India has demanded continuation of concessional financing until 2030 from the World Bank Group and increasing the overall development financing, including non-concessional loans, to $ 100 billion over the next five years. Finance Minister Arun Jaitley made these suggestions at various interactions at the International Monitory Fund (IMF) and the World Bank, called the Spring Meetings.
The Minister said the ongoing revision of environmental and social standards required under the financing conditions must not “compromise the primacy of the development objective.”
The largest recipient of World Bank loans, India has so for received $ 52.7 billion in commercial loans from the International Bank for Reconstruction and Development (IBRD) and $ 49.4 billion from the International Development Association (IDA) which is the Bank’s assistance programme for developing countries.
Referring to the WB Sustainable Development Goals (SDG), the Finance Minister said delivering on such a massive development and reconstruction agenda would require large amounts of concessional and non-concessional finance. “Most IDA countries would still need primarily the concessional and grant financing. All these call for a bigger than ever grant contributions based IDA 18 replenishment. In fact, we will need quite a few such strong replenishments until 2030 if we were to achieve the goals of eliminating extreme poverty and other SDGs in IDA countries,” the Minister said, calling for increasing the current levels of $50-$60 billion per annum in concessional, non-concessional and private sector resources from the WB Group to $100 billion a year over the next five years.
IDA funds are meant for countries with per capita income up to $ 1260 adjusted for purchasing power, and going by this technical definition India is no longer eligible for continued support. This year, the 45 odd developed countries that contribute to the kitty are set to replenish it- it happens once in three years - amid global economic uncertainties, and support for India under this is a debate in the Bank.
Simultaneously, the World Bank is now also in the “process of reviewing, updating and strengthening its environmental and social policies” taking into account the failures and best practices from the last two decades. Submissions from development experts, policy makers, and governments have closed in March, and the Bank is expected a release a summary of these recommendations and a new draft Environmental and Social Framework (ESF) soon.
The framework will have significant implications for India that is grappling with environmental and social questions alongside its push for rapid economic development. The ESF requires borrowing governments to address certain environmental and social risks in order to receive Bank financing for development projects.
“The ESF for Investment Project Financing has completed the third Consultation process held extensively for almost five months in 33 countries including India. Indian project authorities and Ministries/ Departments have brought out adverse implications and impracticality of many of the identified issues and offered useful suggestions for amending the proposed standards. It is now time to incorporate the suggestions and concerns pointed out during this process. While there is no quarrel that the standards need to reflect the changing times, it is also the responsibility of the Bank to ensure that the new standards incorporate borrowers’ concerns and are simple, transparent and predictable. The new standards must ensure that the cost of compliance is not excessive and there is no compromise with the primacy of the development objective,” the Minister said.
