In his remarks at the Development Committee meeting, Mr. R. Gopalan, Secretary (Economic Affairs) addressed some of the major challenges that the World Bank needs to address in coming years. He spoke on the future directions that the Bank should take, the need to enhance its lending capacity and the need to invest more in agriculture.
Further Strengthening the Financial Capacity of the World Bank
He spoke of the need to improve the financial capacity of the Bank further as the world has been “moving from one crisis to the other - first fuel, then food, then financial and economic, and now the return of fuel and food crises. While these crises demand global efforts to mitigate adverse effects, the World Bank Group needs to have sufficient financial resources not only to tackle crises, but also to support long term growth. In this regard, we are concerned that Bank lending will decline starting from next year. We need to deliberate now and in future on how we can strengthen the financial base of the Bank further. We need to take steps to ensure that just as it did over the last two years, the Bank has the capacity to respond to crises, play a counter-cyclical role that can make a difference and help in long term growth.” He also wanted measures to be taken to enhance the lending limits which are constraining the ability of India and other developing countries to utilize World Bank resources more.
Future Activities and Core Focus
On the expansion of the Bank’s work into areas like climate change, the Secretary said that “the core mandate of the Bank of poverty reduction and support to long term growth of developing countries requires that the Bank should continue to have larger focus on such global public goods as education, health, financial inclusion and agricultural research rather than climate change alone.”
On the main theme of Food Security, the Secretary pointed out that “the structural dimension of agricultural production has moved from the surplus of the past three decades to a constrained scenario.” And that “tackling food security requires both short term and long term measures on many fronts – research, dry land farming, irrigation and most importantly public investment. The Bank needs to rev up its agricultural activities.”
The Secretary also brought in the issue of Trust Funds which have now grown so large that they account for 20% of the Bank’s budget. He said “Trust Funds have emerged as an important source of finance and policy advice to the developing countries and also within the Bank. We think that proper oversight of trust funds is required to protect Bank’s reputation and to align trust fund activities with the strategies and priorities of the Bank to ensure that Trust Funds are working as per the mandate of the World Bank.”
Reiterating the continuing relevance of the World Bank, he said “The WBG has done well in helping developing countries in the past. The series of crises have shown that it has continuing relevance in the future. Addressing the needs of the poor is a challenge that will also remain for a long time to come. We a need a strong, yet flexible Bank and we need to work in that direction. The Bank needs to continue to maintain its core focus on poverty alleviation without a proliferation of goals. The Bank is an important Global Public Institution we have in the development arena and we need to preserve and strengthen it for our future generations.”
The Development Committee endorsed the replenishment of the International Development Association (IDA). The replenishment of IDA16 for the next three years (2012-2014) is now for $ 49.3 billion which is almost 20% more than in IDA15.
India would continue to remain as an important recipient of IDA flows during IDA16. This is a significant development as India would receive almost $ 5.4 billion of concessional IDA funding over the next three years which could be used for project activities in the social sectors and in the most backward regions.