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World Bank President Jim Yong praises Narendra Modi's 'Gujarat Model of development'; promises $18 billion loan to India for development

Sunday, 27 July 2014 - 5:04pm IST Updated: Sunday, 27 July 2014 - 6:22pm IST | Place: Mumbai | Agency: dna webdesk

Even as the CAG (Comptroller and Auditor General) report slammed Gujarat's model of development and gave details of grave financial irregularities, World Bank President Jim Yong Kim had earlier endorsed the Gujarat model of development and promised a commitment of $18 billion loan to India in 3 years for activities related to development. India is one of the topmost clients for the World Bank. 

Kim further had said, “My hope is that what Modi did in Gujarat in improving the business environment can be scaled up now to all of India, and if that happens then India will rise quickly in ease of doing business rankings."

The World Bank has been publishing an annual 'Doing Business Report' since 2004 and it highlights specific information on ease of doing business in 189 countries. India has fallen by  three spots to 134th spot as per the latest data reports. 

As the World Bank President Jim Yong Kim visited India recently, the formal announcement about World Bank's willingness to commit $15-18 billion to support India over the next three years was splattered across various media reports. “From my discussions with Prime Minister Modi and Minister Jaitley, it is clear that they are committed to increasing India’s economic growth,” President Kim told. 

World Bank also welcomed the constitution of New Development Bank by BRICS countries — Brazil, Russia, India, China and South Africa.  In a report, the financial institution has said the initiative would support their infrastructure financing requirements.

He further added, “I assured them that the World Bank Group will bring to bear all possible knowledge and financing to help them in this task.  A large proportion of the world’s poor live in India and we will give all our support to the Government as it strives to create jobs and build prosperity for its people. The World Bank Group will be ready to provide financial support worth $15-18 billion over the next three years.”

President Kim was on a three-day visit to India to learn more about the Narendra Modi government’s development priorities.

“The government is committed to introducing key reforms, which are critical to India achieving its full economic potential,” said Kim. “They have identified infrastructure development and job-oriented skill development as the deep drivers of growth.  The World Bank Group is ready to support these development initiatives with financing, as well as knowledge and capacity building, that is informed by global experience.”  

World Bank's road map for India:

*The World Bank Group will bring increased financial and knowledge resources to help India return to the path of sustained high growth needed to bring prosperity to millions, especially the poor living in the lower income states.

*Discussions with the Prime Minister and other officials focused on the government’s plans to re-ignite growth by investing in infrastructure to create jobs; providing quality education and skills training to 8 million young people who enter the labor force each year; and better equipping the 10 million people who leave rural areas for towns and cities each year for jobs.

*India needs to bring out 270 million people out of poverty and International Development Association (IDA) donors have agreed to provide $3.4 billion over the next three years as transitional support.  

*The International Bank for Reconstruction & Development (IBRD) has also recently increased the single borrower limit for India to $20 billion from $17.5 billion.  

*Government of India’s agreement to purchase Special Private Placement Bonds (SPPBs) of up to $4.3 billion and will create additional opportunities for continued assistance to India as it strives to revive growth.

*The World Bank Group’s Country Partnership Strategy (2013-17) focuses on three areas key to India’s goal of faster, sustainable and more inclusive growth: economic integration, rural-urban transformation, and inclusion.  

GDP growth comparison: India versus South Africa and the free fall

Data from World Bank

*The World Bank Group focus is on engagement in India’s low-income states, where income per capita is low, poverty is widespread, and development indicators are comparable to those in the least-developed countries in the world.

*The largest operations of the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), and the International Finance Corporation (IFC) are in India.

*World Bank Group assistance to India between July 2013 and June 2014 amounted to $6.4 billion. This comprised $2 billion from IBRD, $3.1 billion from IDA, and $100 million from the Clean Technology Fund that the World Bank Group administers.  During that period, the IFC committed $1.2 billion in India.

Ganga takes credence: 

President Kim had also added that Modi's government would like India to return to a growth rate of 9% and that the World Bank fully supported this target. 

 "I also suggested to Dr Jim Yong Kim that the cleaning of the Ganga would be a very inspiring project for the World Bank," added Narendra Modi in his twitter account about his Ganga initiative. 

Below are some of tweets from Prime Minister's account: 

Watch the project video below: 

President Kim had a field visit to the Bank-supported Tamil Nadu Empowerment and Poverty Reduction Project which is helping women and other vulnerable groups transition into urban livelihoods once they move from their villages into towns and cities. He met with young men and women from rural areas who are being trained to take up jobs in manufacturing industries.

“I met young people whose parents are small farmers or agricultural laborers. Giving them basic job skills and connecting them to the right employers has allowed these young people to pull themselves and sometimes their entire families, out of extreme poverty,” said Kim.  “We often talk about the goal of removing poverty in a generation; I can now say I saw that happening.” The Project has helped place 240,000 people in steady jobs; 46% of these are young women," he added. 

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