The Hindu : Business : World Bank pegs GDP growth at 6 p.c.

Online edition of India's National Newspaper
Wednesday, Jun 09, 2004

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World Bank pegs GDP growth at 6 p.c.

NEW DELHI, JUNE 8. An upbeat World Bank today said the Common Minimum Programme (CMP), emphasising reforms with human face, will spur socio-economic development in India, but contested the UPA Government's target that the GDP will grow at 7 to 8 per cent.

"The Indian economy will grow at 6 per cent over the next five years against the target of 7 to 8 per cent unless the Government reins in fiscal deficit and raises investment to improve physical and social infrastructure in rural areas,'' the World Bank Country Director (India), Michael Carter, told reporters here.

"India is likely to continue growth at 6 per cent over the next five years. It could be faster now due to an inbuilt dynamism in the services sector, but the key to India's growth lies in rural areas,'' he said. In this regard, he said the World Bank would increase the annual assistance to India from $1.7 billion during this fiscal to $3 billion by 2005-06. "We are looking at substantial increase in lending to India. A major portion of the assistance will be allocated to rural areas,'' he said.

The World Bank, which follows July-June fiscal year, will provide $2 billion to India, mainly for rural areas, during 2004-05.

The Washington-based lender praised the UPA Government's CMP, saying it is strong. "We are encouraged by the quality of CMP. We are happy that the new Government is continuing reforms with focus on rural areas which were neglected earlier.''

Mr. Carter said the CMP had laid special emphasis on social services and programmes for poor people. "What now really matters is the implementation of CMP, but it is too early to judge that aspect,'' he said on the sidelines of a conference, organised by the Federation of Indian Chambers of Commerce and Industry (FICCI).

Mr. Carter said the bank was now looking forward to the budget, which will be tabled in Parliament next month. "We are waiting for the budget. It is going to be the first real indication of how the CMP works.''

The official, however, maintained that the fiscal deficit remained a challenge for the new Government. The combined deficit of the Centre and the States stands at 11 per cent. "We are concerned about it as in the long run, fiscal deficit diverts resources away from investment and, in turn, development.''

He said, "The bank plans to apportion a good proportion of its India programme in the coming years to supporting investment in the rural sector to help the country address issues related to rural livelihoods, access to finance, electrification, roads, education, watershed management, irrigation and water supply.'' All of these interventions will be based on the notion of community involvement and empowerment.

With this aim, the World Bank has started its India Country-level Development Marketplace (IDM) with the theme: "Improve Rural Services — Access and Quality in Rural Water Supply and Sanitation, Health, Education, Roads, Finance and Electricity.''

This is the bank's first Country Development Market Place in the South Asia region.

It will support non-government actors in the development world in finding creative approaches to development issues.

The main objective of the IDM is to bring together social innovators from all over the country to compete for funding and to share their knowledge and experience on how to improve the delivery of services in rural areas.

UNI

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