive agricultural and rural growth; (ii) technology development and low-carbon and climate-resilient agriculture; (iii) food and nutrition security; (iv) agricultural markets; and (v) water and natural resources management; Engagement will be underpinned by increasingly deeper and broader analytical work, guided largely by findings from the on-going India agriculture productivity study. The overall emphasis will be on innovative approaches and systems strengthening. Strengthening collective action (especially among women) to facilitate access to better economic opportunities, and key services will remain a hallmark of Bank engagement in India’s rural development. With 65 percent of India’s agriculture relying solely on rainfall, improving the productivity of country’s rain-fed agriculture remains a challenge. To this end, the Bank will support the National Integrated Watershed Management Program in eight states. On irrigated water, the Bank’s strategy is to focus on increasing agricultural water use efficiency through support to ongoing implementation of state level efforts in Andhra Pradesh, Maharashtra, Madhya Pradesh and Uttar Pradesh. More emphasis will be placed on strengthening water-related institutions, and building the state and national capacity for the management of irrigation systems and decentralized management of irrigation tanks. 44 Country Partnership Strategy for India: 2013–17 Ongoing implementation of state-level agricultural competitiveness A new approach projects in Assam, Rajasthan and Maharashtra are instrumental in to develop the translating increased demand for agriculture products into improved agriculture value farmers’ income. A new approach to develop the agriculture value chain chain using a PPP using a PPP mode will be explored as part of the Ministry of Agriculture’s Million mode will be explored Farmer Initiative. IFC advisory services will work towards promoting sustainable as part of the Ministry and inclusive economic growth in the agribusiness sector. To build farmers’ of Agriculture’s capacity, IFC will prioritize demonstration projects in the value chains of private Million Farmer sector players in key commodities. IFC supported the government of Punjab Initiative. in pioneering the first grain silos infrastructure on a PPP basis and plans to further support the government’s food security agenda through the scaling up of the Food Corporation of India’s silos PPP program across eight to ten states. IFC will also provide patient capital to agribusinesses, strengthen agriculture products, logistics infrastructure (e.g. warehousing), and promote best practices in sustainable farming. The WBG will help India develop and disseminate agricultural technology. New methods of disseminating technology to the farming community, with a greater emphasis on women, will be explored. This may require forms of farmer collective action as well as outsourcing of publicly funded agricultural advisory services to private sector providers. Analytical work will be undertaken on the likely impact of climate change on India agriculture. This will support India’s efforts at preparing and implementing approaches towards achieving greater agriculture resilience towards climate 45 Country Partnership Strategy for India: 2013–17 On pollution change (adaptation) as well as towards reducing the carbon growth intensity of management, Bank’s agricultural growth (power consumption and fertilizer use (mitigation)). ongoing Ganga Basin Project will help Outcome 2.5 Improved environmental protection and biodiversity build the capacity of conservation the National Ganga River Basin Authority The WBG will focus on developing effective systems and institutions to pilot wastewater to enable more efficient environment management and reduction collection and of resource degradation. This would include interventions in three key treatment, and adopt areas: (i) coastal management; (ii) industrial pollution management; and (iii) river conservation natural resources (particularly water), ecosystems and biodiversity. Efforts to measures. integrate sustainability considerations and lower carbon approaches in project design across sectors, but especially in infrastructure, will intensify. On coastal management, the Bank will support the simultaneous economic development of India’s extensive coast line and preservation of its fragile ecosystems with pilots in Gujarat, Odisha, and West Bengal. The new coastal disaster risk reduction project in Puducherry and Tamil Nadu will also pilot improvements to marine fisheries, particularly in inshore coastal areas. On pollution management, Bank’s ongoing Ganga Basin Project will help build the capacity of the National Ganga River Basin Authority to pilot wastewater collection and treatment, and adopt river conservation measures. The Capacity Building for Industrial Pollution project is helping deploy technologies and management practices for cleaning up toxic legacy sites. Outcome 2.6 Reduced Greenhouse Gas emissions through energy efficiency and renewable energy production The WBG will continue to promote low-carbon growth. The Bank will support Himachal Pradesh’s inclusive green growth strategy through a series of development policy loans—one of which is expected to be funded through the Clean Technology Fund. In line with its Climate business strategic priority, IFC investments will continue to support private companies to move to lower carbon growth paths through renewable energy, and energy and resource efficiency In recent years, IFC’s innovative PPP advisory work in India has supported India’s first solar roof-top project (Gujarat) and the first street lighting energy efficiency project in the low income states of Rajasthan and Odisha. IFC has also partnered with financial institutions to expand the availability of capital for renewable energy and energy financing. Through its Clean Technology Innovation Fund, IFC will be able to invest in clean-tech companies, including seed investments in higher risk sectors and locations. On the advisory front, IFC will help financial institutions to expand their focus on clean energy financing by promoting improved access to finance for low- income households, strengthening microfinance networks, and introducing financial products that enable access to clean energy, water and sanitation products. Green cities can also be a source of efficiencies. A series of CTF-funded projects in India aim to improve energy efficiency of equipment, buildings, and industry which improve cities. The proposed projects aim to reduce the growth of emissions from energy consumption in the country. Carbon finance 46 Country Partnership Strategy for India: 2013–17 operation as well as market-based energy efficiency projects such as the Super The South Asia Energy-efficiency Equipment Program (SEEP) support Government efforts Infrastructure to scale up energy efficient programs. The SEEP will create implementation Facility, which structures and undertake a pilot to introduce higher efficiency appliances, helps governments using market-based approaches. The main aim of the project is to reduce design projects that energy consumption associated with the rapidly growing number of consumer attract private sector electrical appliances over the next decade. Under SEEP sales-based incentives participation and for manufacturers to introduce and promote appliances that are 50 percent investments, will more efficient than currently available alternatives will be provided. The initial focus on renewable focus will be on ceiling fans—the second-largest selling appliance in India, with energy, as well annual sales of more than 30 million units, increasing at 6-9 percent per year. as water, health This program will help create the systems and structures that can be used for and agribusiness, other appliances and other applications, promoting private sector-led efficiency especially in the low- improvements. Based on an ESCO (energy service company) model, IFC’s income and Northeast municipal level energy efficient street lighting projects in two cities aims to states. deepen the market and demonstrate successful models designed city-wide. IFC’s support for the power sector will be guided by its overall strategic focus on climate change and GHG emission reductions. To date, IFC has made its largest number of renewables investments in India, including “first-of-their-type” investments in companies with limited renewable energy experience. This will be done by providing them with targeted equity investments and debt lines, sharing global expertise, developing suitable E&S standards, and advisory support. Future engagements could support: (i) innovative clean technology investments with potential for demonstration impact and/or scaling up; (ii) financial sustainability; (iii) cross-border and South- South investments (potentially partnering with MIGA); (iv) renewable energy, new business models and new technologies; (v) gas-powered generation; and (vi) reduction of transmission and distribution losses through efficiency-linked investments. The South Asia Infrastructure Facility, which helps governments design projects that attract private sector participation and investments, will focus on renewable energy, as well as water, health and agribusiness, especially in the low-income and Northeast states. In the oil and gas sector, IFC will continue to provide support for the development of: (i) domestic hydrocarbon resources to help lower the dependence on imports; (ii) gas transmission to facilitate end-user access to gas; and (iii) capacity enhancement for domestic oil and gas companies. 47 Country Partnership Strategy for India: 2013–17 Strategic engagement area 3 Inclusion Economic integration Inclusive growth is a key priority for the Government, as detailed in and rural-urban the 12th Five-Year Plan. Ensuring that everyone reaps the benefits of faster transformation can growth, regardless of social grouping, age, gender, or place of residence benefit a large share will require significant improvements in education, health (notably progress of India’s population, toward universal health coverage), access to water and electrical power, and but only if there is the creation of meaningful employment and livelihoods opportunities. The a stronger focus on Government’s 13 large, centrally sponsored schemes for inclusiveness— human development covering rural and agricultural development, health and nutrition, education, and on policies that power, water, and urban development—will have to be reformed to drastically help make growth improve implementation performance, reduce duplication, create convergence, inclusive. and most important, to improve development outcomes. Economic integration and rural-urban transformation can benefit a large share of India’s population, but only if there is a stronger focus on human development and on policies that help make growth inclusive. For example, a growth strategy that focuses on labor-intensive sectors, rather than on skill- and capital-intensive ones, and on the development of small and medium-size enterprises will help create productive employment opportunities for India’s poor people and make growth more inclusive. 48 Country Partnership Strategy for India: 2013–17 India’s weak health system and poor nutritional outcomes undermine Providing modern its competitiveness. The growing burden of non-communicable diseases energy services for increases disability among the working-age population; malnutrition reduces lighting and cooking lifetime productivity; unmanaged health care costs displace more-productive is widely recognized investments by the state and by households; and high fertility rates keep as an important step women out of the workforce. The main health-related target of the 12th to ensure energy Five-Year Plan is greatly reduced rates of maternal and child mortality. Other access, especially necessary changes include improving delivery systems by strengthening in the rural areas. accountability, providing regulation and oversight of private providers of health Existing activities will care, and ensuring insurance coverage for more people, especially the very support replicable poor. and sustainable business models for Outcome 3.1 Improved access to electricity off-grid generation and supply models Despite increasing dependency on commercial fuels, more than 60 in lagging states. The percent of Indian households depend on traditional sources of energy— ongoing India Power fuel wood, crop residue, biomass, and animal waste. Providing modern energy Sector Diagnostic services for lighting and cooking is thus widely recognized as an important will review progress step to ensure energy access, especially in the rural areas. Existing activities will on access to power support replicable and sustainable business models for off-grid generation and over the last decade, supply models in lagging states. The ongoing India Power Sector Diagnostic including assess will review progress on access to power over the last decade, including an why household assessment of why household electrification lags behind village electrification, electrification lags and the implementation and financial barriers to executing rural-electrification behind village projects. The study will also provide a detailed examination of the consumption electrification, and subsidies given to India’s domestic consumers (who represent 25 percent of the implementation total electricity consumption) through tariffs, and focus on subsidy targeting and financial barriers and cost (in terms of fiscal burden). The potential for state-level engagements to executing rural- in Uttar Pradesh and Bihar to develop business models of generation that electrification connect very poor areas to off-grid power will be explored. IFC is undertaking projects. a partnership with the governments of US and Italy, the Lighting Asia’s India program, which was launched in February 2012. This program is expected to provide safe, clean and affordable off-grid lighting to two million people in rural India by December 2015. IFC is also supporting SEWA to promote usage of solar lanterns and energy efficient cook stoves; these are key livelihood tools for rural households and increase their productivity in their occupations, in addition to mitigating climate change. Outcome 3.2 Strengthened public and private health-delivery systems A larger share of interventions in the health sector will be at the state level and focus on strengthening institutions and accountability, developing local systems and capacities, and addressing government and market failures. The ongoing Uttar Pradesh Health System Project aims to strengthen planning, human resource management, monitoring, supply chain management, quality enhancement, and asset management to enable better service delivery for the entire population of Uttar Pradesh—one of the poorest states in the country. The project demonstrates the potential for Bank support to raise the impact of public and private health expenditures 49 Country Partnership Strategy for India: 2013–17 The objective of and defines a strategy for future state-level lending. A joint IFC-Bank initiative WBG engagement (Health in India, box 6.1) will focus on improving poor people’s access to is to address issues quality health care and reducing out-of-pocket expenditures in two low- constraining the income states. IFC is pursuing both investment and advisory projects in the development of health-care industry, with investments supporting the expansion of private accessible and hospital chains in the country. It focuses on niche areas such as medical affordable health instruments and devices, vaccines, biotechnology products, and care facilities, generic drugs. including access to capital for healthcare The objective of WBG engagement is to address issues constraining the organizations, limited development of accessible and affordable health care facilities, including access tertiary healthcare to capital for healthcare organizations, limited tertiary healthcare facilities facilities outside of outside of Tier I cities, a shortage of human resources with healthcare skills, Tier I cities, a shortage lesser access and awareness about medical insurance, limited adoption of of human resources quality programs and standard protocols. An innovative IFC advisory project in with healthcare skills, Bihar is supporting automation of Government-to-Person payments to enhance lesser access and efficiency of health workers and doctors by 10-15 percent. Once implemented, awareness about the project could be replicated across India. IFC is also assisting states to plan medical insurance, and prioritize state-wide programmatic initiatives through PPPs in the health limited adoption of sector, particularly in the areas of payment insurance, health networks by quality programs and clubbing primary, secondary and tertiary services, and diagnostic platforms for standard protocols. state-wide roll out. 50 Country Partnership Strategy for India: 2013–17 Box 6.1. Health in India The WBG is working to increase poor people’s access to high-quality health care and to reduce out-of-pocket expenditures in two low-income states. This effort, which exemplifies the approach recently adopted by the joint IFC–World Bank management team, recognizes the critical role that the private sector plays in health care in India. While the joint engagement began with exploring opportunities to work together, it has since evolved into a more systematic approach that is identified upfront, planned and sequenced over a period of time, drawing on respective advantages of each institution, with clear expected results. Examples of current engagement include supporting the state of Meghalaya in implementing a health insurance scheme. The states selected for further action will be low-income states in which the World Bank Group is already engaged. The building blocks for influencing health outcomes include: service delivery; financing; governance; medical products and technologies; the health workforce; and information systems and analytics. Working with the public and private sectors, the intermediate outcomes of Health in India focus on improving access, affordability, equity, and quality, with the overall goal of improving health-related outcomes. The program’s joint business plan identifies priorities based on a three-dimensional framework: impact, feasibility, and expected timelines. Its scope is driven by client delivery capacity and resources. The strengths of each institution have been clearly identified and a list of proposed joint and complementary interventions drawn up, with appropriate time horizons and results indicators (e.g., two pilot PPP transactions, accreditation of ten public and five private hospitals, reductions in out-of-pocket expenditures by income and caste levels, and so on). Outcome 3.3 Improved child nutrition delivery systems The Bank-supported National Rural The Bank will—through lending, analytical work and technical Livelihoods Mission assistance—support the national government and states in aims to contribute strengthening the nutrition policy framework as well as systems and to India’s efforts to capacities to improve nutrition. Although restructuring and strengthening combat high rates the ICDS will be a prime focus, Bank efforts will also include support for of malnutrition by multisectoral nutrition actions, both through Government programs and setting up a network through Bank operations in different sectors. Examples include the Bank’s of nutrition centers ongoing support for the National Rural Drinking Water Program and a series of that cater to pregnant state-level rural water supply and sanitation projects, including a new operation women and children in low-income states. Improved provision of drinkable water and particularly up to five years of age sanitation in rural (as well as urban) areas is likely to have a large impact on and by ensuring that health and nutrition. The Bank-supported National Rural Livelihoods Mission households get access aims to contribute to India’s efforts to combat high rates of malnutrition by to food. setting up a network of nutrition centers that cater to pregnant women and children up to five years of age and by ensuring that households get access to food. Outcome 3.4 Improved access and quality of education The Bank will support Government efforts to improve education mainly at the secondary and tertiary levels, with a more pronounced focus on quality. Lessons learned from the Sarva Shiksha Abhiyan Education- for-All Program will inform this engagement. At the secondary level, the implementation of the Rastriya Madhyamik Shiksha Abhiyan will support Government efforts to universalize secondary education by 2017. With financial and managerial contributions, the Bank will help expand access to, and strengthen delivery systems for, quality secondary education, with an eye to 51 Country Partnership Strategy for India: 2013–17 A final round of improving on labor-market entry for young adults. Greater attention will be paid support to the to teacher training, performance, and accountability—a prime determinant Sarva Shiksha of quality. Using new ICT technologies, the Bihar Teacher Education Project Abhiyan program will help pilot innovative approaches to teacher education and professional from the Bank and development. A final round of support to the Sarva Shiksha Abhiyan program its development from the Bank and its development partners will help improve educational partners will help quality and student learning outcomes at the primary level, incorporating improve educational greater involvement of the private sector. IFC’s education sector strategy quality and student supports the “skills for competitiveness” agenda, especially education projects learning outcomes with strategic clients—predominantly larger, for-profit providers with potential at the primary level, to grow and operate in several markets move down-market to reach lower- incorporating greater income households, create centers of excellence, and provide employment involvement of the opportunities for skilled professionals. One of the innovations supported by IFC private sector. to open up new markets for the private sector is the implementation of PPPs for a medical college—500 bed teaching and 100 seat medical—in Meghalaya which also has a large replication potential. Outcome 3.5 Increased coverage of social protection programs More than 90 percent of the labor force is in the informal sector, with inadequate mechanisms to absorb and manage economic risks and shocks. The Bank will work to enhance social protection coverage for this population, including for health and disability insurance, job transition insurance, and protection in old age. Because many programs do not reach all of their intended beneficiaries, with significant variation, particularly in low- income states, the Bank will work with states to expand coverage. Increased use 52 Country Partnership Strategy for India: 2013–17 Box 6.2. Addressing gender issues Various social and economic indicators in India show significant and persistent gender inequalities. Beginning with the child sex ratio and progressing through secondary schooling, labor market participation, marriage, fertility and maternal mortality, Indian women and girls fare considerably worse than men and boys. The recent brutal gang rape and death of a 23 year old student in Delhi has raised international attention to the pervasive and extreme nature of gender-based violence in India. The Bank Group continues to address gender issues across its lending, investment and knowledge activities. The National Rural Livelihoods Project mostly targets women, and gender has been included in work on suburban transport, adaptation to climate change, employment, and health. The design of the Coastal Zone Management project, for example, was informed by an analysis of the issues faced by women and men in fishing communities and other coastal dwellers. Knowledge work included a study on social exclusion, which examined the unique disadvantages faced by tribal and scheduled caste women. Work on gender inequalities in labor outcomes, and access to and use of infrastructure and services is also ongoing. The Bank will also strengthen its gender-based M&E. IFC’s support to microfinance institutions predominantly benefits women, who account for 90 percent of borrowers. IFC’s work on Government-to-Person (G2P) payment projects improve women’s access to healthcare services and individualized payment services through direct money transfers to their accounts. IFC’s support to the SEWA Bank – owned and operated by women for the welfare of self-employed women—enabled it to expand its operations and new products. IFC also aims to work with private sector banks to develop and launch financial schemes targeting women owned businesses. The World Bank Group is adding new gender initiatives to its operations, including in the micro, small and medium enterprise sector. But much more can be done by the Bank to engender its investments and empower women economically, socially, and in government. Under this CPS, more emphasis will be placed on two “inclusion” priorities: (i) reducing gender disparities in labor force outcomes; and ii) strengthening women’s leadership in local government. On female labor force participation much of the focus will be on skills development and higher education. Issues related to gender-based violence will be addressed through regional work as well as through collaboration with development partners who have extensive experience and knowledge in this area. The Bank will expand its analytical work on gender equality, most importantly by preparing the India Economic Development Report (InGender) in FY2013, as a follow on to the 2012 World Development Report on Gender Equality and Development. Findings from this gender analysis will be instrumental in strengthening the Bank’s work on gender issues during this CPS and beyond and will support the Government of India’s National Mission for the Empowerment of Women in its analysis of the gender impacts of government programs. of ICTs in program delivery and management will form a cornerstone of this To accelerate India’s work, together with capacity building and enhancement of human resources efforts toward at local levels. An example of this approach is the Bihar Integrated Social inclusive rural Protection Project, which aims to modernize service standards and operational growth, the Bank will processes in order to deliver better services to more people, while also reducing assist national and duplication, encouraging the development of harmonized procedures, and state authorities in introducing transparency. Ongoing NLTA supports the Government’s efforts implementing rural- to covert many in-kind subsidies and support programs to cash assistance livelihood projects through it new Direct Benefits Transfer initiative. across 16 states under the National Outcome 3.6 Enhanced rural-livelihood opportunities Rural Livelihood Project (NRLP) as To accelerate India’s efforts toward inclusive rural growth, the Bank will assist well as ongoing state national and state authorities in implementing rural-livelihood projects projects in Bihar, across 16 states under the National Rural Livelihood Project (NRLP) as well Madhya Pradesh, as ongoing state projects in Bihar, Madhya Pradesh, Rajasthan, Tamil Nadu, Rajasthan, Tamil and four Northeastern states. NRLP and state-level interventions (with some Nadu, and four variation across states) entail a three-pronged approach: (i) improving existing Northeastern states. livelihoods (working with farmers to help them diversify products, lower cost of production, and identify stable markets for their goods); (ii) identifying self- employment opportunities and providing both access to credit and technical assistance for business development; and (iii) developing skills that are better 53 Country Partnership Strategy for India: 2013–17 The Bank will matched to the needs of the market. Women are the main beneficiaries of the help microfinance projects, a good example of the WBG’s emphasis on gender in India (box 6.2). institutions integrate Livelihoods will continue to be a main source of off-farm job creation in rural responsible India. microfinance principles into their Outcome 3.7 Increased access to financial services work and develop new financial The WBG will promote integrated approaches to financial inclusion products for the by facilitating access to credit and other financial services to farmers poor such as micro- and households. Two ongoing lending operations (rural credit coops and pensions and micro- scaling up of sustainable and responsible microfinance) and two planned health insurance. operations (low-income housing finance and agriculture insurance) will be central to the Bank’s response in this area. The low-income housing finance project will provide informal housing finance for people without documented income and property rights, while the agricultural insurance project will ensure that a greater number of farmers have crop insurance. The Bank will help microfinance institutions integrate responsible microfinance principles into their work and develop new financial products for the poor such as micro-pensions and micro-health insurance. The rural livelihood programs described in the previous paragraph will continue their focus on expanding poor households’ access investment and savings. IFC’s key objective will be to improve the depth and quality of financial services through: (i) financial product diversification; (ii) responsible finance i.e. promoting financial awareness among clients and transparent reporting by financial institutions; and (iii) supporting delivery channels using new technology and agents. New approaches to delivery of financial services will 54 Country Partnership Strategy for India: 2013–17 be key in coming years to expand the last mile reach. IFC has already begun The National Cyclone work in this regard with Government-to-Person payments and will continue Risk Mitigation to work on innovation in payments systems, alternative delivery channels, Project helps remittances, and government payments. strengthen the capacity of state Outcome 3.8 Enhanced disaster-risk management system disaster-management agencies to mitigate The Bank’s work in this area has two strands: (i) helping build institutional the impact of and capacity to prepare for and manage the impact of natural disasters and (ii) respond to cyclones helping people protect themselves from natural disasters and recover quickly in vulnerable coastal from them. The National Cyclone Risk Mitigation Project helps strengthen states. the capacity of state disaster-management agencies to mitigate the impact of and respond to cyclones in vulnerable coastal states. The second phase of the project will focus on Gujarat, Kerala, Maharashtra, and West Bengal. Technical assistance helps build Government capacity to conduct risk assessments for geophysical hazards and vulnerabilities, establish building and planning standards, and pilot innovative approaches to risk mitigation. To mitigate risks of and vulnerability to natural disasters, especially in coastal areas, the Bank focuses on access to emergency shelter and on evacuation and protection against wind storms, flooding, and storm surges in high-risk areas. 55 Country Partnership Strategy for India: 2013–17 7. Implementing the WBG Country Partnership Strategy Guiding principles of engagement In addition to India’s 12th Five-Year Plan, the World Bank’s engagement is guided by the Government’s “Innovation Impulse with Investment” approach, which lays out the Government’s vision of how best to use the financing and expertise of multilateral institutions to address India’s development challenges. Support should be focused on projects that transform and modernize policies and institutions, leverage resources, and pilot new and innovative development approaches. Special emphasis will be placed on multi-sectoral projects and programs, as well as on creating synergies with existing Government programs across sectors. Although access to financing remains important to India’s development, the services that come with that financing are particularly valued. Those services include the transfer of knowledge and international good practices, guidance on reforming processes and systems, and the building of capacity for improved service delivery. These principles will be applied jointly by the Government and the World Bank to manage the program described in this CPS. 56 Country Partnership Strategy for India: 2013–17 The Government’s approach to working with multilaterals calls for The approach for a rebalancing of the World Bank portfolio toward more state-level engaging low-income activities, particularly in low-income and special category states (table and special category 7.1). Overall, the aim of that rebalancing will be to raise the share of the Bank’s states will build commitments devoted to direct financing of state projects to 60 percent, of on lessons learned which half (30 percent of total lending) will go to low-income and special from successes and category states. Under the previous CAS, 18 percent of the Bank’s total lending failures over the last went to these states.20 Under this CPS, the approach for engaging low-income four years. Initial and special category states will build on lessons learned from successes and engagement will failures over the last four years. Initial engagement will include holding high- include holding level multi-sectoral discussions at the state level, together with the IFC, to high-level multi- identify synergies among programs and the mix of instruments that best suits sectoral discussions the particular circumstances of each state. Specific activities will build on the successful approach already adopted in Bihar, which combines extensive at the state level, capacity building, technical assistance, and analytical work that underpins together with the IFC, lending operations. Past experience also shows the relevance of local knowledge, to identify synergies particularly in the context of state-level political economy. among programs and the mix of IFC is also intensifying its program in low-incomes states. Its strategy aims instruments that best to ensure that people at the “base of the pyramid” gain greater access to finance, suits the particular infrastructure, and markets, while working to formalize the private sector in circumstances of these states. IFC is in the process of expanding its program in Bihar, Odisha, and each state. Past Rajasthan by increasing investments and improving business-climate reforms experience also (with a special emphasis on small and medium-size enterprises), enhancing shows the relevance certainty and transparency, and reducing business risks. Twenty-two percent of all of local knowledge, investments and 31 percent of all projects in India were in LISs in FY2009-13YTD. particularly in the The share of IFC advisory services in LISs tripled from 21 percent in FY2009 to 66 context of state-level percent as of February FY2013. Currently, 44 out of 66 advisory projects in India political economy. involve at least one low-income state. By the end of this CPS period, IFC aims to invest approximately $2.3 billion, and facilitate another $1.4 billion in private investment in low-income states. Table 7.1. Low-income and special category states (US$) Low-income States Special Category States Population % Poor GSDP per Population % Poor GSDP per (mn) capita (mn) capita Bihar 103.8 53.5 294 Assam 31.2 37.9 536 Chhattisgarh 25.5 48.7 695 Himachal Pradesh 6.9 9.5 1,267 Jharkhand 33.0 39.1 589 Manipur 2.7 47.1 569 Madhya Pradesh 72.6 36.7 555 Meghalaya 3.0 17.1 866 Odisha 41.9 37.0 676 Mizoram 1.1 21.1 883 Rajasthan 68.6 24.8 666 Sikkim 0.6 13.1 1,715 Uttar Pradesh 199.6 37.7 436 Uttarakhand 10.1 18.0 1,233 Total 545.1 39.5 494 Total 55.5 29.5 792 Notes: GSDP PC has been converted from INR to USD using the period average exchange rate. Total for population weighted average of the group. Total % of poor is the HCR for the group. Special category states are mostly northern mountainous states, sparsely populated, and those with high transport costs leading to high delivery cost of public services. (as defined in the 13th Finance Commission). IFC also includes West Bengal, but excludes Himachal Pradesh and Uttarakhand. Sources: Census 2011, Planning Commission, poverty figures 2009-10, CSO GSDP, 2010-11, MF-IFS exchange rate 20 Low-income states and special category states also benefit from IDA/IBRD support to multistate projects and centrally sponsored schemes. 57 Country Partnership Strategy for India: 2013–17 Sharing knowledge Lending to more advanced states will predominantly focus on activities and international that are innovative and transformative. Projects in more advanced good practices states can test second-generation approaches, which then can be applied can help leverage to low-income states that often have limited capacity. For example, the pilot public financing by Beneficiary Verification System for health services, which produces timely improving design, data, is serving more than 3,000 beneficiaries in Karnataka and may now be implementation, replicated in the low-income state of Uttar Pradesh. IFC, having led many and monitoring on innovative renewable-energy investments in India, will promote the replication a national scale. of its solar rooftop pilot in Gandhinagar in five additional cities in Gujarat and The core concept develop solar policy recommendations to engage other state governments. in World Bank support for centrally Support for centrally sponsored schemes and national projects will sponsored schemes focus on capacity and institution building. Sharing knowledge and will be to support international good practices can help leverage public financing by improving the Government design, implementation, and monitoring on a national scale. The core concept in scaling up in World Bank support for centrally sponsored schemes will be to support the successful state-level Government in scaling up successful state-level interventions into national interventions into programs. The World Bank has played an important role in such efforts; in the national programs. process, it has learned that success is not always guaranteed. Support for the Sarva Shiksha Abhiyan Education-for-All Program, for example, has shown that successful scaling-up requires significant upfront inputs into improving management and fiduciary systems, building national institutions, careful supervision, and adjustments along the way. Increasingly, projects will focus on helping states implement programs supported by central schemes. The complex challenges of bringing development solutions to national scale in a large and diverse country like India require a learning partnership. Given the size, diversity and magnitude of India’s development challenges, selectivity principles are central to World Bank Group engagement under this CPS. Selectivity in the India context is primarily about the “where” and “how” of WBG engagement, the former guided by the Government’s “Innovation Impulse with Investment” approach and the latter by management and staff’s understanding that better collaboration across the WBG and sectors is likely to result in improved development outcomes. Unlike previous CAS periods, country-led selectivity principles are being applied more systematically upstream by Government, and internally by the India management team. Such a concerted effort is needed to intensify engagement in low- income and special category states. Selectivity principles will also be applied to IFC’s engagement in low-income states. IFC will aim to support projects/programs that offer scope for scalability. For example, alongside a growing number of business and development partners, IFC is supporting inclusive business models to expand access to goods, services, and livelihood opportunities for those at the “base of the pyramid” in commercially viable and scalable ways. Such models have huge potential for scale up, and contribute to the goals of reducing poverty and boosting shared prosperity. 58 Country Partnership Strategy for India: 2013–17 Lessons from country strategy 2009-12 The FY2009-12 CAS Completion Report found that direct The FY2009–12 CAS Completion Report (CASCR) drew implications and lending to low-income highlighted recommendations for this CPS21. First, India’s complex and dynamic and special category development environment demands a full and integrated toolkit of the WBG’s states requires analytic, advisory, convening, and financial instruments. There is ample scope long-term support for proactive management of knowledge work, including project-embedded for capacity and knowledge and impact evaluations, to ensure continuous innovation and institution building learning and to fully integrate and build positive interactions between and underscores the knowledge products and financing. This includes not only bringing global importance of local best practices to India, but pollinating Indian expertise through South–South knowledge as well knowledge exchange. as analytical and advisory support. Second, the synergy between state and national interventions can make significant contributions to enhanced leverage and enhance the impact of Bank-supported activities. For example, experience gained at the state level (e.g., in programs in education and rural livelihoods) can provide valuable design inputs, increasing the relevance of national schemes to varying state circumstances while helping to strengthen management systems at both the state and national levels. However, the CASCR also found that direct lending to low-income and special category states requires long-term support for capacity and institution building and underscores the importance of local knowledge as well as analytic and advisory support. Moreover, replicating successful state projects at the national level is more than just scaling up: Upgrading or creating new institutions and fiduciary systems at the national level takes time as well as willingness to learn and adapt. Third, the CASCR identified two collaboration challenges that must be addressed in the CPS. First, although the need for multi-sector approaches is increasingly important if the WBG is to help India make inroads into key challenges (e.g., urban, nutrition, water resources), multi-sector activities fell short under the FY2009–12 CAS. Second, despite recent improvements, collaboration between IBRD, IDA, IFC, and MIGA will have to be deepened if the potential impact of WBG efforts is to be fully realized. Such collaboration can yield most when all components of the WBG pursue common strategic objectives (e.g., a joint approach in a low-income state or on a particular issue, such as increased investment in climate-change adaptation). Effective collaboration should reflect each institution’s relative operational strengths, thereby producing a result greater than what each institution could achieve independently. PPPs are one area in which experience under the FY2009–12 CAS demonstrated clearly differing institutional strengths, with IFC’s transaction and business climate experience complementing the policy orientation of the World Bank. Given India’s own extensive experience with PPPs, this is a promising area for enhanced collaboration. 21 The full FY2009-12 CAS Completion Report is available online at: www.worldbank.org/en/country/india. 59 Country Partnership Strategy for India: 2013–17 The current IBRD/IDA portfolio includes Current WBG portfolio net commitments of The CPS builds on a large current portfolio, which will be the main $23.7 billion across 78 source of development results under this CPS. The current IBRD/IDA projects. At the end portfolio includes net commitments of $23.7 billion across 78 projects. Of that of January 2013, IFC’s amount, $16.7 billion is undisbursed, reflecting a relatively young portfolio committed portfolio (38 percent of the total undisbursed amount is for projects approved by the contained 219 Board in the last two years). At the end of January 2013, IFC’s committed projects amounting portfolio contained 219 projects amounting to $4.8 billion, including $564 to $4.8 billion, million syndications. MIGA has no existing exposure in India, but may support including $564 investments into critical areas during the CPS period through the provision million syndications. of credit enhancement. Portfolio performance has varied. The growth of MIGA has no the portfolio in recent years is reflected in the portfolio performance as existing exposure measured by standard metrics. The average portfolio age has gone down in India, but may with the attendant impact on the portfolio disbursement ratio. The IDA/IBRD support investments disbursement ratio22 dropped in FY2012 to 13 percent after peaking at 27.6 into critical areas percent in FY2010, reflecting the retirement of well-disbursing projects and during the CPS the inclusion of new projects into the portfolio. Disbursements are generally period through the expected to be low in the first two years, while project implementation is being provision of credit launched. At the same time—and in some cases—the World Bank may have enhancement. underestimated the implementation challenges of large national and multi- state projects. Lessons from implementation show that starting with smaller initial commitments to each program might be better. Experience also suggests the wisdom of taking earlier action to readjust, restructure, “right-size,” or cancel operations that are not performing well. Teams must be realistic, and willing to change course early on in project implementation. During the last CAS period, IFC delivered a strong program. During FY2009–12, IFC committed $4.5 billion in total financing (including its own account and mobilized funds), with nearly 34 percent supporting infrastructure. Through end February 2013, IFC has committed $822 million in total financing. Thirty-four percent of IFC’s own account commitments were in equity and 63 percent were in loans. IFC’s India portfolio is performing well. Investments in low-income states have grown from $60 million in FY2009 to $265 million in FY13 as of end of February 2013, an increase of 342 percent. The advisory portfolio has grown from $30 million over 42 projects in FY2009 to $55 million in 66 projects by end February 2013. The World Bank and the Government of India are working together to improve portfolio management. To address the recent decline in portfolio performance parameters and accelerate implementation, the Government of India and the World Bank have identified major bottlenecks and are working with project authorities to remove them. Sector- and state-specific portfolio reviews, undertaken in cooperation with relevant line ministries, as well as reviews of risky and slow-disbursing projects, are held regularly, with time-bound action plans, agreed disbursement targets, and close follow up. Project restructurings are being carried out more frequently, with around 30 22 The ratio of the amount of disbursements in a given fiscal year to the undisbursed balance at the beginning of the fiscal year. 60 Country Partnership Strategy for India: 2013–17 restructurings, including partial cancellations, completed in FY2012 alone. Under the CPS, Discussions are ongoing to “right-size” a few national level operations. New efforts will be made projects are being subjected to more-rigorous readiness criteria by the World to integrate India’s Bank and the Government to ensure improved implementation. In the short public financial term, these measures have meant that new lending has dropped to allow management systems teams to focus on making the existing portfolio perform better. Continued and accountability proactive portfolio management will be needed to turn the performance of the mechanisms portfolio around. (budgeting, accounting, public A focus on governance and public financial management will also expenditure help improve the design and implementation of Bank-supported management, projects. Under the CPS, efforts will be made to integrate India’s public external auditing, financial management systems and accountability mechanisms (budgeting, corporate accounting, public expenditure management, external auditing, corporate governance, right governance, right to information, and redressal of citizens’ grievances) and to information, tools (social audits, e-project management, and e-monitoring) into Bank and redressal of operations. The Bank’s technical support will aim to strengthen program- citizens’ grievances) level budgeting and implementation of a new chart of accounts to improve and tools (social linkages between spending and performance. The Bank will also help audits, e-project strengthen and scale up the government’s Central Plan Scheme Monitoring management, and System (CPSMS), monitoring of central plan funds by enabling real-time e-monitoring) into tracking of expenditures. Procurement and financial management capacity Bank operations. building components in WBG-financed projects will aim to strengthen and mainstream country systems. Governance and accountability action plans— required for all Bank operations in India—will continue to help mitigate fiduciary risks while promoting institutional effectiveness for better service delivery. The knowledge portfolio will complement and underpin lending operations, especially in low-income and special category states, and in relatively new areas of engagement. In a country as sophisticated and diverse as India, there is no dearth of knowledge providers. The WBG’s value lies in its ability to focus on long-term, complex, multisectoral issues; to bring together experience from across the world; and engage deeply in policy, program, and project implementation. Its knowledge is conveyed through analytical and advisory services, impact evaluations, and research and embedded in operations and lending. The World Bank Group also acts as a convener, bringing together Indian and foreign policymakers on key policy issues, such as clean energy, job creation, and informality, and facilitating exchanges of South-South knowledge. The Bank and the Indian Government regularly review the knowledge portfolio to maximize the strategic relevance and timeliness of knowledge products. The World Bank Group’s knowledge agenda for FY2013–17 will be guided by (i) focusing in-depth analytical work on a few key cross-sectoral questions (e.g., growth and inclusion, energy, and urbanization), carried out in partnership with local and international institutions; (ii) informing design and implementation of future interventions by drawing on impact evaluations (e.g., on rural livelihood programs); (iii) responding quickly and flexibly with demand-driven technical assistance and just-in-time knowledge support to help reform and implementation; (iv) brokering South-South and across-state 61 Country Partnership Strategy for India: 2013–17 The end goal is to knowledge exchanges; (v) developing flexible programmatic approaches deliver an integrated to develop analytic and advisory activities; and (vi) scaling up training package of support, capacity. Under the CPS, dissemination of knowledge across government and especially to low- nongovernment stakeholders will be enhanced. income and special category states At the heart of the World Bank Group knowledge agenda will be a series of that combines stand-alone analytical products that aim to inform public debate around key financing instruments reforms critical to India’s continued high economic growth, poverty reduction knowledge and and increased prosperity. Topics for such work will be identified over time, advisory services although work on PPPs, nutrition and acceleration poverty reduction and best suited to the shared prosperity is likely to commence at the beginning of the CPS period. development needs Efforts will also be made to link country-specific work to regional flagship of the each state, reports in areas that support the CPS. The regional flagship on jobs (FY12) while building on would support economic integration, upcoming flagship on inequality (FY14) the comparative will likely feed into work that is relevant to the inclusion engagement area, advantage of both the and finally the regional flagship on urbanization (FY15) could inform country- World Bank and IFC. specific analytical work on India’s rural-urban transformation. Collaboration and partnerships Exploiting “synergies by design” versus “synergies by chance” will enhance the development impact of the WBG’s program. Experience during the previous CAS period has shown that effective and planned collaboration between the World Bank and IFC is possible in India. A notable example of this is the joint financing of the $270 million loan/investment for the PowerGrid Corporation of India, which supports PowerGrid’s access to international commercial banking markets and leverages the IBRD’s 18-year partnership. Collaborative work is also underway in the health sector in two low-income states (see box 6.2). Under this CPS, collaboration will increase significantly through closer interactions at all staff levels and across all relevant sectors. As a first step, sessions on operationalizing the CPS across the three engagement areas, as well as in focus low-income and special category states will be organized. Using the model developed for expanded engagement in Uttar Pradesh—one of India’s poorest states—efforts will be made to identify synergies early in the project identification and preparation process, so that collaboration is better planned. The end goal is to deliver an integrated package of support, especially to low-income and special category states that combines financing instruments knowledge and advisory services best suited to the development needs of the each state, while building on the comparative advantage of both the World Bank and IFC. The proposed state-level infrastructure program—identified as one of the five programs for increased collaboration—will focus on expanding infrastructure in two states. In addition to increased collaboration in focus states, two areas are likely to benefit from the “synergies by design” approach: investment climate and public-private partnerships. The World Bank and IFC will work together to help the Government to improve the investment climate, where joint economic and sector work could be pursued. Similarly, on PPPs, where the World Bank (through its economic and sector work and technical assistance) and IFC (through its advisory services) could help government and quasi-governmental 62 Country Partnership Strategy for India: 2013–17 agencies carry out regulatory reforms in sectors where IFC’s investments Opportunities to take (and possibly MIGA credit enhancement) could significantly boost private further advantage of participation. Opportunities for increased collaboration with MIGA, the World synergies between Bank Institute, and the Water and Sanitation Program will also be explored. the Bank Group and other development The WBG will continue to work in partnership with many bilateral partners will be and multilateral donors to help India address its most-pressing pursued in areas development challenges. Partnerships take many forms, including the of mutual interest, pooling of financial resources, knowledge creation and dissemination, capacity such as regional building, and support for the supervision and implementation of Bank integration, operations. Opportunities to take further advantage of synergies between infrastructure the Bank Group and other development partners will be pursued in areas financing, climate of mutual interest, such as regional integration, infrastructure financing, change, and climate change, and governance. Several Bank operations are co-funded by governance. external donors: Primary and secondary education projects have benefited from co-financing from the U.K. Department for International Development. The Japan International Cooperation Agency has supported the Dedicated Freight Corridor Project and urban development in Karnataka and Tamil Nadu. For the Asian Development Bank, the Government of India follows an essentially geographic approach to come to a division of labor. The objective is to maximize the support from both major MDBs across a range of sectors but minimize transaction costs at State level. This approach has worked well and given both institutions’ capital limitations, it is really the only viable choice for now. Portfolio reviews of lending and AAA benefit from ADB participation. The WBG India program has benefited from trust funds. Trust funds focusing on global partnerships and public goods have supported many activities in India, most prominently in health. The Global Fund for AIDS, Tuberculosis, and Malaria has disbursed almost $800 million in India since its inception in 2003. Two donor trust funds—from DFID and AusAid—have supported analytical work and capacity building efforts. In 2009, DFID renewed its support, with a contribution of £20 million, increasing that by £6.5 million in 2012. Funding has helped leverage the World Bank’s support to improve service delivery, address climate change, and promote inclusive growth and governance in low-income states such as Bihar, Chhattisgarh, Jharkhand, and Odisha. AusAid is providing $3.4 million through its South Asia Region Infrastructure for Growth trust fund to support project preparation. Sixty percent of IFC’s advisory program in India is supported by donor trust funds. The US Department of State and Government of Italy contributed a total of $4 million to the “Lighting Asia India Program. The Netherlands and Japan are other major donors. In an effort to diversify funding sources, IFC advisory is working to engage with new partners such as the Gates Foundation on improving health services and promoting financial inclusion in Bihar. 63 Country Partnership Strategy for India: 2013–17 8. Financing the strategy Financial support for this CPS should be commensurate with the scale of the challenge of helping India to accelerate poverty reduction and boost prosperity. Although the World Bank Group’s contribution to the government’s overall development is small, the government’s “Innovation Impulse with Investment” approach means that World Bank Group’s involvement can be catalytic and transformative when financing is combined with knowledge and experience. Supporting the government’s objective of faster and more inclusive growth are three project selection filters: (i) systemic or transformational impact; (ii) innovation and piloting of new approaches; and (iii) financial leveraging. Government expects World Bank commitments to be distributed among low-income and special category states (30 percent), other states (30 percent) and national programs and centrally sponsored schemes (40 percent). Making growth more inclusive also entails targeting pockets of poverty in more advanced states, where innovative approaches can be piloted and later replicated in poorer states. National projects that make substantial investments in energy and transport, for example, help generate more growth. 64 Country Partnership Strategy for India: 2013–17 To make a meaningful contribution to the assault on poverty, the Although the Government of India is seeking about $5 billion annually in support World Bank Group’s from the World Bank Group. However, the WBG’s ability to provide such contribution to the levels of financing is uncertain due to two main factors: India approaching government’s overall its Single Borrower Limit (SBL) for IBRD exposure, currently at $17.5 billion development is small, and India’s graduation from IDA at the end of FY14. The SBL prevents IBRD the government’s from being able expand lending to make up for the loss of IDA resources at “Innovation Impulse graduation to IBRD-only status. Beginning in FY15, support to India would with Investment” drop precipitously to an annual average of about $600 million IBRD for FY15- approach means FY17. Looking at the full CPS period (FY13-17), annual levels of IDA/IBRD would that World Bank average only $1.4 billion. Moreover, total net flows from IBRD/IDA turn negative Group’s involvement in FY18 due largely to India’s graduation from IDA. (Figure 8.1) Graduation can be catalytic and also triggers contractual accelerated credit repayments on a large share of transformative when outstanding IDA debt.23 financing is combined with knowledge and To ease the hard constraint of the SBL, India has agreed to use its own experience. resources to purchase Special Private Placement Bonds (SPPBs). In 2012, the Board approved the use of SPPBs by India of up to $4.3 billion. Beginning in FY14, this additional headroom would enable India to borrow an annual average of $2.4 billion of IBRD/IDA over the CPS period, an additional billion per year. Figure 8.1. Impact of IDA Graduation on India, by IDA Replenishment, IDA15-19 (in ‘000 US dollars) (no SPPBs, no IDA transitional support) IDA and IBRD lending to India 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 IDA15 IDA16 IDA17 IDA18 IDA19 (ave.) (ave.) (ave.) (ave.) (ave.) -1,000 -2,000 -3,000 IBRD Commitments IDA Commitments IBRD/IDA Total Net Flows w/o Transitional Support Sources: World Bank data (actuals); staff estimates for projections. 23 India’s graduation from IDA also has implications on net flows because of the contractual IDA credit acceleration clause which would be triggered. Due to India’s high outstanding IDA credit balance ($26.4 billion as of December 2012) there will be a significant increase in principal repayments by $0.5 billion a year in FY2015-FY20 from $1.2 billion under the current repayment schedule to $1.7 billion. Although transitional IDA support would help offset the overall reduction in net flows during the CPS period, they are estimated to become negative in FY18. 65 Country Partnership Strategy for India: 2013–17 Transitional IDA Although India will graduate from IDA at the end of FY14, it is being support would be proposed as a candidate to receive transitional IDA support for the used to tackle India’s IDA17 period. Transitional IDA support would be used to tackle India’s unfinished poverty unfinished poverty agenda as laid out in this CPS. The terms for transitional agenda as laid out in IDA financing would be harder than those of IDA hard-term lending, but less this CPS. than the fixed rate equivalent of an IBRD loan. Although a final decision on the volumes and terms of transitional support will not be reached until late 2013, IDA Deputies were broadly supportive of the proposal to provide transitional IDA support to India presented at the first IDA17 replenishment meeting. With the combination of SPPBs and assuming transitional IDA support at the levels proposed to Deputies in the March IDA17 replenishment meeting, annual commitments for IBRD/IDA could average about $3 billion over the CPS period. (Figure 8.2). SPPBs would be purchased in FY14 when India hits the SBL and be used to help finance the lending program laid out in Annex B3. IDA levels in FY14 are low because of India’s frontloading of IDA and utilizing the remainder of the IDA16 envelope. And, even with transitional IDA support, net flows turn negative in FY18. IFC investments are expected to be around $1 billion annually. IFC will maintain its focus on private sector development through multiple engagements focusing on inclusion and improving access, enhancing regional and global integration, and mitigation of and adaptation to climate change. During the CPS period, IFC expects to invest approximately $2.3 billion in the low-income states. IFC also expects to invest around $350-400 million direct and mobilized financing per annum in infrastructure water, transport, telecom and IT and IT-enabled sectors. Figure 8.2. Annual IDA and IBRD lending to India, FY09-24 10,000 CPS Period 8,000 6,000 4,000 2,000 0 FY9 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 -2,000 -4,000 IBRD Commitments IDA Commitments IBRD through SPPBs Possible transition support IBRD/IDA Net Flows IBRD/IDA Total Net Flows w/o Transitional Support Sources: Actuals through FY12 and Staff estimates for projections. 66 Country Partnership Strategy for India: 2013–17 Overall average annual WBG financing is estimated to be about $3 World Bank billion from IBRD and IDA (assuming transitional support from IDA and Group support use of SPPBs) and $1 billion from IFC. This is still short of India’s expressed for an ambitious borrowing needs of about $5 billion. Although hypothetical, the impact of engagement in India additional IBRD headroom would help ease the hard constraints of the SBL. If would necessitate management were to recommend, and the Board were to approve, say a $1 the development of billion increase in the SBL for India, additional lending space of about $500 innovative solutions million a year for three years would be created. World Bank Group support to leverage higher for an ambitious engagement in India would necessitate the development levels of financing of innovative solutions to leverage higher levels of financing consistent with consistent with India’s India’s “Innovation Impulse with Investment” approach. “Innovation Impulse with Investment” To maximize potential financing for India, the World Bank is also approach. exploring ways of restructuring poorly-performing projects in the portfolio. “Right sizing” or cancelling part and restructuring the remainder of a poorly-performing operation can free up resources in the short-term, allowing for the commitment of resources to higher impact activities. An example is the proposed cancellation of the $1 billion IBRD-financed India Infrastructure Finance Company, Ltd. (IIFCL), and using the tied up capital for a similarly-sized infrastructure project. The WBG can play an important catalytic role beyond its own resources to help India mobilize long-term financing. To complement existing World Bank Group’s existing financial instruments, innovative means to mobilize long-term financing can respond to India’s expressed need for help to fill its infrastructure financing gap. Strengthening India’s capital markets, developing a long-term corporate bond market and enabling securitization of assets are additional avenues to explore. 67 Country Partnership Strategy for India: 2013–17 9. Monitoring of results The CPS results framework will be the key instrument for monitoring the implementation of the WBG country program in India (Annex 1). The results matrix presents the priority outcomes of the WBG in India, which are aligned with the objectives of the Government’s 12th Five-Year Plan. The country program aims to support the Government in areas where the WBG has a clear comparative advantage. It includes ongoing and indicative lending, advisory an analytical activities, technical assistance, and key trust-funded activities for FY13-14. The matrix comprises 19 outcomes, expected to be achieved through mostly ongoing WBG engagements at the national, state, and local levels. A total of 33 indicators—all linked to the ongoing lending and AAA portfolio— will be monitored throughout the CPS period. The achievement of CPS results will depend to a large extent on ongoing activities and the speed at which new programs are developed and implemented. The three overarching goals of the CPS: reduced poverty, increased shared prosperity and rapid economic growth reflect the CPS vision for India in 2030 under the ambitious scenario, a country gradually regaining the economic status it once had in history. As such, these are the long-term goals, to which the WBG program will strive to contribute in the short term or over the next five-years. Activities in three broad areas of WBG engagement: 68 Country Partnership Strategy for India: 2013–17 integration, transformation and inclusion will in turn contribute to one or more The WBG financing, of the overarching goals. analytical work and advisory services While most activities in the current WBG portfolio contribute to one or will therefore aim more of the three overarching goals, the main linkage is through the to contribute to two WBG’s increased support to India’s low-income and special category specific high-level states (see Table 7.1). Combined, these fourteen states account for about country outcomes: half of India’s population, of which 38.6 percent are poor. The WBG financing, increased economic analytical work and advisory services will therefore aim to contribute to two growth as measured specific high-level country outcomes: increased economic growth as measured by GSDP per capita by GSDP per capita (on average $512.5 in 2011), and decrease in poverty (on average $512.5 in (in 2011 38.6 percent of the total population in 14 LIS and Special Category 2011), and decrease in States were poor). Analytical work underpinning this CPS also clearly indicates poverty (in 2011 38.6 that economic integration across states and countries leads to per capita percent of the total income convergence. Guided by the Government’s “Innovation Impulse with population in 14 LIS Investment” approach, the CPS therefore, focuses on India’s low-income and special category states in an effort to contribute to a more balanced growth and Special Category across the country. States were poor). The results framework will mainly monitor outcomes and indicators at the program level. Directly mapped to the WBG program, these outcomes (18 in all) and indicators will be tracked and used mid-and end-CPS period to assess WBG performance. Each outcome supports relevant Government goals as defined in the Government’s 12th Plan. A significant departure from past practice and reflection of continued efforts at improved collaboration across the WBG is the inclusion of common indicators that aggregate IDA, IBRD and IFC contributions and program toward program level outcomes. CPS program implementation will be tracked and reviewed on a regular basis. The CPS results framework will also be reviewed in the context of periodic country portfolio reviews, where progress on—as well as risks to—achieving CPS outcomes will be assessed. The Results Integration and Monitoring System, a web-based application recently improved and re- launched, will be used to monitor progress towards achieving CPS outcomes. The system will be updated every six month, and updates will be shared with Government counterparts. A CPS progress report will be prepared at midterm in FY15 to evaluate progress, assess relevance of CPS outcomes to longer-term objectives. The matrix will be adjusted as needed, and new activities will be added in response to Government’s demand throughout the CPS period, but especially for FY15 and FY16 activities. 69 Country Partnership Strategy for India: 2013–17 10. Managing risks Achieving the ambitious vision of India in 2030 entails mitigating significant potential economic and political country level risks. Although India’s GDP growth is forecast to strengthen modestly to 6.4 percent in the 2013 fiscal year, and rise to 7.3 percent in 2015,24 elevated inflation and large fiscal and current account deficits will remain concerns. Continued sluggishness of the global economy is likely to affect India’s growth prospects in the short-term. Although recent policy announcements have helped improve investors’ confidence, the Government will need to break the current policy logjam and push through deeper and more difficult reforms needed to improve the business climate, increase tax efficiency, and improve the efficiency of public expenditures. While general elections will be held in 2014, it will be important to recognize that continued progress on the reform agenda will be critical to the country’s progress toward the vision of India in 2030—a country that triples its per capita income in just one generation, reduces poverty to 5.5 percent, and increased shared prosperity. By focusing on economic integration, spatial transformation and social inclusion, the CPS mitigates the risk that growth will slow down and progress on poverty reduction and human development will be stalled. 24 Global Economic Prospects, 2013. 70 Country Partnership Strategy for India: 2013–17 Realizing India’s economic potential requires seizing the demographic dividend The CPS assumes a and this in turn will critically depend on job creation. New entrants to the labor much higher level of force need to find gainful employment for lower dependency ratios to actually operational risk than lead to higher output per capita. Greater economic integration, through physical did the previous CAS. connectivity and the removal of inefficient regulations, is key to boost the creation But higher risks often of jobs by the private sector. A successful spatial transformation, including entail greater payoffs, agricultural modernization and rapid urbanization, is needed for jobs to become as reflected in the more productive. Progress in social inclusion, providing opportunities for everyone ambitious India 2030 to live a healthy life, acquire new skills, and access gainful employment, is a pre- scenario outlined requisite for shared prosperity. The choice of areas of engagement in the CPS is thus here, one of rapid well geared towards helping India realize its potential. inclusive growth and equally rapid poverty At the same time, by shifting the focus to low-income and special category reduction. states, the CPS assumes a higher operational risk. The CPS assumes a much higher level of operational risk than did the previous CAS. But higher risks often entail greater payoffs, as reflected in the ambitious India 2030 scenario outlined here, one of rapid inclusive growth and equally rapid poverty reduction. A more pronounced shift to working in low-income and special category states—states that often have weak, systems, capacities and institutions; difficulties in adequately staffing project units; poor data collection—may have the effect of delaying project preparation and implementation. However, many low-income states are now growing faster despite having lower levels of capital than more advanced states. This in turn translates into higher marginal returns to investment over time. Low-income states also have the highest poverty rates, and some of the lowest human development indicators, so that poverty reduction payoffs from successful interventions will be high. The “Innovation Impulse with Investment” principles of working on transformational, innovative projects and those with high potential for leverage are also inherently risky. Compounding that risk, a few areas where the Bank Group has been asked to contribute—nutrition, urban development, higher education, and education quality—have proven difficult in the past. As the CPS is implemented, it will be important to build on the lessons learned from both past successes and failures so as to better respond to India’s challenges. Better and planned collaboration across WBG and with development partners will help us better identify areas where the WBG can add value and put together a mix of instruments that is suited to the needs of India. Improving portfolio performance will be a key challenge under the CPS and of utmost important for overall discussion on India’s financing needs. Efforts will be made to raise portfolio indicators to levels closer to Bankwide averages. Of particular concern is the IBRD disbursement rate, which remains low. Throughout the CPS, more emphasis will be placed on accurately identifying risks using existing tools (e.g., Governance and Accountability Action Plans and the Operational Risk- Assessment Framework), proposing mitigating measures, and jointly monitoring the portfolio to address problems proactively as they arise. An effort to customize solutions (in the form of integrated packages of support) to better meet the needs of each borrower will help in the management of a riskier portfolio. Ongoing Government-WBG efforts to strengthen portfolio performance will have to be sustained throughout the CPS period to ensure results of the WBG program and its contribution to accelerating poverty reduction and boosting shared prosperity across India. 71 Country Partnership Strategy for India: 2013–17 72 Country Partnership Strategy for India: 2013–17 ANNEX 1 INDIA CPS Results Framework Overarching Goals Economic Growth * Poverty Reduction * Shared Prosperity High level Country Outcomes Low-income States + Special Category States (Total population: 600 million) Baseline (2011): GSDP per Capita: US $ 512.5; Percent Poor: 38.6% Government Issues and CPS Outcomes and Indicative World Bank Group Program (Ongoing Strategic Objectives Obstacles Indicators Milestones and Indicative) (12th Plan Goals) Engagement Area 1: Integration Upgrade national Most national 1.1 Improved Generation of at Ongoing financing: Assam State Roads; and state highways highways need transport least US$300 million Odisha State Roads; Punjab State Roads; to the minimum upgrading and connectivity in in new private Karnataka State Highway Improvement two-lane standard maintenance targeted States sector capital for II; Eastern Dedicated Freight Corridor work Core Road Network Complete Eastern • 9000 Km of additional improvement and Indicative financing: Rajasthan Rural and Western Freight Low freight State highways management Road Connectivity; Tamil Nadu Roads II; Corridors train capacity; upgraded and Kerala Transport II; National Highways inadequate asset maintained in good 340 km of the Interconnectivity; Gujarat Highways II; maintenance condition in targeted Eastern rail corridor Eastern Dedicated Freight Corridor II states by 2017 (Khurja and Kanpur section) completed Knowledge activities1: Transport • Rail transport capacity Policies and Reform Activities on Eastern Freight Corridor increased from 20 (in 2011) to 22 (NTKM bn ton-km) by 2017 Strengthen India’s Electricity 1.2 Improved At least 5,000 Ongoing financing: Coal-Fired electricity supply transmission inter-regional circuit kilometers Generation Rehabilitation; Vishnugad and transmission capacity power transmission of transmission Pipalkoti Hydroelectric; Haryana system in order to between connectivity capacity added by Power Sector Improvement; increase availability regions and 2015 Rampur Hydropower; Power Sector and reliability of states is low • Power exchange Development IV&V; IFC investment in the power for economic between regions and At least 412 MW transmission sector (Nepal-India Power development Generation States increased from of hydro power Transmission Project) stations 46,027 Gwh in 2009 to generation capacity operate below 60,000 Gwh by 2017 constructed by 2017 Indicative financing: Northeast Power capacity (60% Transmission; Luhri Hydropower of firms rely on 630 MW of Coal- costly back-up Fired generation Knowledge activities: Concentration generation) plant rehabilitated Solar Power; Program for Market Readiness; Rural Feeder Segregation; Private Sector Participation in Hydropower 1 Knowledge activities include advisory services, technical assistance, impact evaluations, and economic and sector work. 73 Country Partnership Strategy for India: 2013–17 Develop demand Skills mismatch 1.3 Improved 5 Institutes of Ongoing financing: Vocational driven, skilled in the job demand-driven training of trainers Training Improvement; Second Technical workforce by market. skills for productive (ITOT) established Engineering Education Quality; National providing increased employment by 2014 Rural Livelihoods; State Livelihood opportunities skills Poorly trained Projects (Bihar, Madhya Pradesh, Odisha, training labor force (29% • Graduates of Industrial At least 3000 Rajasthan, Tamil Nadu, and Northeast) not literate and Training Institutes new and current another 24% employed within 1st year instructors given Indicative financing: Andhra Pradesh with primary of completing training entry-level or Rural Inclusive Growth; IFC investments education). increased from 60% refresher/specialized in competitive, employment generating (Female 38%) in 2012 instructors courses industries Low female to 70% (Female 50%) by annually by 2015 labor force 2015 Knowledge activities: Migration participation At least 33,000 and Remittances; Higher Education; (29% of total). • At least 17,000 youth SHGs are provided Small and Medium Enterprise Capacity (including more than with job placement Building; IFC Farmer Training/GAP 50% women) from the training Program, India Sugar Program and Farm supported SHGs and Forestry Project; TVET; West Bengal Skills CDOs are placed in Development appropriate jobs Increase private Low private 1.4 Enhanced private IFC’s technical Ongoing financing: IFC investment sector investment in sector investment in low assistance and PPP to support enabling environment and lagging regions investment in income States advisory projects in mobilize private sector resources for Low-income low-income states, investments and PPP projects in Bihar, States • Additional US$ 2.3 which include Meghalaya, Odisha, Rajasthan, and West billion private investment Bengal facilitated in LIS States - 8 IFC led technical by 2017 advisory and/or PPP Indicative financing: IFC investment projects in by 2015 to support enabling environment and mobilize private sector resources for - 23 IFC led investments in Uttar Pradesh investment projects by 2015 Knowledge activities: IFC’s programs on Health for All, Buddhist Circuit, Rajasthan IC Integrate regional Below potential 1.5 Strengthened Construction Indicative operations: Nepal-India market in trade, levels of regional regional trade of Indo-Nepal Trade and Transport Facilitation Project; infrastructure trade and and infrastructure transmission line IFC South-South investments (power and investment; integration has commenced transport), and poor in accordance with Knowledge activities: Bangladesh- investment connectivity • 150 MW of electricity the tender package India Inland Water Transport; TA for between India traded between India awarded by 2014 knowledge exchange across SAR and neighboring and Nepal by 2017 countries on performance management countries Trade information • Border crossing time portal and single between India and Nepal window system reduced by 20 % by 2017 developed by 2015 (3-4 days in 2012) Narayanghat- mugling road upgraded by 2016 74 Country Partnership Strategy for India: 2013–17 Engagement Area 2: Transformation Improve long- Low urban 2.1 Strengthened At least 20 cities Ongoing financing: Capacity Building term planning for planning institutional capacity with new/revised for Urban Development; Andhra Pradesh sustainable and capacity, weak of urban government city development Municipal Development ; Third Tamil inclusive urban governance, in targeted states plan in targeted Nadu Urban Development; Karnataka development; and financially States by 2015 Municipal Reform strengthen unsustainable • At least 220 cities (ULBs) governance ULBs, with with new/updated 230 cities with new Indicative financing: Informal and financial limited capacity urban management e-governance and/ Settlements; West Bengal Secondary sustainability of to raise own systems (in planning, or GIS mapping Cities urban local bodies resources financial management, system in Karnataka (ULBs) citizen-interface, etc. ) to State by 2016 (0 in Knowledge activities: Social improve service delivery 2012) Dimensions of Urbanization; National in targeted states by 2017 Land Records Modernization Implementation Support; Inclusive Heritage Based City Development Planning; IFC’s advisory assistance to governments to structure PPP Increase public Poor or non- 2.2 Improved urban 6 Cities developed Ongoing financing: Mumbai Urban transport; expand existent urban transport services urban transport Transport; Sustainable Urban Transport metro rail and transport investment plans by bus system; and planning • Modal share by public 2016 Indicative financing: Efficient and improve road safety transport in targeted Sustainable City Bus Service Supply of public cities increased from 4 % 7 additional electric transport has in 2010 to 8% by 2017 EMU train (12-car not kept up with train) added in demand targeted cities by 2017 Improve access to Limited access 2.3 Improved access Additional Ongoing financing: Tamil Nadu water and sanitation to piped water to water supply and 18,000 water Urban III; Andhra Pradesh Municipal services in rural and supply services sanitation services supply systems Development; Karnataka Municipal urban areas and sanitation rehabilitated or Reform; Karnataka RWSS II; Punjab systems in rural • Additional 34 million extended across RWSS; Uttaranchal RWSS; Andhra and urban areas people provided with states by 2017 Pradesh RWSS; Kerala RWSSP II; IFC’s access to improved water Waste to Energy Investment Project; IFC sources by 2017 Additional 10,000 investment in water treating utilities sanitation systems • Additional 12 million rehabilitated or Indicative financing: Karnataka Urban people provided with extended across Water Modernization; Maharashtra Rural access to improved states by 2017 Water and Sanitation III; Rural Water sanitation system by Supply in Low-income States 2017 (Urban: 1.2 million; Rural: 10.8 million) Knowledge activities: IFC’s India E-Waste Advisory Raise agricultural Low agricultural 2.4 Increased Additional 1.1 Ongoing financing: National productivity to 4% productivity agricultural million hectares of Agriculture Innovation; Maharashtra per annum productivity in improved irrigation Agriculture Competitiveness; Assam Outdated targeted areas in targeted areas by Competitiveness; National Dairy Strengthen irrigated agriculture 2017 Support; Andhra Pradesh Community water resource technology and • Cereal yield for Tank Management; Tamil Nadu Irrigated management practices beneficiaries farmers At least 1 million Agriculture; Uttar Pradesh Sodic Land (tons/hectares) farmers adopting Reclamation; Water Sector Restructuring Inefficient and - Paddy increased from improved crop (Andhra Pradesh and Madhya Pradesh); unsustainable 2.9 in 2012 to 3.5 by production Odisha Community Tank Management; use of water 2017 techniques and Rajasthan Water Sector; West Bengal resources - Wheat increased from practices in targeted Minor Irrigation; IFC’s investments in in irrigated 2.8 in 2012 to 3.5 by areas by 2017 diary/oilseed/poultry sector and in agriculture 2017 fertilizers and pesticides production 75 Country Partnership Strategy for India: 2013–17 - Sugarcane increased At least 500,000 Indicative financing: Uttar Pradesh from 55 in 2012 to 63 farmers adopting Water Sector Restructuring II; Northeast by 2017 improved livestock Water Resources; National Watersheds; production Uttarkhand Watersheds II; Himachal • Milk production techniques and Pradesh Mid-Himalayan Watersheds-AF; (kg/day/animal) for practices in targeted Northeast Water Resources beneficiaries farmers areas by 2017 increased from 4 kg in Knowledge activities: Enhancing 2012 to 4.4 kg by 2017 Agriculture Productivity: Policy and Investment Priorities; Capacity Development for Integrated Water Resource Development; IFC India Sugar Program & Farmer Training/GAP Improve Deteriorating 2.5 Improved Environmental Ongoing financing: National Ganga management of environmental environment Compliance River Basin; Capacity Building for natural resources quality due to protection and Assistance Center Industrial Pollution Management; by introducing water pollution biodiversity to promote Integrated Coastal Zone Management; regulation to limit Unsustainable conservation measures for Biodiversity Conservation and Rural water pollution, exploitation voluntary industrial Livelihood Improvement; Sustainable improving sewerage of natural • 160 million liter per compliance Land Management treatment system, resources and day of untreated established by 2015 and protecting degradation of municipal and industrial Indicative financing: Himachal biodiversity biodiversity. wastewater prevented Additional 200 Pradesh Watershed-AF; Karnataka from entering the million liter per Watershed; Sustainable Livelihoods National Ganga River day of wastewater and Adaptation to Climate Change; by 2017 treatment capacity Sundarbans Biodiversity Conservation created in the Integrated Coastal Zone Management II • Additional 500,000 National Ganga hectares brought under River basin by 2017 Knowledge activities: Green Growth enhanced biodiversity in Himachal Pradesh; IFC Agri-water protected area Institutional and efficiency program and industrial water management methodological reuse project framework and guidelines for landscape conservation approaches developed in high biodiversity landscapes Additional 500 million liter of water saved or harvested as a result of IFC’s engagement 76 Country Partnership Strategy for India: 2013–17 Reduce the intensity Lack of 2.6 Reduced Additional 4,000 Ongoing financing: Coal-Fired of greenhouse gas awareness about Greenhouse Gas MW of energy Generation Rehabilitation; Vishnugad emissions energy saving Emissions through saved via supported Pipalkoti Hydroelectric; IFC Renewable technologies energy efficiency and energy efficiency Energy and Energy Efficiency PPP; and measures to renewable energy measures by 2017 IFC’s Equity/Debt Investment in reduce Ozone production Renewables, Energy Efficiency projects in Depleting Additional 3000 Manufacturing Sector, and wholesaling Substances • Additional 1.5 million Gwh of renewable through financial institutions (tCO2e) GHG emissions energy capacity reduced per year by 2016 developed by 2017 Indicative financing: Himachal Pradesh DPL II; CTF-Energy Efficiency 80 CFC-based Partial Risk Sharing Facility; CTF-Super centrifugal chillers Efficient Equipment Program replaced by the CEEP Knowledge activities: IFC Lighting Asia: India Program Construction and operation of 13 solar and wind stations by 2017 Engagement Area 3: Inclusion Universalize access 30% of rural 3.1 Improved access At least 10,000 Ongoing financing: Power System to electricity, households to electricity in circuit kilometers Development IV; Coal-Fired Generation focusing on lack access to targeted states of transmission Rehab; Rampur Hydro Power; electrification of all electricity; capacity added by Haryana Power System Improvement; villages • Additional 300,000 of 2015 PowerGridV;Vishnugad Pipalkoti; IFC High reliance connections to Below Investment in private sector generation, Increase household on traditional Poverty Line households At least 412 MW transmission and distribution; IFC access to clean and sources of by 2017 in North Eastern of hydro power supported direct lines with banks/ environmentally fuel in rural Region generation capacity infrastructure finance companies to sustainable energy households, constructed by 2017 support renewable energy; with deleterious • Additional 220,000 health impact households with off-grid 630 MW of Coal- Indicative financing: Northeast Power connections Fired generation Transmission plant rehabilitated Knowledge activities: IFC Lighting Asia: India Program and Rooftop Solar Program. Improve efficiency Limited capacity 3.2 Strengthened At least 40 Ongoing financing: Uttar Pradesh of health delivery of state- public and private health facilities Health System Strengthening; Karnataka systems by level health health delivery assessments Health System – AF; IFC’s Investment in converging health institutions (low systems completed and private health facilities; IFC’s Jharkhand programs under accountability, action plan Hospital PPP the National Rural inadequate • Below Poverty Line (BPL) developed in the Health Mission financial and other vulnerable targeted states by Indicative financing: National AIDS management, households covered 2017 Control Support Project poor quality under Government assurance, Sponsored Health At least 50 PPPs Knowledge activities: Service poorly trained Insurance Schemes performance-based Delivery and Public Spending on health workers), increased from 180 contracts in health Health; Government-sponsored Health resulting in million in 2011 to 350 facilities in targeted Insurance Schemes; IFC’s Meghalaya inefficiency million by 2017 states by 2017 Health for All; IFC’s Shillong Medical; delivery of Karnataka RBF Hospital Care health services • Additional 9.4 million Additional patients reached in 21 private supported private health health facilities facilities by 2017 strengthened through IFC engagements 77 Country Partnership Strategy for India: 2013–17 • Public sector hospitals that have achieved entry level-pre-accreditation in the three sates (UP, Tamil Nadu, and Karnataka) increased from 6 in 2011 to 50 by 2017 Reduce under- Inadequate 3.3 Improved child Multi-sectoral Ongoing financing: ICDS Systems nutrition among systems/ nutrition delivery nutrition action Strengthening and Nutrition children aged 0-3 institutions to systems in targeted plans developed Improvement from 40% (2005-06) address high States and implemented in to 27% levels of child targeted districts in Knowledge activities: Multisectoral malnutrition • 246,000 Anganwadi 6 states Nutrition Action in Bihar; Social (40% of Centers conducting Observatory for Rural Food & Nutrition the world’s inter-personal counseling Inter-personal Security in National Rural Livelihoods malnourished to improve Infant and counseling Mission; Community Food and Nutrition children live in Young Child Feeding guidelines and Initiatives in High Poverty States India) practices tools material for promoting positive • 400,000 additional IYCF behaviors Below Poverty Line developed and (BPL) households with adopted by 8 states access to community management nutrition 10,000 additional centers community service delivery centers organized by 2017 Universalize access Poor quality of 3.4 Improved access New system Ongoing financing: RMSA Secondary to secondary education at all and quality of of National Education; IFC Investment in education education by 2017 levels education Assessment infrastructure of Student Improve quality at Low learning • Enrolment of students Performance Indicative financing: Bihar Teacher all Education levels outcomes, in Secondary (Grade IX developed and Education and Training; SSA—Education and align programs and X) increased from implemented (for for All to market needs Low retention 28 million in 2012 to 40 grade X) by 2014 rates and million by 2017 Knowledge activities: Teachers enrollment at Proportion of Education; Secondary Education; the secondary • Gross Graduation rate schools with all core Teacher’s Education and Professional level increased from 78% in subject specific Development- International Best 2010 to 88% by 2017 teachers available Practice; IFC’s Gujarat University PPP and Limited access increased from 20 Meghalaya College PPPs to education for • Gender Parity Index % in 2010 to 40% by underprivileged (GPI) in secondary 2017 children/youth schools increased from 94% in 2010 to 98% by 2017 Implement direct Limited 3.5 Increased IT application Indicative financing: Bihar Integrated cash transfer for state-level coverage of social to track benefit Social Protection Strengthening Project major subsidies institutional protection programs payments Andhra Pradesh Rural Inclusive Growth and welfare- capacity and in targeted States established in at related beneficiary systems to least one state by Knowledge activities: Social payments implement • Coverage of program 2015 Pensions; Jharkhand Social Protection; social protection beneficiaries in targeted Chhattisgarh RSBY/PDS Evaluation programs districts increased from State disability (including 18% in 2012 to 25% by and older persons beneficiary 2017 policies developed awareness, for at least one state enrollment, by 2015 78 Country Partnership Strategy for India: 2013–17 benefits At least 50 social payments and protection service tracking and centers established accountability) by 2017 Create economic Limited 3.6 Enhanced At least 50,000 Ongoing financing: National Rural opportunities livelihood rural livelihood additional Self Help Livelihood Project; State Rural Livelihood to improve rural opportunities opportunities in Groups (SHGs) Projects (Bihar, Odisha, Rajasthan, and livelihood of poor (farm and non- targeted States have been formed, Northeast states); Scaling-up Sustainable households farm) for rural including poor and Responsible Micro-Finance poor, especially • Additional 500,000 women SHGs women supported poor Indicative financing: Andhra Pradesh households report Rural Inclusive Growth Andhra Pradesh: a minimum of 20% Rural Poverty Impact Evaluation Food increase in income by Security in Tribal and Conflict Affected 2017 Areas Strengthening Implementation of Rural Livelihood Program Improve financial 40% of 3.7 Increased access 10 additional Ongoing financing: National Rural Services households do to financial services number of lenders Livelihood Project; State Livelihood not avail any in targeted states for low-income Projects (Odisha, Rajasthan, Tamil Nadu, Provide access to banking services housing finance Madhya Pradesh, Bihar, and states in the banking services • Additional one million created in target Northeast); IFC investments in MFIs; IFC to 90% of Indian Organized households with access States by 2017 equity in banks and long-term finance households financial sector to formal financial institutions; IFC’s short-term trade does not reach services by 2017. 27 MFIs supported finance and liquidity to banks. out to a large through IFC’s segment of the • Additional 20 million engagement Indicative Financing: IFC Low-income population loans provided to micro-, Housing Finance small-, and medium- enterprises in targeted Knowledge activities: Rural Credit states by 2017 (including Cooperatives; Financial Literacy and 0.5 million to female- Education; IFC Micro-and small and owned microenterprises) medium enterprise access to finance: Capacity Building Programs with Banks • Additional 750,000 and NBFCs; IFC work to facilitate G2P for payment accounts health services opened by 2017 Strengthen Weak or 3.8 Enhanced Master plan for Ongoing financing: National Cyclone natural disaster non-existent disaster risk Flood Management Risk Mitigation I; Bihar Kosi I; Global Fund management/ institutions and management system prepared for Kosi for Disaster Reduction and Recovery resilience mechanisms river basin by 2015 for enhanced • At least 3 states have Indicative financing: Bihar Flood disaster risk installed an operational Multi-hazard risk Rehabilitation II; Tamil Nadu and management Early Warning and vulnerability Puducherry Disaster Risk Reduction; and climate dissemination Systems assessment National Cyclone Risk Mitigation Phase resilience, (EWDS)in targeted prepared for India’s II & III especially in vulnerable communities coastal areas by agriculture and by 2017 2015 Knowledge activities: Bihar Kosi water-intensive Flood and Climate Adaptation; Support sectors 400 Cyclone shelters to National Cyclone Risk Mitigation completed in Program targeted coastal areas by 2017 900 Remote Public Alert Communication System installed by 2015 79 Country Partnership Strategy for India: 2013–17 ANNEX 2 India’s Progress towards the Millennium Development Goals1 India has or is on track to achieve some of in 2010. Although India has almost doubled the the Millennium Development Goals (MDGs) share of the population with access to improved by 2015. Extreme poverty—the proportion of sanitation facilities (MDG7)—from 18 percent in people living on less than $1.25 a day—has been 1990 to 34 percent in 2010, it is unlikely to achieve halved (MDG1) to under 30 percent, and halve the the target of halving it by 2015 (table 1). number of people without sustainable access to safe drinking water (MDG7). In addition, 96 percent From a global perspective and for most of Indian school children—boys and girls alike—will MDGs, India is making more progress than complete a full course of primary education (MDG2) the rest of the developing world (figure 1). For and India will likely eliminating gender disparity in primary education completion, India has already primary and secondary education (MDG3). achieved 96 percent of the required target, whereas developing countries, as a group, have achieved At least three MDGs are off track in India. 87 percent. This is also the case for health-related Although much progress has been made since MDGs, even though more progress is needed, and 1990, under-five and infant mortality rates remain particularly relevant for maternal mortality. Recent high. According to 2010 data, 63 children under estimates indicate that although the country may age five out of 1,000 and 48 infants out of 1,000 live not reduce by three-quarters the maternal mortality births die. Although both rates have been halved, it ratio between 1990 and 2015, it has already is unlikely that India will meet the target of reducing achieved 75 percent of the target, far above the 46 them by two-thirds. Reducing the target on percent reduction observed in developing countries maternal mortality (MDG5) by three-fourths is also as a whole. Increased efforts are nonetheless likely to be missed, even though it has decreased required in terms of access to improved sanitation from 570 out of 100,000 live births in 1990 to 230 facilities, where progress is significantly lower Table 1. India’s Performance on MDGs MDG Performance 1 Extreme poverty Achieved 2 Primary education completion rate On track 3 Gender parity in primary and secondary education On track 4 Child mortality Off track 5 Maternal mortality Off track 7a Access to improved water source Achieved 7b Access to improved sanitation facilities Off track Source: World Bank staff calculations based on data from the World Development Indicators database. 1 Based on Global Monitoring Report 2012: Food Prices, Nutrition, and the Millennium Development Goals. 80 Country Partnership Strategy for India: 2013–17 Figure 1. India’s MDG performance in the global context 100% 100% 100% 96% 96% 92% 87% 90% 80% 75% 72% Progress toward 2015 70% 62% 59% 60% 52% 50% 46% 40% 30% 20% 10% 0% MDG 1a. MDG 2a. MDG 3a. MDG 4a. MDG 5a. MDG 7c. MDG 7c. Extreme Primary Ratio of girls Mortality Maternal Improved Improved poverty completion to boys in rate, under-5 mortality water sanitation (% of rate, total (% primary and (per 1,000 ratio source (% of facilities population of relevant secondary live births) (modeled population (% of below $1.25 age group) education estimate, without population a day in (%) per 100,000 access) without 2005 PPP) live births) access) Developing countries India Note: a value of 100% means that respective MDG has been reached. Values denote present progress as illustrated by most recent available data: Extreme poverty-Global: 2010, India: 2008; Primary completion rate-Global: 2009, India: 2008; Ratio of girls to boys in primary and secondary-Global: 2009, India: 2007; Mortality rate, under 5-2010, Global: 2010, India: 2009; Maternal mortality ratio-2010; Improved water source-2010; Improved sanitation facilities-Global: 2008, India: 2010. Source: World Bank staff calculations based on data from the World Development Indicators database. (62 percent of the target) than the 72 percent shown by the ratio of India’s performance relative achieved in the rest of the developing world. to global performance (83 percent). (figure 2) For many other MDGs, India was one of the leaders. India’s contribution to meeting global MDGs For example, India’s primary education completion is significant, especially for MDGs that are rate improved by more than 3 times with respect furthest away from meeting global targets to all developing countries between 1990 and (table 2). India’s contribution to lowering the 2009. Given India’s track record and its continued maternal mortality ratio (MDG5) was 33 percent and focused attention to addressing the MDG between 2005-2010 while for the mortality rate challenge, India has the potential to contribute of children under five (MDG4) it was 28 percent. even more to global targets. Without India For Improved Sanitation (MDG7), not only does making further and faster progress in on child and India still have a way to go (currently at 62 percent maternal mortality and sanitation, global MDGs of the target), but progress is much slower as are unlikely to be achieved. 81 Country Partnership Strategy for India: 2013–17 Table 2. India’s contribution to improvement in selected MDGs, 2005-2010 (%) Access to Access to Maternal Infant Under-5 Sanitation Water Mortality Mortality Mortality India 15% 46% 33% 32% 28% South Asia excluding India 17% 7% 12% 13% 10% East Asia & Pacific 52% 16% 8% 18% 19% Middle East & North Africa 6% 4% 2% 3% 3% Latin America & Caribbean 2% 4% 2% 7% 4% Sub-Saharan Africa 12% 29% 43% 25% 35% Europe & Central Asia -5% -7% 0% 2% 2% Total Improvement 100% 100% 100% 100% 100% Figure 2. Improvement in MDG indicators relative to global performance, 1990-2009 MDG 7c. Improved sanitation facilities (% of population without access) 0.83 MDG 7c. Improved water source (% of population without access) 1.52 MDG 5a. Maternal mortality ratio (modeled estimate, per 100,000 live births) 2.00 MDG 4a. Mortality rate, under-5 (per 1,000 live births) 1.44 MDG 3a. Ratio of girls to boys in primary and secondary education (%) 2.11 MDG 2a. Primary completion rate, total (% of relevant age group) 3.17 MDG 1a. Extreme poverty (% of population below $1.25 a day in 2005 PPP) 1.47 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 Improvement in India / Improvement at the Global level Note: Chart depicts the ratio of absolute regional improvement to global improvement by MDG. Improvement is measured as the difference between latest available value (see note figure 1) and starting value circa 1990. Source: World Bank staff calculations based on data from the World Development Indicators database. 82 Country Partnership Strategy for India: 2013–17 Millennium Development Goals – India With selected targets to achieve between 1990 and 2015 (estimate closest to date shown, +/- 2 years) India Goal 1: halve the rates for extreme poverty and 1990 1995 2000 2010 malnutrition Poverty headcount ratio at $1.25 a day (PPP, % of population) 53.6 49.4 .. 32.7 Poverty headcount ratio at national poverty line (% of population) .. 45.3 .. 37.2 Share of income or consumption to the poorest qunitile (%) 8.8 9.1 .. 8.6 Prevalence of malnutrition (% of children under 5) 59.5 41.1 44.4 43.5 Goal 2: ensure that children are able to complete primary schooling Primary school enrollment (net, %) .. .. 79 92 Primary completion rate (% of relevant age group) 64 74 71 96 Secondary school enrollment (gross, %) 37 46 45 60 Youth literacy rate (% of people ages 15-24) 62 .. 76 81 Goal 3: eliminate gender disparity in education and empower women Ratio of girls to boys in primary and secondary education (%) 68 75 79 92 Women employed in the nonagricultural sector (% of 13 14 17 18 nonagricultural employment) Proportion of seats held by women in national parliament (%) 5 7 9 11 Goal 4: reduce under-5 mortality by two-thirds Under-5 mortality rate (per 1,000) 115 100 86 63 Infant mortality rate (per 1,000 live births) 81 72 63 48 Measles immunization (proportion of one-year olds immunized, 56 72 55 74 %) Goal 5: reduce maternal mortality by three-fourths Maternal mortality ratio (modeled estimate, per 100,000 live 570 470 390 230 births) Births attended by skilled health staff (% of total) .. 34 43 53 Contraceptive prevalence (% of women ages 15-49) 45 41 47 54 Goal 6: halt and begin to reverse the spread of HIV/AIDS and other major diseases Prevalence of HIV (% of population ages 15-49) 0.1 0.3 0.4 0.3 Incidence of tuberculosis (per 100,000 people) 216 216 216 185 Tuberculosis case detection rate (%, all forms) 80 58 49 59 Goal 7: halve the proportion of people without sustainable access to basic needs Access to an improved water source (% of population) 69 75 81 92 Access to improved sanitation facilities (% of population) 18 21 25 34 Forest area (% of total land area) 21.5 .. 22.0 23.0 Terrestrial protected areas (% of land area) 4.7 4.9 5.0 5.0 CO2 emissions (metric tons per capita) 0.8 1.0 1.1 1.5 GDP per unit of energy use (constant 2005 PPP $ per kg of oil 3.3 3.5 3.9 5.1 equivalent) Goal 8: develop a global partnership for development Telephone mainlines (per 100 people) 0.6 1.2 3.1 2.9 Mobile phone subscribers (per 100 people) 0.0 0.0 0.3 61.4 Internet users (per 100 people) 0.0 0.0 0.5 7.5 Computer users (per 100 people) .. .. .. .. Note: Figures in italics are for years other than those specified. .. indicates data are not available. Development Economics, Development Data Group (DECDG) 83 Country Partnership Strategy for India: 2013–17 Education indicators (%) Measles immunization (% of 1-year olds) 100 100 75 75 50 50 25 25 0 0 2000 2005 2010 1990 1995 2000 2010 Primary net enrollment ratio India South Asia Ratio of girls to boys in primary & secondary education ICT indicators (per 100 people) 70 60 50 40 30 20 10 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Fixed + mobile subscribers Internet users 84 Country Partnership Strategy for India: 2013–17 Annex 3 Poverty in India India has made significant progress in reducing benefits for its poor from growth. Even with recent absolute poverty in the last two decades: it has improvements, at the $2 a day poverty line, the pace already achieved MDG1 in halving the proportion of poverty reduction is still about 2 percentage points of people whose income is less than $1.25 a day, to per year below what a model based on international under 30 percent. The percentage of people living cross-country regressions would predict for India.2 below Government of India’s official poverty line has declined from 45 percent in the early 1990s to But poverty remains widespread. With population 30 percent in 2009-10 (table 1).1 Most notably rural growth, it has proved difficult to reduce the number poverty has decreased by 16.3 percentage points. of poor at a rapid pace; 400 million people still Given that India is predominantly rural, however, a live in poverty.3 India and poverty in India remain huge concentration of the poor people (four out of predominantly rural: nearly four out of every five every five) still live in rural areas. poor persons live in rural areas. Wide disparity in poverty rates across the states is a key feature of The pace of poverty reduction picked up significantly poverty in India. For example, poverty reduction in in the latter half of the 2000s, reflecting faster some of the poorest—and most populous States— economic growth and greater inclusiveness of has been slow. Each of the seven of the low-income growth during this period. The poverty rate declined states4 have poverty rates that are two to three by 1.5 percentage points a year between 2004-05 times higher than those of the more advanced and 2009-10, relative to 0.8 percentage points a year States. Accelerating progress in the poorest states is in the previous two decades. Shared prosperity – important as they are the states where fertility rates defined as the growth rate of the bottom 40 percent are particularly high. Higher-income States also of the population – improved, with the gap between have pockets of extreme poverty; Karnataka’s per growth rates of the less well-off and average growth capita income, for example, varies nearly five-fold narrowing considerably between 2005 and 2010. across districts. However, comparisons with other fast growing Given such intra-India disparities, an obvious countries such as China, Vietnam and Thailand but important fact is that where people live is suggest that India is not reaping comparable important: location-specific features are important Table 1. All-India Poverty Rates Rural Urban Total 1993-94 50.1 31.8 45.3 2004-05 41.8 25.7 37.2 2009-10 33.8 20.9 29.8 Source: Government of India, 2012. 1 India revised its poverty line upwards in real terms in 2011 based on recommendations of the Tendulkar Committee. Results reported in this annex are based on the revised official poverty lines, or based on the World Bank’s international ($1.25 per day and $2 per day) lines. 2 A large and (until recently) growing gap between mean consumption per person from the National Sample Surveys (NSS) and the private consumption component of the National Accounts Statistics (NAS) confound efforts to provide a definitive assessment of the responsiveness of poverty reduction to growth in India. 3 World Bank estimate of people living on US$1.25 or less per day. 4 Rajasthan, Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Odisha, and Uttar Pradesh. 85 Country Partnership Strategy for India: 2013–17 parts of the overall experience of poverty. States percent) in 2009-10. Female disadvantage in India matter. India’s states are so different in their continues, despite high rates of growth, and women poverty levels that they range from the best in the die both in infancy and in motherhood, with poorer developing world to the worst. As shown in figure outcomes for women from scheduled castes and 1, India’s poorest states have poverty rates that are tribes. Economic and social outcomes for women at the high end of the distribution of all countries, are underpinned by low levels of security within while the poverty rates of Goa and Himachal and outside their home. Caste remains a potent Pradesh are considerably better – towards the low indicator of labor market outcomes and social end of the distribution. When urban and rural rates status, but positive signs of dynamism are also are analyzed, the contrast between the low and appearing within the caste hierarchy. Indicators high poverty areas is even more striking. that India’s educational expansion is leaving scheduled tribes behind, especially at the secondary India’s high growth in the last decade has not school and higher levels, are worrying. Scheduled benefited everyone uniformly. India’s consumption tribes have shown the least improvement in inequality as measured by the Gini coefficient intergenerational mobility in education and also is 0.37. Inequality is on the rise, with widening display the worst indicators of child nutrition and disparities between urban and rural areas. Further, mortality. income inequality does not reflect the depth and range of social inequities. Structural inequalities Lifting people out of poverty is not enough. by gender, caste, and tribe persist, and indicators Even above the threshold for the World Bank of poverty and human development for these Group’s indicator of shared prosperity (defined as groups lag behind those of the general population. consumption growth of the bottom 40 percent of Poverty rates are especially high among Scheduled the population), a large number of people have Tribes (46.1 percent), and Scheduled Castes (40.8 consumption levels that are precariously close to Figure 1. Poverty rates in Indian States span a wide range of the distribution across all countries 80 Bihar 70 Chhattisgarh 60 Jharkhand Odisha Poverty Rate 50 40 30 Punjab 20 Himachal Pradesh Goa 10 0 Bulgaria Malaysia Turkey West Bank and Gaza Croatia Slovenia Belarus Jordan Czech Republic Lithuania Uruguay Seychelles Thailand Romania Estonia Argentina Chile Iran, Islamic Rep. Egypt, Arab Rep. Dominican Republic Iraq Mexico Ecuador Peru Brazil Goa Panama Algeria Paraguay Guyana El Salvador Bhutan Belize South Africa Punjab Nicaragua Suriname China Yemen, Rep. Philippines Gujarat Pakistan Delhi Tamil Nadu Mauritania Turkmenistan Ghana Rajasthan Botswana Namibia West Bengal Gambia, The Papua New Guinea Timor-Leste Togo D & N Haveli Swaziland Bangladesh Kenya Uttar Pradesh Burkina Faso Jharkhand Mali Bihar Mozambique Central African Republic Tanzania Zambia Madagascar Liberia Legend Countries Indian States Note: At $1.25 a day, constant 2005 PPP, US$; for countries, figure indicates poverty rates for the latest year available in POVCALNET; for Indian states data is from 2009/10 Source: POVCALNET 86 Country Partnership Strategy for India: 2013–17 the poverty line. These “vulnerable” people live below the poverty line. Although the number of between one and two official poverty lines.5 In poor has been declining, the number of vulnerable 2009-10, half of India’s people (51 percent) lived on people has steadily risen to 600 million people. The consumption levels in this vulnerability band. Minor end goal is to reduce extreme poverty and reduce shocks—illness, poor weather and poor crop yields, vulnerability: the number of people that are not indebtedness, high inflation—can easily push them poor, socially included and reasonably secure. 5 The official poverty line for India is set at the equivalent of US$1.17 per person per day in PPP terms. For the purposes of the India CPS, the vulnerable are defined as those living between one and two poverty lines. This choice is based on two independent but coincident local criteria. The National Commission for Enterprises in the Unorganized Sector classifies all population groups in five categories, and those between one and two poverty lines are considered “vulnerable”. The threshold to pay personal income tax is such that a family of five, with one taxpayer, would also be close to two poverty lines. 87 Country Partnership Strategy for India: 2013–17 Annex 4 IFC Indicative Non-Lending Activities Business Line No. of projects Funds Managed by IFC ($ mn) Access to Finance 31 21 Sustainable Business 12 16 Advisory Investment Climate 3 6 Public Private Partnerships* 17 8 Total Non Lending 63 52 Activities Project Name Project Description Expected End Date Access to Finance Microfinance Knowledge Project focusing on: (i) LIS focus to expand access to finance; FY13 Management (ii) Microfinance (MF) product diversification beyond microdebt; (iii) e-payments linked to bank and MFI accounts; (iv) sustainable energy finance linked to MF; (v) micro insurance. E-Banking South Asia Link Working towards improving access to banking services for low-income FY13 to Global Initiatives households by using innovative business models for payments services Belstar Investment and Phase I: Working to determine how Hand-in-Hand (HiH), an NGO working with FY13 Finance Private Limited SHGs in S.India, can successfully promote a commercially run microfinance institution. Phase II: Provide assistance to Belstar to strengthen operations and monitoring systems. Intellecash Micro Finance Support start-up MFIs to establish and grow their operations in underserved FY13 areas and LIS through the Intellecash Network Program franchising model. Capacity Building of To support Utkarsh to develop and grow its operations through improved FY13 Utkarsh product diversification, development of sound internal systems and processes, and the introduction of a Social Performance Management System. India SME Banking To design an SME Banking program through gathering of market information, FY13 Knowledge Management holding discussions with internal and external stakeholders, and conducting studies and workshops. Microfinance Risk To contribute to strengthening risk management systems and practices in the FY14 Management India MF sector in India by providing a framework for risk assessment. Technical Assistance to To enhance the access to financial services of low income population through FY14 FINO Phase II technology platform, by supporting FINO to scale up and become sustainable. Sustainable Energy Finance To provide technical assistance to Regional Rural Banks for developing a clean FY14 - Micro Energy Credits energy lending portfolio and serve the demonstration effect of successful clean energy interventions for low income population. Capacity Building of To support Ananya to expand outreach, build capacity and diversify the FY14 Ananya product base offered to lower income population. 88 Country Partnership Strategy for India: 2013–17 Project Name Project Description Expected End Date Microfinance Credit To take forward and build upon the achievements of Phase I by including FY14 Reporting Phase II outreach to MFIs currently not members of CIB and enabling them to integrate with CIBs. The project design also incorporates awareness raising of end borrowers as well as a study of the impact of credit bureaus on MFI borrowers’ behaviour and dissemination of results. Sustainable Energy Finance To build the capacity of MFIs to undertake sustainable finance in a way that FY14 - Dia Vikas helps them manage their own risks and contribute to climate mitigation. Sustainable Finance - FY15 Maanaveeya Responsible Finance To contribute to strengthening of the MF sector in India by promoting FY15 Sectoral initiatives aimed at bringing greater customer centricity to the sector, and raising awareness among decision makers to better address the issues facing the sector. SEWA Livelihood Finance To assist SEWA in launching a Livelihood Finance Business by evaluating the FY15 feasibility, preparing the business plan and providing handholding support. Technical Assistance to To enhance access to finance for the urban population by supporting SFPL FY15 Swadhaar through TA jointly with Accion International. Axis Bank Alternative To enhance the access to financial services for low income population in India FY15 Delivery Channels (such as migrants), using alternative delivery channels. The project will use remittance as an entry product to increase access to other banking services using this channel. It will support Axis Bank to pilot a new agent banking channel to prove the commercial viability of this model and help them scale it up. Aadhar Responsible To support the partner organisation in launching new housing finance FY15 Finance products, capacity building and development of sound internal systems and Equitas Housing processes and introduction of a Responsible Finance framework. FY15 Microfinance Janalakshmi Financial FY15 Services Health Payment To launch an automated G2P payment system in Bihar, linking payments made FY15 to health workers and program participants to bank accounts. The Andhra Pradesh State To assist AP Coop Bank to reach an expanded customer base of farmers, to FY15 Cooperative Bank build an expanded product base of both credit and non-credit offerings, to improve its overall systems and to engage in responsible finance practices. Ujjivan Microfinance To support Ujjivan in launching new products and scale-up of operations, FY15 reducing operating costs through process improvements and incorporating Responsible Finance principles in operations. Equitas Microfinance To support Equitas in scaling up its operations in under-banked areas and LIS, FY15 and incorporating Responsible Finance principles in their operations. MicroInsurance - To develop a new microinsurance product for Self Help Groups (SHGs) to be FY15 VimoSEWA piloted among selected financial institutions. Responsible Finance To assist the MF sector in India to refocus on a client- centric approach by FY16 Accion organizing responsible finance programs at client, institutional, and sectoral levels leveraging on existing industry, lender and investor Sustainable Energy Finance To build capacity of GTN to undertake sustainable finance in a way that helps it FY16 - Grassroots Trading to manage risk and contribute to climate change mitigation. Network Housing Regional To conduct market assesment, develop tools for capacity building, raise FY16 stakeholder awareness and pilot innovative business models in the mortgage and housing markets across SA. Grameen Koota Housing To assist Grameen Koota in introduction of new products, capacity building to FY16 Microfinance scale up and development of Responsible Finance Management Framework. 89 Country Partnership Strategy for India: 2013–17 Project Name Project Description Expected End Date Technical Assistance to To increase access to credit for MSMEs in India by providing support to CERSAI FY15 Collateral Registry in India in developing a sustainable business model and expanding its remit to include movables. Arohan Pensions To support Arohan, an MFI working in West Bengal, Bihar and Assam to offer FY16 pension product to the low income segments by leveraging their brand and branch network. Investment Climate India Rajasthan Investment To assist the Government of Rajasthan (GoR) in increasing the level of FY13 Climate Reform private investments in the State through (i) proactive investor targetting and investment generation, including increased investments by IFC; and (ii) improving its business environment with a focus on easing the regulatory and non-regulatory constraints. Bihar Tax Simplification To increase regulatory compliance by reducing compliance costs and increased FY13 Program formalization of businesses in Bihar. Buddhist Circuit Tourism: A two-phase project that aims to facilitate the upgrading of tourism services in FY15 Facilitating Growth the Buddhist Circuit. Corridors in UP and Bihar Sustainable Business Advisory Green Power for Telecom To facilitate two mobile operators / telecom tower companies / energy service FY13 providers to implement two viable business models (pilot projects) using RE / hybrid to reduce GHG emissions and increase RE. CTI TurboTech To catalyze growth in TurboTech by increasing the Company’s manufacturing FY13 capabilities and address the market barrier of access to financing for early-stage cleantech companies. Agribusiness - APPL To scale-up dairy and aquaculture in APPL’s tea estates and its surrounding FY13 areas and to strengthen the supply chain and market linkage for dairy, aquaculture and other agro-produce. 2011 India Development To monitor and document the evolution of the 13 winning social entrepreneur FY13 Marketplace and to oversee the management of a grant pool and award a portion to each of the 13 social enterprises that want to scale or replicate their inclusive business models in the states of Bihar, Orissa, and Rajasthan. Tata Water Sustainability To support 11 Tata facilities in developing a set of detailed water response FY14 Program strategies and build awareness within the broader community for water sustainability and water footprinting. Cleaner Production To support CP assessments with IFC pipeline and portfolio clients and FY14 Technical Advisory Services specifically target large energy intensive companies, to reduce manufacturing costs and potentially lead to additional CP related investments. SME Management To scale up the Business Edge model in India by customizing for the local FY14 Solutions India market and building capacity of local service providers to deliver Business Edge. India Farm Forestry To increase tangible benefits from sustainable forestry and productive land use FY14 Advisory Program Phase II to rural landowners. Lighting India To focus on addressing systemic market failures in the off-grid renewable FY15 energy market in India by working at the company/sector level with the objective to provide renewable energy lighting access. LI will seek to replicate the Lighting Africa program. South Asia Farmer To facilitate development/application of farmer training tools and techniques FY15 Training/GAP and uptake of improved good agricultural practices (GAP). India Sugar Advisory To design, implement and scale-up pilot projects (which can be taken to scale) FY15 with leading sugar mills in India. These pilot projects will focus on sustainable sugarcane and work predominantly with small and marginal landholders. India E-Waste Advisory To demonstrate a sustainable business model of integrating and formalizing FY16 the informal sector players in the E-waste supply chain of Attero. 90 Country Partnership Strategy for India: 2013–17 Project Name Project Description Expected End Date PPP Gujarat University PPP The PPP business line provides assistance to governments in structuring and FY13 Universal Health Insurance, implementing public-private partnerships (PPPs) to improve infrastructure and FY13 Meghalaya Project 1 public services, with the benefit of private-sector expertise, management, and finance. We are currently advising various state government on the following Shillong Medical College & projects across sectors: FY13 Teaching Hospital PPP Kerala Port, Vizhinjam FY13 Chennai Metro FY13 Vadodara Rooftop Solar FY13 Orissa SWM PPP - FY13 Berhampur Surat Rooftop Solar FY13 Rajkot Rooftop Solar FY13 Mehsana Rooftop Solar FY13 Bhavnagar Rooftop Solar FY13 FCI Silos FY14 Jharkhand Diagnostics FY14 Rajasthan Public Street FY14 Lighting Bhubaneswar Public Street FY14 Lighting * For PPP, currently 15 projects but two of the projects (Jharkhand diagnostics and FCI Silos) are split into two projects each making the total project count as 17. 91 Country Partnership Strategy for India: 2013–17 Annex 5 Overview of Main Trust Funds Activities Trust Funds are a diverse instrument used mainly for companies in OECD countries to purchase two purposes: (a) to implement global conventions project-based greenhouse gas emission and support global partnerships/global public reductions in developing countries, within goods, and (b) to support activities in country the framework of the Kyoto Protocol’s Clean programs that implement country, regional, and Development Mechanism (CDM); sector priorities. • IDA grants, which help low-income countries to restore or maintain their external debt Global Partnership Trust Funds: Trust Funds in sustainability; while India is not eligible for IDA support of global partnerships/public goods with grants, one such grant was approved in the significant activities in India are mostly focused aftermath of the Indian Ocean Tsunami. on the environment, and include the following programs:1 These Trust Funds often complement IBRD/IDA project funding and are normally executed by • The Ozone Trust Fund, which assists countries recipient agencies.2 Disbursements over the last CAS in phasing out Ozone Depleting Substances period were $41.7 million (equivalent to 0.4 percent as agreed under the Montreal Protocol for the of IBRD/IDA disbursements over the period) (see Protection of the Ozone Layer, with funding table 1). from the Multilateral Fund of the Montreal Protocol; In some respects the use of funds from global • The Global Environmental Facility, which programs in India is different than that in other provides funding for projects that improve the countries. For example, the Ozone Depletion global environment; Program is larger in East Asian countries, and Carbon • The Carbon Finance Program, which uses Finance is significantly larger in China.3 money contributed by governments and Table 1. Global Partnership Trust Funds in India, FY2009-12 Trust Fund Disbursements (US$, mn)* Ozone Trust Fund 22,425,798 Global Environmental Facility 13,632,004 Carbon Finance 3,327,801 IDA Grant--Tsunami 2,300,000 Total 41,685,604 * FY12 data up to April 2012. 1 This note covers only trust funds administered by the World Bank. The World Bank also operates as the Trustee for other global institutions such as the Global Fund for AIDS, Tuberculosis, and Malaria (GFATM), but these are not covered here, although the GFATM has disbursed $788 million in India since its inception in 2003. 2 Both Ozone and Carbon Finance projects are often free-standing—not linked to a World Bank-supported project. 3 For example, over FY2010 to the first half of FY2012, the Carbon Fund disbursed $408 million, GEF $96 million, and Ozone $28 million in China. 92 Country Partnership Strategy for India: 2013–17 Looking forward, while some programs such as activities were World Bank executed. The remainder Ozone are phasing out, others are expected to ($12.2 million) was recipient-executed. play an increasingly important role. Most notably, the Clean Technology Fund (CTF) Trust Fund Some trust funds are only or primarily recipient- Committee agreed in May 2012 to provide an executed (Policy and Human Resource initial allocation of around $263 million to India Development (PHRD), Japan Social Development to fund its Climate Investment Plan. Lending Fund (JSDF), Cities Alliance, the Development constraints in the next four years call for the Marketplace, Institutional Development Fund (IDF), leveraging of significantly higher amounts of trust Consultative Group to Assist the Poorest (CGAP), resources, including through global partnerships. the Statistical Capacity Building Trust Fund, and Phase II of the Himachal Pradesh Green Growth Independent Evaluation Group’s CLEAR initiative). Development Policy Loan is expected to be In cases, where World Bank-executed funds are financed by the CTF. provided alongside recipient-executed funds, the former supports supervision and implementation Country, Region, and Sector Trust Funds: activities of recipient agencies. Certain trust fund Trust funds also support activities in country programs can be executed by the Bank or by programs that help implement country, regional, the Recipient depending on the objective of the and sector priorities. During FY2009-12, 51 such activity. This is the case for (DFID, Output-Based TF programs4 were active in India, of which the 15 Partnership, Public Private Infrastructure Advisory largest accounted for more than 80 percent of total Facility (PPIAF), Global Facility for Disaster Reduction disbursements ($44.8 million) (see table 2). In all and Recovery (GFDRR), and South Asia Food and 394 activities were funded in India, with an average Nutrition Security Initiative (SAFANSI) (see table 4). disbursed amount of about $100,000. More than All Recipient-executed trust funds require approval two-thirds ($32.6 million out of $44.8 million) of the by the Government of India. Table 2. Country, Region, Sector Trust Funds, FY2009-12 Program Name Total Cum share No. Ave. size (%) Activities DFIDIN DFID India III 7,326,037 16 33 222,001 INFGRW AusAid Infra 4,578,265 27 29 157,871 PHRD PHRD 3,195,235 34 20 159,762 PPIAF PPIAF 3,152,994 41 30 105,100 SPTF DFID TF II 2,867,551 47 37 77,501 JSDF JSDF 2,549,884 53 8 318,736 ESMAP ESMAP 2,254,167 58 13 173,398 TFESSD TFESSD 2,055,138 62 19 108,165 FTIE Education for All 1,802,713 66 8 225,339 CITIES Cities Alliance 1,419,605 70 13 109,200 GPOBA GPOBA 1,411,650 73 7 201,664 FS-SP Swedish Social Development 1,326,520 76 10 132,652 SA-DSD South Asia Decentralization 1,063,634 78 24 44,318 GFDRR GFDRR 1,021,023 80 9 113,447 BNPPRF BNPPRF 1,019,145 83 16 63,697 OTHER Other TFs 7,832,515 100 118 66,377 Total 44,876,076 394 4 All programs excluding the Water and Sanitation Program and global programs such as Ozone Trust Fund, GEFIA, Carbon Finance Program, CDCFTA, and TRF 93 Country Partnership Strategy for India: 2013–17 All other trust fund programs are only World Bank- region; accordingly, a large the South Asia Food and executed (see table 4 for the 11 largest). These trust Nutrition Security Initiative or SAFANSI trust fund funds are linked to activities in the India program, has been mobilized with contributions from DFID which have been requested by the Government and other donors to support initiatives to reduce of India (as are projects under preparation or malnutrition. implementation and knowledge activities), and are in line with the country strategy, South Asia Another way to look at trust fund programs is by the Regional (SAR) Strategy, and sectoral priorities level at which they are managed: country, region that are endorsed by the Board of Executive (South Asia), sectoral anchors or global. Trust funds Directors. For example, the SAR strategy stresses managed at the level of the country program (the the importance of reducing malnutrition in the second and third DFID Trust Funds, for example) Table 3. Trust Funds with recipient-executed activities, FY2009-12 (US$) Trust Fund Recipient- Bank-executed Total Share RE/Total Type executed Disbursement Disbursement Disbursement (%) Disbursement PHRD 2,927,082 268,153 3,195,234 92 Mostly RE JSDF 2,403,691 146,192 2,549,884 94 Mostly RE Cities Alliance 1,202,933 216,672 1,419,605 85 Mostly RE DFID TF II 1,188,859 1,678,691 2,867,551 41 Both DFID TF III 1,043,294 6,282,743 7,326,037 14 Both GPOBA 977,663 433,987 1,411,650 69 Both Dev. Marketplace 586,491 0 586,491 100 Only RE IDF 463,561 0 463,561 100 Only RE CGAP-T 333,639 44,840 378,479 88 Mostly RE PPIAF 317,078 2,835,916 3,152,994 10 Both StatCap 307,313 0 307,313 100 Only RE GFDRR 234,610 786,413 1,021,023 23 Both SAFANSI 200,000 23,636 223,636 89 Both IEG’s CLEAR Init. 54,304 0 54,304 100 Only RE Table 4. World Bank-executed (BE) trust funds cumulative disbursements above $500,000, FY2009-12 Program Name BE Disbursements INFGRW AusAid Infrastructure 4,578,265 ESMAP ESMAP 2,254,167 TFESSD TFESSD 2,055,138 FTIE Education for All 1,802,713 FS-SP Swedish Social Development 1,326,520 SA-DSD South Asia Decentralization 1,063,634 BNPPRF BNPPRF 1,019,145 WPP Water Partnership Program 756,951 SIEF Spanish IE TF 753,097 SAWI SAWI 584,387 GENTF Gender TF 520,827 94 Country Partnership Strategy for India: 2013–17 Table 5. Trust Funds by Level of Management, FY2009-12 (US$) Level of management Disbursement Disbursement Share (%) Country 10,193,588 23 Region 10,345,827 23 Sector or global 24,390,127 54 Total 44,929,542 100 disbursed about a fourth of the total; regionally- The Government of India as a Trust Fund managed trust funds, another fourth; and sector/ Donor: An important development over the global ones accounted for the remainder.5 past CAS period has been India’s increasing role as a donor in various trust funds. India is now Over time, the World Bank, donors, and recipients a member of ten trust funds and contributes have striven to manage trust funds in a more strategic to six of them (the Afghanistan Reconstruction and less fragmented way, with the 2009 Trust Fund Trust Fund, Africa Cooperation Building, Avian Reform representing an important step forward in and Human Influenza, GEF, GFATM, South-South this direction. For the trust funds managed by the Experience Exchange Facility (SSEEF), Cultural India program, the DFID-World Bank Partnership Heritage) and the Government of India envisages Trust Funds for India II and III, a tripartite structure contributing to a few additional ones. India is a in which the Government of India (Department of contributor and provider of experience to the Economic Affairs), DFID, and the World Bank jointly SEETF, and SEETF resources will continue to be endorse activities has been put in place to ensure mobilized to foster experience sharing regionally greater client ownership. For trust funds managed at and beyond on various development issues the regional or sectoral level, government approval including decentralization and delivery of public is needed for all recipient-executed activities, in line services. with Government of India procedures. Government of India’s Concerns on Trust Other Trust Funds: In addition to the two categories Funds: The Government of India has taken a of TFs discussed so far, both the Water and Sanitation strategic stance on trust funds as a whole and Program (WSP) and IFC manage large trust fund expressed a major concern about the overall resources. WSP-managed trust funds disbursed $12.3 increase of trust fund funding in World Bank million and IFC-managed trust funds disbursed $31.8 Group activities, stating that trust fund donors’ million over FY2009-12. IFC mobilized significant contributions do not have any leveraging impact amounts of trust fund resources for its advisory financially, contrary to what would happen if the services, from less than $1 million in FY2008 to $9.5 same funds were provided as IBRD or IFC capital million in FY2011. increase. 5 Excluding WSP $12,300,658 and Global Partnerships (OTF, GEFIA, Carbon, CDCFTA, and TRF) 95 Country Partnership Strategy for India: 2013–17 Annex 6 India Country Financing Parameters Date: March 24, 2005 The country financing parameters for India set out below have been approved by the Regional Vice President, South Asia Region and are being posted on the Bank’s internal website. These parameters would be applied within the overall framework of the Bank’s Country Assistance Strategy for FY05-08 (see India: Country Assistance Strategy, R2004-0170/3, IDA/R-2004-0208/3, September 17, 2004). Item Parameter Remarks/Explanation Cost sharing. Limit on the Up to 100% Cost sharing arrangements in individual projects would be managed to stay proportion of individual project costs within the aggregate lending envelope; the Bank’s overall financing share that the Bank may finance is not expected to change significantly. The Bank’s financing percentage in each project may vary from project to project, depending upon project type, sector etc. Some level of counterpart financing however is expected to continue in many projects. The Bank may selectively finance 100% of project costs e.g., social sector projects and projects in poor and remote areas. In individual projects, cost sharing arrangements would take into consideration the characteristics of the project and sector-specific aspects (e.g., based on the CAS ‘guidelines for Bank lending in key sectors’) In national-level projects, where the Bank’s envisages cofinancing with other development partners under common arrangements, including sector- wide approaches, the Bank’s financing share is expected to be relatively low. Recurrent cost financing. Any limits No country In determining Bank financing of recurrent costs in individual projects the that would apply to the overall amount level limit Bank will take into account sustainability issues at the sector and project of recurrent expenditures that the Bank on levels including sustainability of the project/ program achievements/ may finance recurrent outcomes, and implied future budgetary outlays. Sector-specific cost considerations (e.g., based on the CAS ‘guidelines for Bank lending in key financing sectors’) would also be taken into account. Local cost financing. Are the Yes India meets the criteria for Bank’s financing of local costs. Therefore, the requirements for Bank financing of Bank may finance local and foreign costs in any proportion as needed in local expenditures met, namely that: individual projects. (i) financing requirements for the country’s development program would exceed the public sector’s own resources (e.g., from taxation and other revenues) and expected domestic borrowing; and (ii) the financing of foreign expenditures alone would not enable the Bank to assist in the financing of individual projects Taxes and duties. Are there any taxes No Current levels of taxes and duties are reasonable. At the project level, the and duties that the Bank would not Bank would consider whether taxes and duties constitute an excessively finance? high share of project costs. 96 Country Partnership Strategy for India: 2013–17 Annex 7 Government of India Project Screening Criteria1 In 2011, the Department of Economic Affairs, as the creation) in a sustainable manner - which other nodal agency for posing projects to the World Bank, wise has not been the norm in the projects Asian Development Bank (ADB), and International implemented in the sector - e.g. focus on levels Fund for Agricultural Development, has decided of reduction of water loss, focus on number to institute a new set of screening principles to of hours power/water is available per day, govern the selection of projects to be posed to reduction in waterborne disease? these agencies. The goal of instituting this screening 4. Does the proposal bring together otherwise criteria is to maximize access and leverage of disparate attempts/ schemes to one synergetic Multilateral Financial Institution/Multilateral platform which has not been possible hitherto Development Banks’ (MDBs) knowledge base, (e.g. nutrition, gender issues, livelihoods)? international experience and familiarity with best 5. Does the proposal seek to create additional practices, making the best use of limited external choice for the citizens to access required resources available. This selection criteria will form service/entitlements? the main approach for accessing assistance from the 6. Does the proposal involve energy efficiency World Bank, ADB and the IFAD. and environmental benefits without making the project/ outcomes expensive? Central to this new approach are two principles: 7. Are knowledge transfer, technology transfer 1) size of external assistance will be up-to a and best practices transfer from international maximum of US$500 million from MDBs for any experience envisaged with adequate long project inclusive of any technical assistance for term engagement for ensuring sustainability in project preparation and 2). Overall portfolio will be Indian context? progressively re-balanced towards State Projects 8. Does the proposal have institutional and amongst the States towards the lagging and improvement measures: e.g. (a) Accounting the special category States. Reforms (moving from single entry cash based accounting system to double entry Systemic or transformational impact accrual system of accounting (b) Ring fencing of finances/activities including 1. Does the proposal have elements of sustainable corporatisation wherever needed c) creation systems re-engineering and or sustainable and implementation of appropriate revenue process re-engineering which would lead models e.g. tariff reforms or alternative revenue to improved systems, business processes or structuring. delivery mechanisms? 9. Does the proposal address issues of real sector 2. Does the proposal involve capacity and reforms e.g. Development of sectoral policies, institution building that can foster better development of institutional structures, setting outcomes on a long-term sustainable basis? up of regulatory framework/ regulators? 3. Does the proposal have focus on service 10. Does the proposal have elements that delivery/improvement (rather than only asset are transformational in nature - which if 1 Based on Government of India circular (F.No. 3/2/2010-FB.II), issued on September 1, 2011, outlining a country-led screening criteria for projects posed to the World Bank, ADB and IFAD. 97 Country Partnership Strategy for India: 2013–17 implemented could transform the way systems Innovations in financing and leveraging function or the way delivery of services are done? 1. Does the proposal use different/ innovative Innovations and piloting of new approaches financing products /modalities? 2. Does the proposal involve co-financing from 1. Does the proposal have innovative elements and other financing agencies? new approaches that have not been tried in the 3. Does the proposal catalyze private sector sector and have reasonable chance of changing financing in different ways and especially to for the better the way things are done in the sector create leverage? and have some chance of scalable replication? 4. Does the proposal involve CDM and accrual 2. Does the proposal look at financial sustainability product of core of carbon credits as natural by­ and O&M related issues which otherwise has development projects which can be a way of not been the norm in the sector? financing the project? 98 Country Partnership Strategy for India: 2013–17 Annex 8 Consultations Held to Inform the Preparation of the CPS World Bank FY2011 Client Survey for India greater, however, if its experts improved their knowledge of India’s specific challenges, reduced Background. In order to develop more effective the complexity of obtaining financing, and offered strategies for its work in the country, the World more innovative knowledge products. Bank in India conducted a stakeholder perception survey in May–June 2012 to gauge how its work Areas of focus. Stakeholders were of the opinion was perceived. The survey covered a wide range that rural development, agricultural development, of questions about India’s development priorities, and food security were the most important areas perceptions about the Bank in India, the Bank’s for reducing poverty (tables A9.1 and A9.2). perceived strengths and weaknesses, the relevance Education, job creation, and economic growth and quality of its research and knowledge, the ease were also believed to be critically important. Rural of access and usefulness of its information, and its development, governance, and energy were seen future role in the country. to be the key drivers of economic growth, and stakeholders wanted the WBG to remain engaged Process. The survey was conducted by the market in these areas. On the global development research firm AC Nielson through mailed and online agenda, respondents wanted the WBG to questionnaires, as well as face-to-face interviews. engage on issues related to climate change, It covered a fair mix of think tanks, central and communicable diseases, international financial state government bodies, development agencies, systems, and trade. Areas for future research civil society, media, the private sector, and project included rural and agricultural development, beneficiaries. About half of the respondents worked food security, education, poverty reduction, professionally with the World Bank. The survey governance and water and sanitation. covered the states of Andhra Pradesh, Assam, Bihar, and Himachal Pradesh, as well as the cities of Delhi Value to clients. Financing, particularly investment and Mumbai. lending, was considered the Bank’s most effective instrument in support of the development agenda Results. Most stakeholders expressed confidence (table A9.3). This was followed by the Bank’s about the World Bank Group’s effectiveness and technical assistance and advice and its ability to felt the institution had the financing, knowledge, strengthen institutions. Bank research was perceived and skills to help India solve complex development to be relevant and accessible. However, there were challenges. Better development results could be some concerns about the extent of the Bank’s achieved if the WBG increased its collaboration inclusiveness and openness, the accessibility of its with local governments, academia, think tanks, staff, and its linkages to non-Bank expertise (table and research institutes in India. Going forward, A9.3). Selective concerns were expressed about the respondents felt the World Bank had a significant Bank’s effectiveness in governance, job creation, and role to play in the country; that value would be natural resource management. 99 Country Partnership Strategy for India: 2013–17 Table A9.1. What would contribute most to reducing poverty? Percentage of Respondents (N=269) 0% 10% 20% 30% 40% 50% 60% Rural development/agricultural 52% development/ food security Education 43% Job creation/employment 38% Economic growth 34% Governance/anti-corruption/law and 25% justice Equality of opportunity 21% Health 19% Water and sanitation 17% Social protection 8% Transport 7% Other 6% Gender/social intrusion 6% Energy 5% Natural resource management 5% Urban development 5% Environment 3% Conducive environment for private 3% sector development and FDI “Poverty reduction is a broad term that encompasses work in many different areas. Which three areas of development listed below do you believe would contribute most to reducing poverty in India?” (Respondents chose from a list. Responses combined.) 100 Country Partnership Strategy for India: 2013–17 Table A9.2. Where should the World Bank focus its resources? Percentage of Respondents (N=269) 0% 10% 20% 30% 40% 50% 60% Rural development/agricultural 52% development/ food security Education 32% Governance/anti-corruption/law and justice 26% Water and sanitation 25% Poverty reduction 25% Transport 24% Health 20% Energy 17% Job creation/employment 15% Economic growth 15% Urban development 11% Environment 9% Conducive environment for private sector development and FDI 5% Equality of opportunity 5% “When thinking about how the World Bank can have the most impact on development results in India, in which sectoral areas do you believe the World Bank should focus most of its attention and resources in India? (Choose no more than THREE)” (Respondents chose from a list. Responses combined.) 101 Country Partnership Strategy for India: 2013–17 Table A9.3. What is the greatest value of the Bank? Percentage of Respondents (N=264) 0% 10% 20% 30% 40% 50% 60% Financial resources 42% 9% 51% Institutional strengthening 14% 19% 33% Technical assistance 13% 14% 27% AAA, studies/reports/policy notes 11% 11% 22% Training/capacity building 5% 17% 22% Policy advice 6% 8% 14% Studies/analyses 3% 8% 11% Mobilizing third party financial resources 3% 4% 7% Linkage to non-Bank expertise 4% 5% Donor coordination 2% 4% Other 2% Data 2% Convening/facilitating 1% Greatest value Second greatest value “When thinking about the World Bank’s role, which activity do you believe is of greatest VALUE and which activity is of second great value in India?” (Respondents chose from a list.) Notes: In the previous FY2004 country survey, more than two-thirds (68%) of all respondents indicated that providing loans to finance development projects was the greatest value of the Bank. 102 Country Partnership Strategy for India: 2013–17 Table A9.4. What is the Bank’s greatest weakness? Percentage of Respondents (N=264) 0% 5% 10% 15% 20% 25% 30% Too bureaucratic in its operational 27% policies and procedures Too influenced by developed countries 27% Not adequately sensitive to political/ social realities in India 18% World Bank processes too slow and 16% complex Imposing technocratic solutions 15% without regard to political realities Not collaborating enough with 14% non-state actors Not exploring alternative 13% policy options Not willing to honestly criticize policies 12% and reform efforts in the country Not enough public disclosure of 12% its work Not aligned with country priorities 9% Other 8% Not client focused 6% Staff too in accessible 5% Arrogant in its approach 3% Not aligned with other donors’ work 3% The credibility of its knowledge/data 1% “Which of the following do you identify as the World Bank’s greatest WEAKNESSES in its work in India? (Choose no more than TWO)” (Respondents chose from a list. Responses combined.) Notes: Respondents in the previous country survey (FY2004) indicated that the Bank’s greatest weaknesses were imposing technocratic solutions without regard to political realities (24%), not considering alternative policy options (21%), and being too bureaucratic in its operational policies and procedures (20%). 103 Country Partnership Strategy for India: 2013–17 World Bank Group CPS multistakeholder To reach a much wider audience, the details of the consultations discussions were shared on the Bank’s external website, with comments and suggestions invited In the summer of 2012, the Bank team held from the public at large. multistakeholder consultations to identify priorities for the new CPS. Consultations were held with a Results. Despite the diversity of development broad range of stakeholders to tap their experience challenges raised during the consultations, and knowledge and hear their ideas about how participants identified a few key areas where the the Bank could help India meet its long-standing WBG could play a catalytic role: development agenda as well as the new challenges thrown up by unprecedented economic growth Agriculture and the recent slowdown. Agriculture was repeatedly identified as an Process. In mid-May 2012, a draft concept note overarching concern, given the importance of was prepared by the WBG, outlining initial thoughts food security for the country and the fact that on its strategy for 2013–16. This was followed by the majority of India’s rural poor depend on discussions with the Ministry of Finance and line agriculture for at least a portion of their income. ministries to assess the central government’s views Participants strongly felt that the WBG could help on India’s challenges and to identify key areas increase agricultural productivity by supporting the where the WBG assistance could have the greatest development of agriculture-related infrastructure impact. To capture the diversity of development and services. Ideas included support for low-cost challenges facing India today and the views of irrigation, improved access to credit, the provision state governments, further consultations were held of adequate warehousing and storage facilities, with officials in four states: Assam, Chhattisgarh, bringing the benefits of research to farmers, Karnataka, and Uttar Pradesh. upgrading technological interventions, providing crop insurance, developing village roads, and These early consultations were accompanied by building primary-level processing and marketing parallel consultations with civil society organizations capacity at the grass roots. The improvement of in the state capitals of Assam, Chhattisgarh, livestock, particularly for dairy farming, was also Karnataka, and Uttar Pradesh, as well as in Delhi and seen as important. Participants felt that the creation Mumbai. Ahead of the consultations, all participants of one-stop facilities for farmers should be a priority. received a presentation in both English and Hindi Other matters of perceived importance were that spelled out the main thrusts of the previous the proper management of the country’s water CPS, opportunities and challenges both within and resources and strengthening agriculture’s resilience outside India, and India’s own future direction as to climate change. articulated in the approach paper to the 12th Five Year Plan. This was followed by a paper presenting Health the WBG’s initial thoughts on its new strategy, based on early deliberations. Health and malnutrition were also high priorities. Participants pointed out that only a small Participants were asked to express their views percentage of the population had access to formal candidly on what they felt should be the health care. Public sector services were beset development priorities for India (and their state), with poor management and leakages, and some and whether the CPS captured those priorities. They 80 percent of health spending occurred in the were also asked what role they envisaged for the private sector. An average family spent more on WBG in support of those priorities, in which sectors health care than on education, with the high cost that support would be most effective, and what of treatment often leading to impoverishment. form the support should take (finance, knowledge, The sector faced a critical shortage of human experience sharing, and so on). After feedback from resources, especially in rural areas, making it the Bangalore consultations, a section was added necessary to train local people as paramedics. on the lessons learned from earlier Bank projects. Some participants suggested that a public- 104 Country Partnership Strategy for India: 2013–17 private-partnership model in health care could be Governance promoted, with targeted subsidy for the poor. The World Bank could help in providing technical and The importance of good governance was managerial assistance to the sector, along with repeatedly emphasized, particularly the need capacity building at various levels. Bank support to tackle corruption. It was felt that improving could also be expanded to include the promotion governance should be a focus area of the Bank’s of preventive and alternative medical systems. new strategy. Participants expressed the need for greater transparency and disclosure regarding Education and skills the use of public funds and the outcomes of publicly funded programs. They also cited a need Education was another area of concern. Participants for independent monitoring at the block, district, highlighted the poor quality of elementary and state levels. The Bank, they said, could provide education, which laid a weak academic foundation technical assistance and expertise in this area. To that made it difficult for students to cope at higher support decentralized planning, participants saw it levels, with direct effects on the quality of human as important to strengthen grassroots institutions resources. Moreover, the emphasis on enrolment (Panchayati Raj institutions, or PRIs) and to build numbers created an erroneous impression of their capacity by sharing examples of successful universal schooling. Several speakers emphasized community-driven projects, the more because the the need for meaningful skills training for youth to PRIs provided the only institutional encouragement enable them to set up microenterprises and small to women’s political empowerment in the country. businesses, thereby slowing the migration of rural Convergence of government programs was also youth to urban areas. There was also a perceived needed through greater interministerial and need to increase the number of seats available interdepartmental coordination. Several speakers in institutions providing technical and vocational pointed out the need to develop a current database education, and increase resources allocated to such of critical indicators—such as population, maternal institutions. health, education, location of resources, and so on—to improve development planning at the Urbanization grassroots and to allocate resources wisely. Discussions also focused on the challenges created Environment by India’s rapid urbanization. It was observed that $1 trillion would be needed for urban development Participants highlighted the environmental cost of over the next two decades to meet the needs of high growth as manifested in rampant water, air and India’s rapidly urbanizing population. However, soil pollution. It was emphasized that development it was also suggested that allocations should programs should factor in environmental go primarily to local governments, and that sustainability to ensure holistic development in transparency in public expenditures should be addition to the creation of wealth creation and strengthened. Some participants recommended the stimulation of economic growth. It was also that the WBG support the planned development suggested that the Bank help the government to of the rapidly growing second- and third-tier cities, come up with a climate-change response for the especially by providing technological and scientific medium and long terms. solutions for public transportation, waste disposal, and other urban problems. Several participants Infrastructure expressed apprehension that rapid urbanization, especially through rural-urban migration, was Discussions also centered on the need for creating pockets of urban poverty that were likely strengthening infrastructure, particularly transport, to deepen unless the skills of rural migrants were communications, and power. Several participants developed to improve their employability. Facilities felt that growth in sectors such as water, energy, in rural areas also needed to be improved to halt roads and rail was needed if the manufacturing migration to urban centers. sector was to develop to its full potential. 105 Country Partnership Strategy for India: 2013–17 Small business difficulties of working in Maoist-dominated areas, participants pointed to the plight of farmers and Several participants said that the informal sector forest-dependent people and the need to improve needed to be recognized as the biggest trigger primary health care and education, upgrade the for growth as it generated far more employment delivery of government programs, and ensure the than the formal sector. However, productivity in judicious use of the state’s natural resources. small and medium-size enterprises (SMEs) needed to be improved and such enterprises integrated Other areas of focus with markets across the country. Given the sector’s enormous potential, it was suggested that SMEs Children, the disabled, the elderly, and agri-business (including microenterprises) should be served were identified as sectors that required specific by dedicated financial institutions that provided mention in the strategy. It was mentioned that expertise together with financial support. It was senior citizens—whose number is expected to rise observed that the World Bank could act as a catalyst to about 340 million by 2050 according to a United and counselor for this sector; moreover, deeper Nations estimate—required special focus as they research on the sector’s considerable untapped were excluded from most development programs. potential was needed. Further, in many rural areas, young people were migrating to urban centers, leaving their elders Regional imbalances and the unique characteristics behind to fend for themselves without a support of some of India’s regions were also discussed. For system. In the absence of a clear agenda to address instance, in the northeast, development projects this issue seriously, a major problem was bound to needed to take into account the region’s unique appear. ecological characteristics, and more research was required to understand the richness of the resource CPS Formulation and Consultation Process base. The World Bank could play an important role in Assam by supporting small farmers; strengthening A more detailed version of the CPS consultation transportation (including river transportation on process, with the names of participants, details of the Brahmaputra), communications, and power; discussions, and other information, is available on and expanding microfinance and vocational the World Bank’s India website: training. In Chhattisgarh, while highlighting the http://www.worldbank.org/en/country/india. 106 Country Partnership Strategy for India: 2013–17 Annex 9 The Indian Statistical System India has been a pioneer in the collection and use A strong history of statistical development: of statistics for national development and has one Significant development of the ISS and its related of the largest and most complex statistical systems institutions took place in the first decades after in the world. The complexity derives from the size Independence. The Indian Statistical Institute, for of the economy and the population, the great example, was responsible for the development of variety of economic activities and social conditions, many of the statistical procedures and techniques the variability in natural endowments and that are widely used today throughout the world. environmental conditions and the constitutional The National Sample Survey, which is now in its structure of a federal state. While national statistics 68th round, has collected and disseminated an are the responsibility of the central government, enormous amount of extremely valuable data state and local governments have formal about the economic activity and social conditions responsibility for the collection of the basic data of households throughout the country. It represents which make up the national estimates. the pre-eminent source of data for micro-economic research in India and a very important resource for The Indian Statistical System (ISS) is the responsibility historical analysis. of the Ministry of Statistics and Programme Implementation (MOSPI). The Statistics Wing of In many respects, the Indian statistical system the Ministry – also called the National Statistical in 2012 is sophisticated and well-resourced. For Office (NSO – includes the Central Statistics Office example, India was one of the first subscribers to (CSO), responsible for the compilation of national the IMF’s Special Data Dissemination Standard statistics and statistical standards, the National (SDDS) and has been in compliance with the Sample Survey Office, responsible for sample surveys standard since 19961. The most recent IMF Article IV throughout India, and the Computer Center. At staff report states that “Macroeconomic statistics are the Center statistical work is also carried out in a adequate for surveillance, but weaknesses remain number of ministries coordinated by the CSO. At in the timeliness and coverage of certain statistical the state level and below, statistical activities are series. India has an elaborate system for compiling the responsibility of state governments and most economic and financial statistics and produces states have a department of Economics or Statistics, a vast quantity of data covering most sectors of or its equivalent, to coordinate activities. Statistical the economy.”2 The World Bank’s Bulletin Board activities also take place in districts and panchayats on Statistical Capacity (BBSC)3, indicates that the (local levels). To oversee and promote coordination of Statistical Capacity Indicator for India is significantly the ISS, in 2005 the Government set up a permanent higher than for other IDA countries and for other National Statistical Commission (NSC). The NSC countries in the South Asia region. At the national works to promote coordination, improve standards level, the statistical system is able to call upon a and to ensure that the ISS as a whole meets the cadre of highly skilled and experienced statisticians needs of the nation to support economic, social and and there is an extensive education and training environmental development. system in place to replace those who leave. 1 http://dsbb.imf.org/images/pdfs/AnnualReports/2010/IND_SDDS_AR2010.pdf 2 http://www.imf.org/external/pubs/ft/scr/2011/cr1150.pdf 3 http://go.worldbank.org/QVSQM1R6V0 107 Country Partnership Strategy for India: 2013–17 The statistical system under pressure: Despite the quality and consistency of state and national significant progress, by the end of the twentieth statistics. century, the Indian statistical system as a whole was under considerable pressure. As demand for The World Bank’s involvement in statistics in statistics increased generally and as new concerns India: The World Bank has been in a dialogue with and problems led to demands for new data. To the Government on statistics for more than fifteen a large extent, however, both overall coverage years. This engagement has been based on three and the quality of data also declined as financial arguments. First, it supports a program of reform resources were limited under general fiscal which the Government of India itself has identified pressures and as Government policies turned away as a priority. The importance of good statistics to from central planning towards greater private provide the evidence base for socio-economic sector involvement in national development. By development has long been recognized in India. the time of the Millennium there was widespread An efficient and effective national statistical system concern that the system had been increasingly in India is seen as a core function of Government unable to respond as economic reforms, at all levels and an integral component of the deregulating private investment, and promoting accountability and transparency framework. the market economy kicked in and as more powers Second, good statistics are an integral part of were devolved to the states. To help understand the development results agenda and support the problems, in 2000 the Government set up a development efforts at all levels and in all sectors. National Statistical Commission (NSC), to carry out Third, an efficient and effective statistical system a comprehensive examination of the statistical is essential not only for the proper operation of system and to make recommendations on how it government at all levels but also for the World Bank could be improved. Group’s own lending and non-lending operations in India. The 2001 NSC report identified a number of deficiencies in administrative statistics as well as World Bank support to statistics was initiated in censuses and surveys, including: a) gaps in the 1996, and a draft project was prepared in 1999, availability of needed information; b) delays in the but it did not proceed until after the NSC issued publication of results; c) large and frequent revisions its report. The engagement was re-started in 2005 of published results; d) gross discrepancies between with a number of technical studies, including an official statistics from different sources; and e) lack assessment of the requirements to strengthen of transparency in statistical operations. At the same state statistical systems. In 2010, Statistical time, quality assurance processes were ineffective Strengthening Loan for India (a development and significant sets of data especially at the state policy loan for $107 million) was approved by level were judged to be of poor quality. The report the Board. It supported a program of reform and also noted the absence of effective coordination capacity strengthening that the Government to promote efficient production of comparable had initiated in 2006, largely in response to the statistics, inadequate technical knowledge of staff, recommendations of the 2001 NSC Report. In inadequate numbers of statistical staff in place particular, the Government established a centrally and inadequate information and communications sponsored scheme to support a process of reform technology and physical infrastructure. In addition, and statistical capacity building in the 35 States it was found that variations in the capacities of and Union Territories. Under this scheme states state Statistical Bureaus had had a major effect on undertook to invest in their statistical systems in 108 Country Partnership Strategy for India: 2013–17 line with the needs for both national and state regularly. After a slow start, progress is now picking level statistics, setting their own priorities and up and MOSPI anticipates that significant additional timetable for reform. In return, the centre provided funds will be needed in the 12th Plan beyond grants, training and technical support. the initial allocation. Building on lessons learned from the Statistical Strengthening Loan, the World What has been achieved? Although the Loan Bank will explore options for further engagement closed in 2011, the process of reform and capacity under the new CPS. An important part of the building continues. The centrally sponsored engagement for the Government was to gain statistical strengthening scheme, which was set up access to experience and knowledge of statistical under the 11th Plan will continue through the 12th capacity building programs and good practice Plan and possibly beyond. Thirty-three out of 35 elsewhere. It is clear that success requires careful States have signed up to participate in the scheme, and sustained follow up of the reform and capacity nine states have completed their strategic plans, building process, and that all states would benefit and most are now implementing the reforms and from additional technical assistance and capacity building capacity. A monitoring system has been building efforts both to prepare strategic plans, and, established and progress reports are produced more importantly, implement them. 109 Country Partnership Strategy for India: 2013–17 Annex A2 India at a glance Poverty and Social India South Asia Lower- middle- income 2011 Population, mid-year (millions) 1,241.5 1,657 2,533 GNI per capita (Atlas method, US$) 1,410 1,299 1,760 GNI (Atlas method, US$ billions) 1,746.5 2,151 4,458 Average annual growth, 2005-11 Population (%) 1.4 1.5 1.5 Labor force (%) 0.2 1.1 1.4 Most recent estimate (latest year available, 2005-11) Poverty (% of population below national poverty line) 30 .. .. Urban population (% of total population) 31 31 39 Life expectancy at birth (years) 65 65 66 Infant mortality (per 1,000 live births) 47 48 46 Child malnutrition (% of children under 5) 44 33 24 Access to an improved water source (% of population) 92 90 87 Literacy (% of population age 15+) 63 62 71 Gross primary enrollment (% of school-age population) 116 106 104 Male 116 107 106 Female 116 105 102 Development diamond* Life expectancy GNI Gross per primary capita enrollment Access to improved water source India Lower-middle-income group Notes: 2011 data are preliminary estimates. * The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond will be incomplete. 110 Country Partnership Strategy for India: 2013–17 Key Economic Ratios and Long-Term Trends 1991 2001 2010 2011 GDP (US$ billions) 274.8 492.4 1,684.3 1,848.0 Gross capital formation/GDP 22.5 25.7 35.8 36.6 Exports of goods and services/GDP 8.3 12.4 22.8 24.6 Gross domestic savings/GDP 22.5 24.2 31.7 31.1 Gross national savings/GDP .. .. .. .. Current account balance/GDP -0.4 0.7 -2.7 -4.2 Interest payments/GDP 1.7 0.9 0.3 0.4 Total debt/GDP 31.6 20.2 17.2 18.1 Total debt service/exports 33.4 18.0 6.3 7.1 Present value of debt/GDP .. .. .. 15.3 Present value of debt/exports .. .. .. 68.7 (average annual growth) 1991-01 2001-11 2010 2011 2011-15 GDP 6.2 7.9 9.6 6.9 7.0 GDP per capita 4.2 6.4 8.0 5.4 5.6 Exports of goods and services 12.3 15.1 22.7 15.3 21.8 Economic ratios* Trade Domestic Capital savings formation Indebtedness India Lower-middle-income group Notes: 2011 data are preliminary estimates. * The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond will be incomplete. 111 Country Partnership Strategy for India: 2013–17 Structure of the Economy (% of GDP) 1991 2001 2010 2011 Agriculture 29.4 23.0 17.7 17.2 Industry 25.4 25.2 27.1 26.4 Manufacturing 15.2 14.7 14.5 13.9 Services 45.2 51.8 55.1 56.4 Household final consumption expenditure 65.9 63.4 56.5 57.2 General gov’t final consumption expenditure 11.6 12.4 11.9 11.7 Imports of goods and services 8.3 13.2 26.9 29.8 (average annual growth) 1991-01 2001-11 2010 2011 Agriculture 3.3 3.2 7.0 2.8 Industry 6.2 8.4 7.2 3.4 Manufacturing 6.9 8.6 7.6 2.5 Services 8.0 9.6 9.3 8.9 Household final consumption expenditure 5.9 6.4 7.0 7.5 General gov’t final consumption expenditure 6.9 7.3 7.8 5.1 Gross capital formation 8.0 13.2 11.1 11.1 Imports of goods and services 13.5 16.9 15.6 18.5 Growth of capital and GDP (%) Growth of exports and imports (%) 20 40 15 30 10 20 5 10 0 0 06 07 08 09 10 11 06 07 08 09 10 11 -5 -10 GDP GCF Imports Exports Notes: 2011 data are preliminary estimates. 112 Country Partnership Strategy for India: 2013–17 Prices and Government Finance 1991 2001 2010 2011 Domestic prices (% age) Consumer prices 13.5 4.3 10.4 8.2 Implicit GDP deflator 13.8 3.2 8.5 8.0 Government finance (% of GDP, includes current grants) Current revenue 18.6 16.2 20.2 18.7 Current budget balance -5.4 -6.9 -4.1 -4.8 Overall surplus/deficit -8.6 -9.7 -7.9 -8.3 (US$ millions) 1991 2001 2010 2011 Total exports (fob) 17,865 43,827 251,136 309,843 Tea 492 361 691 853 Iron 135 230 639 789 Manufactures 13,148 33,370 168,098 207,393 Total imports (cif ) 19,411 51,413 369,769 499,533 Food .. .. .. .. Fuel and energy 5,325 14,000 106,068 143,291 Capital goods 4,233 9,882 71,627 96,763 Export price index (2000=100) .. .. .. .. Import price index (2000=100) .. .. .. .. Terms of trade (2000=100) .. .. .. .. Inflation (%) Export and import levels (US$ mill.) 14 600,000 12 500,000 10 400,000 8 300,000 6 200,000 4 2 100,000 0 0 06 07 08 09 10 11 05 06 07 08 09 10 11 GDP deflator CPI Exports Imports Notes: 2011 data are preliminary estimates. 113 Country Partnership Strategy for India: 2013–17 BALANCE of PAYMENTS (US$ millions) 1991 2001 2010 2011 Exports of goods and services 23,288 61,843 382,280 450,777 Imports of goods and services 24,879 70,093 464,054 576,439 Resource balance -1,591 -8,250 -81,775 -125,662 Net income -3,830 -4,206 -17,308 -15,987 Net current transfers 4,243 15,856 53,140 63,494 Current account balance -1,178 3,400 -45,958 -78,180 Financing items (net) 4,563 8,551 59,008 65,349 Changes in net reserves -3,385 -11,951 -13,050 12,831 Memo: Reserves including gold (US$ millions) 9,220 54,106 396,666 414,136 Conversion rate (DEC, local/US$) 24.5 47.7 45.6 47.9 EXTERNAL DEBT and RESOURCE FLOWS (US$ millions) 1991 2001 2010 2011 Total debt outstanding and disbursed 86,864 99,499 290,351 334,331 IBRD 8,459 7,009 11,180 11,524 IDA 14,203 19,458 25,888 26,605 Total debt service 7,858 11,770 24,407 29,177 IBRD 1,170 1,091 625 740 IDA 242 570 1,024 1,101 Composition of net resource flows Official grants 565 557 1,007 .. Official creditors 2,897 363 5,400 2,631 Private creditors 1,476 -1,444 18,989 17,958 Foreign direct investment (net inflows) 74 5,472 26,502 32,190 Portfolio equity (net inflows) 5 2,950 30,442 -4,137 World Bank program Commitments 2,861 2,582 4,348 7,144 Disbursements 2,184 1,997 4,401 2,683 Principal repayments 669 1,152 1,374 1,534 Net flows 1,515 845 3,027 1,149 Interest payments 744 508 275 308 Net transfers 772 337 2,752 841 Current account balance to GDP (%) Composition of 2011 debt (US$ mill.) 05 06 07 08 09 10 11 IDA 0 IBRD 26,605 IMF 11,524 6,108 -1 Other multilateral Short-term 10,711 -2 78,052 Bilateral 26,870 -3 Private 174,461 -4 -5 114 Country Partnership Strategy for India: 2013–17 Annex B2 India - Selected Indicators* of Bank Portfolio Performance and Management As of Date January 24, 2013 Indicator 2010 2011 2012 2013 Portfolio Assessment Number of Projects Under Implementation a 75 81 76 77 Average Implementation Period (years) b 3.7 3.9 3.8 4.2 Percent of Problem Projects by Number a, c 9.3 8.6 7.9 19.5 Percent of Problem Projects by Amount a, c 11.2 12.0 12.1 27.2 Percent of Projects at Risk by Number a, d 10.7 9.9 10.5 20.8 Percent of Projects at Risk by Amount a, d 11.8 12.4 13.4 29.8 Disbursement Ratio (%) e 27.5 16.9 13.0 4.3 Portfolio Management CPPR during the year (yes/no) yes yes yes yes Supervision Resources (total US$ thousand) 14,390 12,199 16,243 14,318 Average Supervision (US$ thousand/project) 192 151 214 186 Memorandum Item Since FY 80 Last Five FYs Proj Eval by OED by Number 350 19 Proj Eval by OED by Amt (US$ millions) 49,161 5,359 % of OED Projects Rated U or HU by Number 25.8 15.8 % of OED Projects Rated U or HU by Amt 23.2 11.4 a. As shown in the Annual Report on Portfolio Performance (except for current FY). b. Average age of projects in the Bank’s country portfolio. c. Percent of projects rated U or HU on development objectives (DO) and/or implementation progress (IP). d. As defined under the Portfolio Improvement Program. e. Ratio of disbursements during the year to the undisbursed balance of the Bank’s portfolio at the beginning of the year: Investment projects only. * All indicators are for projects active in the Portfolio, with the exception of Disbursement Ratio, which includes all active projects as well as projects which exited during the fiscal year. 115 Country Partnership Strategy for India: 2013–17 Annex B3A CAS Annex B3A - IBRD/IDA Program Summary: India As of March 31, 2013 Fiscal Project Name IBRD IDA a/ GEF/MP/ TOTAL Year US$ M US$ M CTF US$ M US$ M INTEGRATION 2013 Himachal Pradesh State Roads - Additional Financing b/ 61.7 61.7 Kerala Transport II 216.0 216.0 2014 National Highways Interconnectivity 500.0 500.0 Gujarat Highways II 350.0 350.0 Eastern Dedicated Freight Corridor II 1,200.0 1,200.0 Northeast Power Transmission I 425.0 425.0 2015 Tamil Nadu Roads II 300.0 300.0 Implementing Perform, Achieve, Trade - CTF 50.0 50.0 100.0 AP Rural Roads 120.0 120.0 Eastern Dedicated Freight Corridor III 525.0 525.0 Northeast Power Transmission II 500.0 500.0 Rajasthan Road Sector Modernization 325.0 325.0 Luhri Hydro 650.0 650.0 Sub-total by engagement area 4,897.7 325.0 50.0 5,272.7 TRANSFORMATION 2013 Karnataka Watersheds II b/ 60.0 60.0 HP Mid-Himalayan Watersheds - Additional Financing b/ 37.0 37.0 Himachal Pradesh DPL Green Growth b/ 100.0 100.0 Super Efficient Equipment Program for Egy Effcy - CTF 50.0 50.0 Maharashtra Rural Water and Sanitation III 290.0 290.0 Uttar Pradesh Water Sector Restructuring II 300.0 300.0 Rural Water Supply and Sanitation for Low-income States 500.0 500.0 2014 Karnataka Urban Water Modernization 190.0 190.0 Uttarakhand Watersheds II 100.0 100.0 Partial Risk Sharing Facility in Energy Efficiency - CTF 25.0 25.0 Efficient and Sustainable City Bus Services - GEF 10.1 10.1 Facility for Low Carbon Technology Deployment - GEF 10.0 10.0 Himachal Pradesh DPL II Green Growth - CTF 100.0 100.0 Sustainable Livelihoods & Adaptation to Climate Change - 8.8 8.8 GEF 2015 Informal Settlements Improvement Project 500.0 500.0 Neeranchal National Watersheds 245.0 245.0 Sub-total by engagement area 790.0 1,532.0 203.9 2,780.9 116 Country Partnership Strategy for India: 2013–17 Fiscal Project Name IBRD IDA a/ GEF/MP/ TOTAL Year US$ M US$ M CTF US$ M US$ M INCLUSION 2013 ICDS System Strengthening & Nutrition Improvement b/ 106.0 106.0 Karnataka Health Systems - Additional Financing b/ 70.0 70.0 Bihar Panchayati Raj Institutions b/ 84.0 84.0 HIV AIDS IV 255.0 255.0 Bihar Social Protection 70.0 70.0 Low-Income Housing 100.0 100.0 Tamil Nadu & Puducherri Disaster Risk Reduction 202.5 202.5 2014 AP Rural Inclusive Growth 150.0 150.0 Teacher Training in Bihar 200.0 200.0 SSA (Elementary Education) IIII 400.0 400.0 Bihar Flood Rehabilitation APL II 250.0 250.0 2015 ICDS System Strengthening & Nutrition APL II 344.0 344.0 National Cyclone Risk Mitigation APL II 250.0 250.0 Kerala Health Systems 40.0 40.0 Bihar Flood Rehabilitation APL III 250.0 250.0 Sub-total by engagement area 3,016.5 3,061.5 Total by FY 2013 377.7 2,074.50 50.0 2,502.2 2014 2,665.0 1,100.0 153.9 3,918.9 2015 c/ 2,645.0 1,454.0 50.0 4,149.0 a/ $2.73 billion IDA16 committed in FY12 b/ approved c/ project preparation underway; assumes transitional IDA17 financing 117 Country Partnership Strategy for India: 2013–17 Annex B3B India: IFC Investment Operations Program 2010 2011 2012 2013* Original Commitments (US$m) IFC and Participants 1130 421 789 653 IFC's Own Accounts only 806 401 789 468 Original Commitments by Sector (%)- IFC Accounts only Agriculture and Forestry 2 0 0 13 Chemicals 4 10 15 11 Collective Investment Vehicles 2 6 15 4 Education Services 7 Electric Power 14 14 8 35 Finance & Insurance 25 55 31 26 Food & Beverages 0 2 Health Care 7 Industrial & Consumer Products 4 9 4 9 Nonmetallic Mineral Product Manufacturing 9 0 Oil, Gas and Mining 31 0 0 0 Plastics & Rubber 4 8 2 Primary Metals 3 0 0 0 Professional, Scientific and Technical Services 0 0 Textiles, Apparel & Leather 0 0 Transportation and Warehousing 1 3 2 0 Utilities 0 2 0 0 Total 100 100 100 100 Original Commitments by Investment Instrument (%) - IFC Accounts only Equity 15 36 34 10 Guarantee 1 0 9 4 Loan 83 58 47 62 Quasi equity 0 0 0 Quasi loan 1 6 11 25 Total 100 100 100 100 * Data as of Jan 17, 2013 118 Country Partnership Strategy for India: 2013–17 Annex B4 Summary of World Bank Knowledge Services - India As of January 23, 2013 Product Name Product Completion Cost Audiencea Objectiveb FY (US$000) INTEGRATION Recent completions (FY12-13) Macro Brief ESW 2012 172 G KG Policy Brief on Indian Power Sector ESW 2013 12 G PS Orissa: Institutionalizing PSIA Capacity TA 2012 138 G PS Issues in Employment: Global & Country Perspectives TA 2012 408 G KG, PD Review of Regulatory Framework: Ports & Airports TA 2012 65 G PS Visiting Scholars Program TA 2012 89 B, G KG Manufacturing Plan Implementation TA 2013 45 G PS Underway (FY 13-14) Bihar Growth Assessment ESW 2013 G KG Financial Sector Assessment: Supplementary Studies ESW 2013 G KG Experience with PPPs in Infrastructure ESW 2013 G KG Policy Notes on Power ESW 2013 G KG, PS India Economic Update ESW 2013 G KG, PD Skills Development ESW 2014 G KG States Report ESW 2014 G KG Options Study for Growth on Eastern Dedicated Freight ESW 2014 G KG Corridor Growth, Inclusion & Competitiveness ESW 2014 G KG Mobilizing Financing for Infrastructure PPPs ESW 2014 G PS Manufacturing Plan Implementation II TA 2013 G PS Solar Power: Renewable Energy Market Transformation TA 2014 G PS Initiative Transport Policies & Reform Activities TA 2014 G PS Orissa Mining & Inclusive Growth TA 2014 G PS Partnership for Market Readiness in Renewable Energy TA 2014 D PS Financial Sector Assessment Follow-up: RBI Banking SPN TA 2015 G PS 119 Country Partnership Strategy for India: 2013–17 Product Name Product Completion Cost Audiencea Objectiveb FY (US$000) TRANSFORMATION Recent completions (FY12-13) PPP Options Study for Waste Water Management TA 2012 73 G KG Urbanization Review ESW 2012 241 G KG Evaluation of National Rural Employment Guarantee ESW 2012 239 G KG Program Urban Institutional Strengthening & Capacity Building TA 2012 92 G PS Strengthening Institutions for Mgmt of Land Acquisition TA 2012 1178 G PS and R&R Facilitating PPPs for Urban Infrastructure Development TA 2012 62 G PS Impact Evaluation of Rural Credit Cooperatives Project Impact Eval 2013 350 G KG Underway (FY 13-14) Social Dimensions of Urbanization ESW 2013 G KG Enhancing Agricultural Productivity: Policy & Investment ESW 2013 G KG Priorities Rural Road Development - Benefits Impact of PMGSY ESW 2014 G KG Project National Land Records Modernization Implementation TA 2014 G PS Support Inclusive Heritage-Based City Development Planning TA 2014 G PS Food Security in Tribal & Conflict-affected Areas TA 2014 G PS Cap Dev for Integrated Water Resources Development TA 2015 G PS & Mgmt INCLUSION Recent completions (FY12-13) Madhya Pradesh Pilot on Integrated Child Development Impact Eval 2012 569 G KG Teacher Accountability & School Outcomes Impact Eval 2012 1011 G KG Health Insurance System of India Impact Eval 2012 142 G KG Financial Literacy & Education Impact Eval 2013 478 G KG Sundarbans Climate Change Mitigation & Disaster Risk TA 2012 1765 G KG Mgmt Implementation Support for India Disaster Risk TA 2012 204 G PS Mitigation Program Bihar: Immediate Relief Support & Disaster Risk TA 2012 297 G PS Management Capacity Building in Disaster Risk Reduction (GFDRR) TA 2012 286 G PS Consultations on Human Development TA 2012 242 B PD Health Policy Notes & Client Engagement TA 2012 628 G KG Growth & Inclusion Workshop TA 2013 121 G PD 120 Country Partnership Strategy for India: 2013–17 Product Name Product Completion Cost Audiencea Objectiveb FY (US$000) Underway (FY 13-14) Human Resources for More Effective Health Systems ESW 2013 G KG Service Delivery & Public Spending in Health ESW 2013 G KG Institutional Arrangements for Nutrition ESW 2013 G PS Madhya Pradesh Higher Education ESW 2014 G KG Andhra Pradesh: Teacher Accountability & Student Impact Eval 2013 G KG Achievement Andhra Pradesh: Rural Poverty Impact Evaluation Impact Eval 2014 G KG Karnataka Results-based Financing Hospital Care Impact Eval 2014 G KG Strengthening Implementation of Rural Livelihoods TA 2013 G PS Programs Improving Technical & Vocational Education & Training TA 2013 G PS in West Bengal Improving Social Inclusion in India's Health Ins Scheme TA 2014 G PS for the Poor Teacher Education & Professional Devmt -Int'l Best TA 2014 G PS Practices National Unique Identification System TA 2014 G PS Multi-sectoral Nutrition Action in Bihar TA 2014 G PS Community Food & Nutrition Security Initiatives in High- TA 2014 G PS Poverty States Bihar Kosi Flood Recovery & Climate Adaptation TA 2014 G PS Program Social Pensions for Ministry of Rural Development TA 2014 G PS Foundation for Corporate Social Responsibility TA 2014 G PS Higher Education TA 2014 G KG Strengthening Institutional Capacity of RSBY TA 2015 G PS Social Observatory for Rural Food & Nutrition Security TA 2015 G KG, PS in NRLM ENVIRONMENTAL SUSTAINABILITY Recent completions (FY12-13) Environmental Challenges of India's Rapid Growth ESW 2012 446 G KG Climate Investment Plan TA 2012 55 G, D PS 121 Country Partnership Strategy for India: 2013–17 Product Name Product Completion Cost Audiencea Objectiveb FY (US$000) GOVERNANCE Recent completions (FY12-13) Constraints to Project Preparation & Implementation TA 2012 327 G PS Underway (FY 13-14) Introduction of e-tools in Mgmt of Construction Projects ESW 2013 G PS Procurement Capacity Building TA 2013 G PS Chattisgarh Capacity Building Program TA 2014 G PS Bihar Capacity Building Program TA 2014 G PS Karnataka Performance Management TA 2014 G PS E-Governance in the Northeast TA 2014 G PS Karnataka PFM Reform Action Plan TA 2014 G KG Support for Performance Management Initiatives TA 2014 G PS Uttar Pradesh Capacity Building TA 2015 G PS Jharkhand Capacity Building TA 2015 G PS GENDER Underway (FY 13-14) Gender and Development ESW 2014 G KG a. Government, Donor, Bank. b. Knowledge Generation, Public Debate, Problem-Solving. 122 Country Partnership Strategy for India: 2013–17 Annex B5 India Social Indicators Latest single year Same region/income group 1980-85 1990-95 2004-10 South Asia Lower- middle- income POPULATION Total population, mid-year (millions) 784.5 964.5 1,224.6 1,633.1 2,518.7 Growth rate (% annual average for period) 2.3 2.0 1.4 1.5 1.6 Urban population (% of population) 24.3 26.6 30.1 30.1 39.4 Total fertility rate (births per woman) 4.3 3.5 2.6 2.7 2.9 POVERTY (% of population) National headcount index .. 45.3 37.2 Urban headcount index .. 31.8 25.7 Rural headcount index .. 50.1 41.8 INCOME GNI per capita (US$) 290 360 1,270 1,176 1,623 Consumer price index (2005=100) 24 57 152 148 140 INCOME/CONSUMPTION DISTRIBUTION Gini index 31.1 30.8 33.4 Lowest quintile (% of income or consumption) 8.7 9.1 8.6 Highest quintile (% of income or consumption) 40.1 40.1 42.4 SOCIAL INDICATORS Public expenditure Health (% of GDP) .. 1.2 1.4 1.3 1.7 Education (% of GDP) 3.2 .. 3.1 2.5 4.0 Net primary school enrollment rate (% of age group) Total .. .. 92 86 85 Male .. .. 92 89 87 Female .. .. 89 84 83 Access to an improved water source (% of population) Total .. 75 92 90 87 Urban .. 90 97 95 93 Rural .. 70 90 88 83 Immunization rate (% of children ages 12-23 months) Measles 1 72 74 77 80 DPT 18 71 72 76 79 123 Country Partnership Strategy for India: 2013–17 Latest single year Same region/income group 1980-85 1990-95 2004-10 South Asia Lower- middle- income Child malnutrition (% under 5 years) .. 51 44 33 25 Life expectancy at birth (years) Total 57 60 65 65 65 Male 57 59 64 64 64 Female 57 61 67 67 67 Mortality Infant (per 1,000 live births) 91 72 48 52 50 Under 5 (per 1,000) 130 100 63 67 69 Adult (15-59) Male (per 1,000 population) 261 236 253 239 244 Female (per 1,000 population) 279 241 168 166 175 Maternal (modeled, per 100,000 live births) .. 470 230 290 300 Births attended by skilled health staff (%) .. 34 53 48 57 Notes: 0 or 0.0 means zero or less than half the unit shown. Net enrollment rate: break in series between 1997 and 1998 due to change from ISCED76 to ISCED97. Immunization: refers to children ages 12-23 months who received vaccinations before one year of age or at any time before the survey. World Development Indicators database, World Bank - 17 April 2012. 124 Country Partnership Strategy for India: 2013–17 Annex B6 India - Key Economic Indicators Indicator Actual Estimate Projected 2007 2008 2009 2010 2011 2012 2013 2014 2015 National accounts (as % of GDP) Gross domestic producta 100 100 100 100 100 100 100 100 100 Agriculture 18 18 18 18 17 17 16 15 15 Industry 29 28 28 27 26 25 25 25 25 Services 53 54 55 55 56 58 59 60 60 Total Consumption 66 70 69 68 69 77 73 72 73 Gross domestic fixed 33 32 32 30 30 27 30 30 29 investment Government investment 8 9 8 8 8 8 8 8 8 Private investment 25 24 23 22 22 19 22 22 21 Exports (GNFS) b 20 24 20 23 25 27 31 36 41 Imports (GNFS) 24 29 26 27 30 34 37 41 46 Gross domestic savings 34 30 31 32 31 23 27 28 27 Gross national savings c 37 34 34 34 33 26 29 30 29 Memorandum items Gross domestic product 1238700 1224097 1361057 1684324 1847982 1967881 2113579 2295980 2475905 (US$ million at current prices) GNI per capita (US$, Atlas 960 1030 1160 1280 1410 1540 1660 1770 1890 method) Real annual growth rates (%, calculated from 93 prices) Gross domestic product at 9.8 3.9 8.2 9.6 6.9 5.1 6.4 7.1 7.3 market prices Gross Domestic Income 9.8 5.3 7.7 10.0 7.1 2.8 5.4 6.0 6.7 Real annual per capita growth rates (%, calculated from 93 prices) Gross domestic product at 8.2 2.4 6.7 8.0 5.4 3.7 4.9 5.6 5.8 market prices Total consumption 5.7 9.6 4.8 5.7 7.5 20.0 -6.3 0.9 7.5 Private consumption 5.3 9.7 3.3 5.6 8.3 19.6 -7.1 0.1 7.9 Balance of Payments (US$ millions) Exports (GNFS)b 256504 294964 277991 382280 450777 529513 659244 822528 1012629 Merchandise FOB 166162 189001 182262 250627 309843 369430 458868 580173 723648 Imports (GNFS) b 309119 360568 360181 464054 576439 670761 787609 942151 1127393 Merchandise FOB 257629 308520 300644 381061 499533 586140 693201 837620 1008240 Resource balance -52615 -65604 -82190 -81775 -125662 -141247 -128366 -119624 -114764 Net current transfers 41945 44799 52045 53140 63494 70275 65674 70810 76008 Current account balance -15737 -27914 -38435 -45958 -78180 -87279 -79974 -69623 -63409 Net private foreign direct 15893 22372 17966 9360 22061 20000 26500 40000 40000 investment 125 Country Partnership Strategy for India: 2013–17 Indicator Actual Estimate Projected 2007 2008 2009 2010 2011 2012 2013 2014 2015 Long-term loans (net) 24724 10303 5792 17145 11592 7245 18423 19437 -2608 Official 2272 2896 3039 5400 2631 6631 6254 5656 1348 Private 22452 7407 2753 11746 8961 614 12168 13781 -3955 Other capital (net, incl. errors & 67284 -24840 28118 32503 31696 49689 49936 59989 61495 ommissions) Change in reservesd -92164 20079 -13441 -13050 12831 10345 -14885 -49802 -35479 Memorandum items Resource balance (% of GDP) -4.2 -5.4 -6.0 -4.9 -6.8 -7.2 -6.1 -5.2 -4.6 Real annual growth rates (YR93 prices) Merchandise exports (FOB) .. .. .. .. .. .. .. .. .. Primary .. .. .. .. .. .. .. .. .. Manufactures .. .. .. .. .. .. .. .. .. Merchandise imports (CIF) .. .. .. .. .. .. .. .. .. Public finance (as % of GDP at market prices) e Current revenues 21.0 19.4 18.3 18.9 18.7 18.7 19.0 19.2 19.2 Current expenditures 21.2 23.8 24.2 24.4 23.5 23.8 22.8 22.4 22.2 Current account surplus (+) or -0.2 -4.4 -6.0 -5.5 -4.8 -5.1 -3.7 -3.2 -3.0 deficit (-) Capital expenditure 4.8 4.0 3.9 3.8 3.5 3.6 3.8 3.9 3.9 Foreign financing .. .. .. .. .. 0.1 0.1 0.1 0.1 Monetary indicators M2/GDP 23.3 22.5 23.1 21.4 19.6 19.6 20.0 20.0 20.0 Growth of M2 (%) 19.3 8.9 18.2 10.0 5.8 12.9 15.9 14.1 13.7 Private sector credit growth / 86.2 53.6 54.9 70.3 65.2 57.9 57.3 50.2 66.4 total credit growth (%) Price indices (YR93 =100) Merchandise export price .. .. .. .. .. .. .. .. .. index Merchandise import price .. .. .. .. .. .. .. .. .. index Merchandise terms of trade .. .. .. .. .. .. .. .. .. index Real exchange rate (US$/LCU)f 108.5 97.8 94.7 102.0 99.1 102.5 102.2 101.8 101.8 Real interest rates Consumer price index (% 6.4 9.0 12.4 10.4 8.2 7.4 7.0 6.5 6.0 change) GDP deflator (% change) 5.8 8.7 6.0 8.5 8.0 7.4 7.0 6.5 6.0 a. GDP at factor cost b. “GNFS” denotes “goods and nonfactor services.” c. Includes net unrequited transfers excluding official capital grants. d. Includes use of IMF resources. e. Consolidated central government. f. “LCU” denotes “local currency units.” An increase in US$/LCU denotes appreciation. 126 Country Partnership Strategy for India: 2013–17 Table B6.1. India’s Demographic Transition India Male and Female Population by Age, 2009-10 90 and above 85 to 90 80 to 84 75 to 79 70 to 74 65 to 69 60 to 64 55 to 59 50 to 54 45 to 49 40 to 44 35 to 39 30 to 34 25 to 29 20 to 24 15 to 19 10 to 14 5 to 9 Under 5 60 50 40 30 20 Millions 20 30 40 50 60 Males Females Source: NSS 66th round. India Male and Female Projected Population by Age, 2030 90 and above 85 to 90 80 to 84 75 to 79 70 to 74 65 to 69 60 to 64 55 to 59 50 to 54 45 to 49 40 to 44 35 to 39 30 to 34 25 to 29 20 to 24 15 to 19 10 to 14 5 to 9 Under 5 60 50 40 30 20 Millions 20 30 40 50 60 Males Females Source: NSS 66th round & UN Population division. 127 Country Partnership Strategy for India: 2013–17 15 to 19 20 to 24 25 to 29 30 to 34 35 to 39 40 to 44 45 to 49 50 to 54 55 to 59 60 to 64 65 and above -20 -15 -10 -5 0 5 Average savings rate by average age of the adults in the household (%) 128 Country Partnership Strategy for India: 2013–17 Annex B7 India - Key Exposure Indicators Indicator Actual Estimate Projected 2007 2008 2009 2010 2011 2012 2013 2014 2015 Total debt outstanding and 204005 227043 256229 290351 334331 370576 401250 431936 439329 disbursed (TDO) (US$m)a Net disbursements (US$m)a 83365 41064 29587 56064 55916 16745 30673 30687 7392 Total debt service (TDS) 7307 7287 5532 5392 7039 39013 43689 53912 62034 (US$m)a Debt and debt service indicators (%) TDO/XGSb .. .. 80.2 69.3 67.9 64.4 56.4 49.0 40.7 TDO/GDP 16.5 18.5 18.8 17.2 18.1 18.6 18.6 18.5 17.4 TDS/XGS .. .. 1.7 1.3 1.4 6.8 6.1 6.1 5.8 Concessional/TDO 21.8 20.8 18.8 17.4 15.6 14.8 14.0 12.9 12.2 IBRD exposure indicators (%) IBRD DS/public DS 6.8 4.7 10.0 10.0 9.3 6.8 8.0 7.9 12.2 Preferred creditor DS/public 19.5 14.0 30.7 32.7 28.7 26.1 29.5 28.1 40.0 DS (%)c IBRD DS/XGS .. .. 0.2 0.1 0.2 0.2 0.2 0.1 0.1 IBRD TDO (US$m) d 6404 7187 7868 10755 11386 11654 12370 13560 15246 Of which present value of guarantees (US$m) Share of IBRD portfolio (%) 5 6 7 10 11 14 18 23 23 IDA TDO (US$m) d 25319 25365 26050 25888 26605 26584 26907 27076 27083 IFC (US$m) Loans Equity and quasi-equity /c MIGA MIGA guarantees (US$m) .. .. .. .. .. .. .. .. .. a. Includes public and publicly guaranteed debt, private nonguaranteed, use of IMF credits and net short-term capital. b. “XGS” denotes exports of goods and services, including workers’ remittances. c. Preferred creditors are defined as IBRD, IDA, the regional multilateral development banks, the IMF, and the Bank for International Settlements. d. Includes present value of guarantees. e. Includes equity and quasi-equity types of both loan and equity instruments. 129 Country Partnership Strategy for India: 2013–17 Annex B8A India - Operations Portfolio (IBRD/IDA and Grants) As of January 24, 2013 (in US dollars) Closed Projects: 470 IBRD/IDA * Total Disbursed (Active) 6,957.0 of which has been repaid 230.6 Total Disbursed (Closed) 16,588.1 of which has been repaid 15,354.1 Total Disbursed (Active + Closed) 23,545.1 of which has been repaid 15,584.7 Total Undisbursed (Active) 16,179.8 Total Undisbursed (Closed) 61.5 Total Undisbursed (Active + Closed) 16,241.3 Active Projects: Project ID Project Name Last PSR Fiscal Original Amount in US$ Millions Cancel. Undisb. Difference Between Supervision Rating Year Expected and Actual Disbursements a/ Development Implementation IBRD IDA GRANT Orig. Frm Objectives Progress Rev’d P102771 IN: IIFCL - India U MU 2010 1,195 1,172 813 Infras Finance Co Ltd P101650 IN: A. P. RWSS S MU 2010 150 130 77 P100789 IN: AP S MS 2007 95 95 93 90 -3 Community Tank Management Proj P071250 IN: AP Municipal S MS 2010 300 276 62 Development P096021 IN: AP Road Sector S MU 2010 320 257 101 -1 Project P100954 IN: AP Water S S 2010 451 354 5 Sector Improvement Proj P084792 IN: Assam Agric S S 2005 204 68 11 -9 Competitiveness P096018 IN: Assam State S S 2012 320 320 12 Roads Project P122096 IN: Bihar Kosi MS MU 2011 220 194 53 Flood Recovery Project P102627 IN: Bihar PRI MS MS 2013 84 86 1 130 Country Partnership Strategy for India: 2013–17 Project ID Project Name Last PSR Fiscal Original Amount in US$ Millions Cancel. Undisb. Difference Between Supervision Rating Year Expected and Actual Disbursements a/ Development Implementation IBRD IDA GRANT Orig. Frm Objectives Progress Rev’d P090764 IN: Bihar Rural S S 2007 163 98 -58 7 Livelihoods Project P088520 IN: Biodiver Cons S MS 2011 15 14 1 & Rural Livelihood P088598 IN: Biodiver S MS 2011 8 7 1 Cons & Rural Livelihoods P091031 IN: CBldg for Indus S S 2010 25 39 58 8 Poll Mgt P099979 IN: CBldg MS MS 2012 60 57 3 for Urban Development P100584 IN: Chiller Effcy- # MS 2009 6 5 4 GEF P102790 IN: Chiller Energy MS MS 2009 1 1 Efficiency - MP P100531 IN: Coal-Fired MS MU 2009 45 45 32 Generation Rehabilitation P100101 IN: Coal-Fired MS MU 2009 180 180 120 Generation Rehabilitation P089985 IN: Dam S S 2010 175 175 347 95 15 Rehabilitation & Improvement P114338 IN: Eastern S MS 2011 975 972 127 Dedicated Freight Corridor-I P100530 IN: Egy Effcy at S MS 2010 11 11 7 SMEs P110051 IN: Haryana Power S MS 2010 330 215 202 -115 System Improv Project P96019 IN: HP State Roads MS MS 2007 282 132 70 Project P084632 IN: Hydrology II MS MS 2005 105 43 43 43 P121731 IN: ICDS Syst # # 2013 106 102 Strength & Nut Imp Prog P097985 IN: Integrated S MS 2010 222 196 57 37 Coastal Zone Mgmt Project P079675 IN: Karn Municipal S MS 2006 216 97 97 23 Reform P122486 IN: Karn Wtrshed II S S 2013 60 60 0 P071160 IN: Karnataka S S 2007 212 98 15 6 Health Systems 131 Country Partnership Strategy for India: 2013–17 Project ID Project Name Last PSR Fiscal Original Amount in US$ Millions Cancel. Undisb. Difference Between Supervision Rating Year Expected and Actual Disbursements a/ Development Implementation IBRD IDA GRANT Orig. Frm Objectives Progress Rev’d P078832 IN: Karnataka MS MS 2006 120 14 -9 Panchayats Strengthening P050653 IN: KARNATAKA S MS 2002 302 17 96 -67 50 RWSS II P121774 IN: Kerala RWSSP II S MS 2012 155 151 1 P073370 IN: Madhya S S 2005 394 7 175 181 11 Pradesh Water Sector Restruct P084790 IN: MAHAR WSIP MS S 2005 325 61 61 -6 P120836 IN: Maharashtra S S 2011 100 90 -5 Agric. Competitiveness P119043 IN: Microf-Scaling S S 2010 200 100 167 59 Up Sustnble & Resp P093720 IN: Mid-Himalayan S S 2006 97 45 4 (HP) Watersheds P102331 IN: MPDPIP-II S S 2009 100 48 32 P113028 IN: Mumbai Urban S MS 2010 430 375 116 Transport Project- 2A P092735 IN: NAIP S MS 2006 200 56 39 16 P112060 IN: National S MS 2010 7 4 2 Agricultural Innovation&SLM P119085 IN: National MU MU 2011 801 199 943 20 Ganga River Basin Project P104164 IN: National MS MS 2012 1,000 959 203 Rural Livelihoods Project P121515 IN: NHAI Technical MU MU 2011 45 40 16 Assistance Project P102330 IN: North East MS MU 2012 130 124 3 Rural Livelihoods Project P094360 IN: Ntnl VBD MS MS 2009 521 160 124 247 Control & Polio Eradication P085345 IN: ODS IV-CTC HS MS 2005 53 14 3 Sector Phaseout Project P093478 IN: Orissa Rural MS U 2009 82 61 50 Livelihoods Project P096023 IN: Orissa State MU MU 2009 250 222 147 Roads P124639 IN: PMGSY Rural MS MU 2011 500 1,000 1,341 349 Roads Project 132 Country Partnership Strategy for India: 2013–17 Project ID Project Name Last PSR Fiscal Original Amount in US$ Millions Cancel. Undisb. Difference Between Supervision Rating Year Expected and Actual Disbursements a/ Development Implementation IBRD IDA GRANT Orig. Frm Objectives Progress Rev’d P101653 IN: Power System HS S 2008 1,000 138 -262 137 Development Project IV P115566 IN: POWERGRID V S MS 2010 1,000 727 235 P090592 IN: Punjab Rural MS MS 2007 154 0 79 65 19 Water Supply & Sanitation P090585 IN: Punjab State MS MS 2007 250 105 105 2 Road Sector Project P040610 IN: RAJ WSRP MS S 2002 159 26 37 5 -4 P124614 IN: Rajasthan ACP S S 2012 109 107 2 P102329 IN: Rajasthan MS MS 2011 163 150 4 Rural Livelihoods Project P095114 IN: Rampur MS MU 2008 400 82 65 -7 Hydropower Project P118445 IN: Secondary S S 2012 500 497 8 Education Program P086518 IN: SME Financing S MS 2005 520 20 -380 20 & Development P102768 IN: Stren India’s MS MS 2007 300 300 164 163 Rural Credit Coops P110371 IN: Sustainable S MU 2010 105 87 68 Urban Transport Project P100589 IN: Sustainable S MU 2010 20 17 Urban Transport Project P102549 IN: Tech Engr S S 2010 300 235 115 Educ Qual Improvement II P079708 IN: TN Empwr & S S 2006 274 130 -31 58 Pov Reduction P075058 IN: TN Health S S 2005 229 20 53 -49 20 Systems P090768 IN: TN IAM WARM S MS 2007 335 150 237 209 P083780 IN: TN Urban III S MS 2006 300 1 56 57 34 P100304 IN: UP Health Sys S S 2012 152 137 18 Strengthening Project P112033 IN: UP Sodic III S MS 2009 197 144 9 P083187 IN: Uttarakhand S S 2007 120 41 32 8 RWSS Project P112061 IN: Uttarakhand S S 2010 7 1 Watershed Mgmt. SLEM 133 Country Partnership Strategy for India: 2013–17 Project ID Project Name Last PSR Fiscal Original Amount in US$ Millions Cancel. Undisb. Difference Between Supervision Rating Year Expected and Actual Disbursements a/ Development Implementation IBRD IDA GRANT Orig. Frm Objectives Progress Rev’d P096124 IN: Vishnugad MS U 2011 648 646 -2 Pipalkoti HEP P099047 IN: Vocational MS S 2007 280 136 107 Training P105311 IN: WB Minor S S 2012 125 125 244 4 Irrigation Project P105990 IN: West Bengal S S 2010 200 134 -12 PRI P107649 IN:Karnataka State S MS 2011 350 323 47 Highway Improv Pro II P102624 IN:Kerala Local S MS 2011 200 133 3 Govt. & Service Delivery P092217 IN:National S MS 2010 255 225 125 Cyclone Risk Mitigation Proj P100735 IN:Orissa MU MU 2009 56 56 35 65 53 17 Community Tank Management Proj P107648 National Dairy S S 2012 352 336 7 Support Project Overall 13,302 10,185 160 265 16,285 4,267 385 Result a. Intended disbursements to date minus actual disbursements to date as projected at appraisal. 134 Country Partnership Strategy for India: 2013–17 Annex B8B India: Committed and Disbursed Outstanding Investment Portfolio As of December 31, 2012 (In USD Millions) FY Company Committed Disbursed Outstanding Approval Loan Equity **Quasi *GT/RM Partici- Loan Equity **Quasi *GT/RM Partici- Equity pant Equity pant 2007 ABC Coffee 5 4 0 0 0 5 4 0 0 0 2005/ ADPCL 52 12 0 0 0 52 12 0 0 0 2008/ 2009 2006/ AHEL 63 25 0 0 0 63 25 0 0 0 2009/ 2012 2005 AP Paper Mills 9 0 0 0 0 9 0 0 0 0 2005 APIDC Biotech 0 3 0 0 0 0 3 0 0 0 2009 APPL 0 6 0 0 0 0 2 0 0 0 2012/ ATC India 50 0 0 0 0 0 0 0 0 0 2013 2013 ATG BV 0 10 0 0 0 0 10 0 0 0 2003/ ATL 30 0 0 0 20 30 0 0 0 20 2005/ 2010/ 2011 2010/ AU Financiers 0 22 0 0 0 0 22 0 0 0 2012/ 2013 2010 Aadhar 0 4 0 0 0 0 4 0 0 0 2007/ Aavishkaar 0 3 0 0 0 0 3 0 0 0 2009 2010/ AavishkaarFundII 0 6 0 0 0 0 3 0 0 0 2013 2011 Aavishkaar MSME 0 15 0 0 0 0 2 0 0 0 2008 Aloe 2 0 17 0 0 0 0 13 0 0 0 2008 Ambit Pragma 0 12 0 0 0 0 11 0 0 0 2012 Ambit Pragma II 0 20 0 0 0 0 2 0 0 0 2008/ Angel Global 0 18 0 0 0 0 18 0 0 0 2012 135 Country Partnership Strategy for India: 2013–17 FY Company Committed Disbursed Outstanding Approval Loan Equity **Quasi *GT/RM Partici- Loan Equity **Quasi *GT/RM Partici- Equity pant Equity pant 2010/ Applied Solar 8 6 0 0 0 5 6 0 0 0 2012 2011 Attero Recycling 0 0 5 0 0 0 0 4 0 0 2006/ Atul Ltd 23 0 0 0 0 23 0 0 0 0 2010/ 2011 2010 Auro Mira Energy 0 4 0 0 0 0 4 0 0 0 2008 Avigo Fund II 0 9 0 0 0 0 8 0 0 0 2009 Avigo Fund III 0 20 0 0 0 0 12 0 0 0 2012 Axis Bank 70 0 0 0 0 70 0 0 0 0 2010/ Azure Power 0 5 7 0 0 0 5 7 0 0 2013 2007 BHSIL 28 0 17 0 32 28 0 17 0 32 2001/ BILT 0 1 0 0 0 0 1 0 0 0 2004 2003/ Balrampur 18 0 0 0 0 18 0 0 0 0 2007 2011 Bandhan 0 24 0 0 0 0 24 0 0 0 2012 Banyan Tree II 0 25 0 0 0 0 3 0 0 0 2001 Basix Ltd. 0 1 0 0 0 0 1 0 0 0 2010 Belstar 0 1 0 0 0 0 1 0 0 0 2005 Bharat Biotech 0 0 3 0 0 0 0 3 0 0 2010/ Bhilwara Energy 0 19 0 0 0 0 19 0 0 0 2012 2012 Bhilwara Wind 13 0 0 0 0 10 0 0 0 0 1985/ Bihar Sponge 4 0 0 0 0 4 0 0 0 0 1990/ 1991/ 1993 2001/ CCIL 6 6 0 1 2 6 3 0 0 2 2006/ 2007/ 2008/ 2010/ 2008 CGPL Ultra Mega 447 0 0 0 0 344 0 0 0 0 2003/ COSMO 10 0 0 0 0 5 0 0 0 0 2005/ 2012 2013 CapAleph 0 15 0 0 0 0 0 0 0 0 2010/ Chola 0 25 0 0 0 0 25 0 0 0 2011 136 Country Partnership Strategy for India: 2013–17 FY Company Committed Disbursed Outstanding Approval Loan Equity **Quasi *GT/RM Partici- Loan Equity **Quasi *GT/RM Partici- Equity pant Equity pant 2009 Connectiva 0 0 0 0 0 0 0 0 0 0 2010/ Craftsman 0 13 0 0 0 0 12 0 0 0 2012 2003/ DQEL 0 2 0 0 0 0 2 0 0 0 2004 2005/ DSCL 59 0 0 7 0 59 0 0 0 0 2006/ 2009 Dhunseri India 0 5 0 0 0 0 3 0 0 0 2009 Dishman 13 0 0 0 0 13 0 0 0 0 2012 Dunar Foods 0 14 0 0 0 0 12 0 0 0 2013 Ecolibrium 0 1 0 0 0 0 0 0 0 0 2012 Educomp 30 14 10 0 0 30 14 10 0 0 2007 Electrotherm 13 0 10 0 0 13 0 10 0 0 2012 Equitas 0 16 0 0 0 0 16 0 0 0 2009/ Exim India 150 0 0 0 0 150 0 0 0 0 2010/ 2011 2007/ FINO 0 1 5 0 0 0 1 5 0 0 2010 2006/ Federal Bank 0 23 0 0 0 0 23 0 0 0 2008/ 2010/ 2011/ 2012 2008/ Finechem 16 13 0 0 0 16 12 0 0 0 2013 2012 Flareum 0 1 0 0 0 0 0 0 0 0 2012 Forum Synergies 0 15 0 0 0 0 1 0 0 0 2007/ GSPL 49 13 0 0 0 49 13 0 0 0 2008 2011 Gamesa India 15 0 0 0 0 15 0 0 0 0 1994/ Global Trust 0 0 0 0 0 0 0 0 0 0 1999/ 2000/ 2001 2007/ Granules 17 1 0 0 0 17 1 0 0 0 2009/ 2012 2013 Green Infra 20MW 8 0 0 0 0 4 0 0 0 0 2013 Green Infra 5MW 2 0 0 0 0 1 0 0 0 0 137 Country Partnership Strategy for India: 2013–17 FY Company Committed Disbursed Outstanding Approval Loan Equity **Quasi *GT/RM Partici- Loan Equity **Quasi *GT/RM Partici- Equity pant Equity pant 2007 HDFC Bank 0 0 100 0 0 0 0 100 0 0 2009 HIKAL 13 7 0 0 0 13 4 0 0 0 2008 HNGFG 6 4 0 0 0 6 3 0 0 0 2009/ Himadri 11 0 7 22 0 6 0 7 0 0 2011 2010/ Husk Power 0 0 0 0 0 0 0 0 0 0 2011 2007 ICICI Bank 0 0 150 0 0 0 0 150 0 0 2011 ICM-INDIA 0 2 0 0 0 0 0 0 0 0 1998/ IDFC 79 3 0 0 0 79 3 0 0 0 2005/ 2006/ 2010 2006 IHDC 4 0 0 0 0 4 0 0 0 0 IHDC - Ascent 3 0 0 0 0 3 0 0 0 0 2012 IMGC 0 5 0 0 0 0 3 0 0 0 2008 Idea Cellular 98 0 0 0 0 98 0 0 0 0 2013 Inabensa Bharat 14 0 0 0 0 5 0 0 0 0 2006 Indecomm 0 2 0 0 0 0 2 0 0 0 2008/ India Infr. Fund 0 46 0 0 0 0 27 0 0 0 2013 2009 India Agri Fund 0 19 0 0 0 0 13 0 0 0 2012/ Infuse Capital 0 5 0 0 0 0 0 0 0 0 2013 2013 Inox Rajasthan 50 0 0 0 0 0 0 0 0 0 2006/ JK Paper 10 2 0 0 0 10 2 0 0 0 2009 2013 JMT Auto 9 0 0 0 0 0 0 0 0 0 2008/ Jain Irrigation 55 19 40 0 65 55 18 40 0 65 2009/ 2010/ 2013 2007/ KCIL 0 0 0 0 0 0 0 0 0 0 2010 2005/ KPIT 0 0 0 0 0 0 0 0 0 0 2006 2011 Kaizen 0 10 0 0 0 0 3 0 0 0 2010 Kalyani Gerdau 25 0 0 0 0 25 0 0 0 0 2012/ Kalkitech 0 1 0 0 0 0 1 0 0 0 2013 138 Country Partnership Strategy for India: 2013–17 FY Company Committed Disbursed Outstanding Approval Loan Equity **Quasi *GT/RM Partici- Loan Equity **Quasi *GT/RM Partici- Equity pant Equity pant 2008 Kamani Oil 0 5 0 0 0 0 5 0 0 0 2005/ Kotak Mahindr... 0 0 45 17 0 0 0 45 17 0 2007/ 2010/ 2011/ 2012/ 2006 LGB 0 1 0 0 0 0 1 0 0 0 LGB FORGE 0 0 0 0 0 0 0 0 0 0 2012 Laxmi Organic 10 9 0 0 0 10 9 0 0 0 2006/ Lok Fund 0 2 0 0 0 0 2 0 0 0 2008 2011/ Lok Capital II 0 13 0 0 0 0 4 0 0 0 2012 1990/ M&M 0 0 0 0 0 0 0 0 0 0 1993/ 1995 2007 MBPV 18 0 0 0 0 18 0 0 0 0 2010 MSETCL 45 0 0 0 0 45 0 0 0 0 2007 MSPL 8 0 0 0 0 8 0 0 0 0 2009 Macq-SBI Int F 0 149 0 0 0 0 96 0 0 0 2009 Macquarie IM 0 0 0 0 0 0 0 0 0 0 2011 MagmaFincorp 0 23 0 0 0 0 23 0 0 0 2012 Mahindra Solar 1 5 0 0 0 0 0 0 0 0 0 2004/ Max Healthcare 0 5 31 0 0 0 5 31 0 0 2007 2009 Max India Ltd 0 28 0 0 0 0 28 0 0 0 2009 Midas 0 0 0 0 0 0 0 0 0 0 2009 Modern Dairies 0 6 0 0 0 0 6 0 0 0 1996/ Moser Baer 0 2 0 0 0 0 2 0 0 0 1997/ 1999/ 2000 2011 NCMSL 0 6 0 0 0 0 6 0 0 0 1993/ NICCO-UCO 0 0 0 0 0 0 0 0 0 0 1996/ 1997/ 1998 2012 NSL Power 0 16 0 0 0 0 16 0 0 0 2012 Nereus Capital 0 20 0 0 0 0 0 0 0 0 2007 OCL 23 0 0 0 0 23 0 0 0 0 139 Country Partnership Strategy for India: 2013–17 FY Company Committed Disbursed Outstanding Approval Loan Equity **Quasi *GT/RM Partici- Loan Equity **Quasi *GT/RM Partici- Equity pant Equity pant 2007/ Ocean Sparkle 11 9 0 0 0 11 9 0 0 0 2009 2007 Ocimum 2 0 0 0 0 2 0 0 0 0 2011/ PTC Financial 80 0 0 0 0 50 0 0 0 0 2013 2012 Paradeep Phosp 50 0 0 0 0 20 0 0 0 0 2006 Peepul CapFnd II 0 15 0 0 0 0 14 0 0 0 2007/ Petronet 42 0 0 0 150 42 0 0 0 150 2010 2011/ Piaggio India 37 0 0 0 0 37 0 0 0 0 2012 2009 Polycab 0 19 31 0 0 0 19 31 0 0 2004 Powerlinks 33 0 0 0 0 33 0 0 0 0 2013 Power Grid 100 0 0 0 120 100 0 0 0 120 2012 Pragati Fund 0 20 0 0 0 0 1 0 0 0 2008 Punj Lloyd 18 0 0 0 0 18 0 0 0 0 2008 Punj Upstream 23 3 0 0 0 10 3 0 0 0 2013 RK Forgings 14 5 0 0 0 0 0 0 0 0 Rabo Equity Mgt. 0 0 0 0 0 0 0 0 0 0 1996/ Rain Calcining 0 0 0 47 0 0 0 0 8 0 1998/ 2005 2013 Religare 0 0 74 0 0 0 0 74 0 0 2012/ Rhodia Inc. 25 0 0 0 0 25 0 0 0 0 2013 2008 Rockland 0 14 0 0 0 0 9 0 0 0 2011 SAFAL Jain NBFC 0 2 0 0 0 0 0 0 0 0 2012 SAME DEUTZ India 13 0 0 0 0 2 0 0 0 0 2009 SBI - Macq DM 0 1 0 0 0 0 1 0 0 0 2012 SEWA 0 0 0 2 0 0 0 0 0 0 2012 SPSL 9 0 0 0 0 9 0 0 0 0 2012 SRLL 0 25 0 0 0 0 21 0 0 0 2008 Samara Capital 0 10 0 0 0 0 8 0 0 0 2008 Samson Maritime 18 4 0 0 0 18 4 0 0 0 1996 Sara Fund 0 0 0 0 0 0 0 0 0 0 2005 SeaLion 1 0 0 0 0 1 0 0 0 0 140 Country Partnership Strategy for India: 2013–17 FY Company Committed Disbursed Outstanding Approval Loan Equity **Quasi *GT/RM Partici- Loan Equity **Quasi *GT/RM Partici- Equity pant Equity pant 2011/ Shalivahana 0 5 0 14 0 0 5 0 0 0 2012 2010/ Snowman 5 5 0 0 0 3 5 0 0 0 2012 2008/ Soktas India 8 2 0 0 0 8 1 0 0 0 2010 2007 Suguna 0 0 7 0 0 0 0 7 0 0 2010/ Suvidhaa 0 7 0 0 0 0 7 0 0 0 2012 2012 Tata Cleantech 0 3 0 0 0 0 0 0 0 0 2011/ Techno Wind 29 4 0 0 0 29 4 0 0 0 2012 2012 Ujjivan 0 8 0 0 0 0 8 0 0 0 2010/ Utkarsh 0 1 0 0 0 0 1 0 0 0 2011/ 2012 2008/ VPF 0 15 0 0 0 0 10 0 0 0 2010 2009/ VW-India 79 0 0 0 99 79 0 0 0 99 2010 2010 VicatSagar 75 0 0 0 73 75 0 0 0 73 2011 Vinati 10 0 5 0 0 10 0 5 0 0 2011 Visakha Terminal 8 0 0 0 0 0 0 0 0 0 2011 Vishwa Infra 3 0 0 0 0 2 0 0 0 0 2011 Vishwa Utilities 2 0 0 0 0 2 0 0 0 0 2011 Vivimed 13 0 8 0 0 13 0 8 0 0 2012 Vortex 0 2 0 0 0 0 2 0 0 0 2007 WCPM 33 0 0 0 0 33 0 0 0 0 2010 WEG S.A. 22 0 0 0 0 22 0 0 0 0 2009/ WHI India 9 0 0 0 0 4 0 0 0 0 2010 1998 WIV 0 0 0 0 0 0 0 0 0 0 1998/ Walden-Mgt India 0 0 0 0 0 0 0 0 0 0 2000 2012 YES BANK LTD 0 0 75 0 0 0 0 75 0 0 2010 Zephyr India II 0 9 0 0 0 0 8 0 0 0 2012 Zephyr India III 0 15 0 0 0 0 1 0 0 0 Total Portfolio 2,460 1,083 631 109 561 2,099 781 630 25 561 * Denotes Guarantee and Risk Management Products. ** Quasi Equity includes both loan and equity types. 141 THE WORLD BANK GROUP 70 Lodi Estate New Delhi - 110003, India Web: http://www.worldbank.org/en/country/india Facebook: http://www.facebook.com/WorldBankIndia