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World Bank pledges $9 billion loan for IndiaBy Subramaniam SharmaPublished:
NEW DELHI: The World Bank plans to lend India $9 billion during the next three years for rural development, as the nation seeks to accelerate economic growth to reduce poverty.
"We will be prepared to commit $3 billion a year for the next three years" for rural projects, the lender's president, Paul Wolfowitz, said Saturday. The bank wants to "help India sustain its impressive economic growth because without growth it's not possible to reduce poverty."
Prime Minister Manmohan Singh is seeking to spend 1.74 trillion rupees, or about $40 billion, by 2009 to improve irrigation, housing, water, electricity, telephones and roads.
About 350 million of India's 1.1 billion people live on less than $1 a day, the World Bank estimates.
The government is aiming for annual economic growth of more than 7 percent over the next decade. The economy expanded 6.9 percent in the year that ended March 31, and the central bank forecasts it will grow 7 percent this fiscal year.
The
Today in Marketplace by Bloomberg
Bank of America moves quickly to cut jobs after earnings disappointSony profit helped by camera sales, but game console still trailing rivalsMicrosoft profit soars 23 percent, beating expectationsWorld Bank, based in Washington, hopes the loan will "help the government both at the federal level and the states to see that the benefits of growth are distributed more rapidly to the poorest people," Wolfowitz said.
Increased investment in rural infrastructure will benefit companies like Larsen & Toubro, India's biggest engineering company, Bharat Heavy Electricals, the largest power equipment maker, and Steel Authority of India, the biggest steel maker, said Pyaralal Raghavan, an economist at the Federation of Indian Chambers of Commerce and Industry.
The World Bank's participation will help attract other investors, Raghavan said. "The problem in India has been implementation," he said in an interview. "With the World Bank's involvement, there will be better evaluation and scrutiny of the projects."
The World Bank lent $2.9 billion to India in the year that ended June 30, up from $1.4 billion the year before, according to Michael Carter, the lender's country director for India.
Under the four-year Bharat Nirman, or Building India, plan, the government aims to provide electricity to all 250 million rural homes, build 6 million houses and provide safe drinking water to 74,000 villages. Each of India's 700,000 villages will have at least one telephone by 2009, Singh has said.
The prime minister estimated in October that India would need an additional $150 billion to improve its airports, railways and other utilities. Airports and railways will require more than $55 billion of investment in the next 10 years, Singh said. Power will require $75 billion, while telecommunications will require $25 billion in the next five years, he said.
The state has little room to finance such spending directly, as it is bound by law to cut its budget deficit by 0.3 percentage point of gross domestic product a year until March 2009 in order to erase its revenue deficit.
India's budget deficit at the end of the last financial year was 4.1 percent of gross domestic
NEW DELHI: The World Bank plans to lend India $9 billion during the next three years for rural development, as the nation seeks to accelerate economic growth to reduce poverty.
"We will be prepared to commit $3 billion a year for the next three years" for rural projects, the lender's president, Paul Wolfowitz, said Saturday. The bank wants to "help India sustain its impressive economic growth because without growth it's not possible to reduce poverty."
Prime Minister Manmohan Singh is seeking to spend 1.74 trillion rupees, or about $40 billion, by 2009 to improve irrigation, housing, water, electricity, telephones and roads.
About 350 million of India's 1.1 billion people live on less than $1 a day, the World Bank estimates.
The government is aiming for annual economic growth of more than 7 percent over the next decade. The economy expanded 6.9 percent in the year that ended March 31, and the central bank forecasts it will grow 7 percent this fiscal year.
The
Today in Marketplace by Bloomberg
Bank of America moves quickly to cut jobs after earnings disappointSony profit helped by camera sales, but game console still trailing rivalsMicrosoft profit soars 23 percent, beating expectationsWorld Bank, based in Washington, hopes the loan will "help the government both at the federal level and the states to see that the benefits of growth are distributed more rapidly to the poorest people," Wolfowitz said.
Increased investment in rural infrastructure will benefit companies like Larsen & Toubro, India's biggest engineering company, Bharat Heavy Electricals, the largest power equipment maker, and Steel Authority of India, the biggest steel maker, said Pyaralal Raghavan, an economist at the Federation of Indian Chambers of Commerce and Industry.
The World Bank's participation will help attract other investors, Raghavan said. "The problem in India has been implementation," he said in an interview. "With the World Bank's involvement, there will be better evaluation and scrutiny of the projects."
The World Bank lent $2.9 billion to India in the year that ended June 30, up from $1.4 billion the year before, according to Michael Carter, the lender's country director for India.
Under the four-year Bharat Nirman, or Building India, plan, the government aims to provide electricity to all 250 million rural homes, build 6 million houses and provide safe drinking water to 74,000 villages. Each of India's 700,000 villages will have at least one telephone by 2009, Singh has said.
The prime minister estimated in October that India would need an additional $150 billion to improve its airports, railways and other utilities. Airports and railways will require more than $55 billion of investment in the next 10 years, Singh said. Power will require $75 billion, while telecommunications will require $25 billion in the next five years, he said.
The state has little room to finance such spending directly, as it is bound by law to cut its budget deficit by 0.3 percentage point of gross domestic product a year until March 2009 in order to erase its revenue deficit.
India's budget deficit at the end of the last financial year was 4.1 percent of gross domestic