The World Bank and IFC work together in several areas, most notably in energy, transport, water and health. IFC-Bank synergies have been particularly strong in raising financing for renewable energy , supporting the Government of Madhya Pradesh in setting up one of the largest single-site solar power project that provides solar power at record low cost. MIGA has been working closely with the Ministry of Finance to provide credit enhancement solutions at the state-level and state-owned enterprise SOE level.
This will enable state governments and SOEs to utilize long-term commercial financing, which can complement concessional lending provided by other multilaterals and development finance institutions. The program informs policy debate, provides analytical underpinnings and learnings for operations and strategy, facilitates the scale up of innovative solutions, and helps to improve state capability.
As of October , some 18 analytical studies and 15 advisory activities were ongoing. Key areas of focus include poverty and macroeconomic analysis , financial sector reform , enhancing human capital including universal health coverage and gender , air quality management , as well as state capability and governance.
Education : Over the past three decades, our support to the Government of India has helped scale up national access to quality primary and secondary education. This has resulted in near universal coverage at the primary level and enhanced representation of girls and students from marginalized groups.
The Nai Manzil project offers an opportunity for school dropouts from minority communities to complete their education and learn a marketable skill. More than 50, minority women have benefited from the education and skilling provided by the program. The Bank also provides support to state-level tertiary education reforms in Odisha and Madhya Pradesh , cumulatively impacting close to 2 million students.
Through these operations, cash transfers reached about million individual bank accounts; and additional food rations were provided to about million individuals. Growth is expected to strengthen over the medium-term.
WPI inflation is expected to moderate to 4. Fiscal consolidation is expected to continue through expenditure restraint, although there is room for revenue mobilization to strengthen, the Update cautions. The transformational impact of reform, particularly if enhanced by a systematic dismantling of inter-state check posts, can dramatically boost competitiveness and help offset both domestic and external risks to the outlook.
The projections could, however, face risks from external shocks, including financial market disruptions arising out of changes in monetary policy in high income countries, slower global growth, higher oil prices, and adverse investor sentiment arising out of geo-political tensions in the Middle East and Eastern Europe.
Domestically, the risks include challenges to energy supply and fiscal pressures from weak revenue collection in the short term, the Update said. However, risks could be mitigated to a large extent by focusing on reforms that help the manufacturing sector. Manufacturing in India accounts for around 16 percent of GDP, a level that has remained largely unchanged in the last two decades and is relatively low when compared to the percent plus share in countries like Brazil, China, Indonesia, Korea and Malaysia, even after controlling for differences in per capita incomes.
The Update said supply chain delays and uncertainty are a major, yet underappreciated, constraint to manufacturing growth and competitiveness. Regulatory impediments to the movement of goods across state borders raise truck transit times by as much as one quarter, and put Indian manufacturing firms at a significant disadvantage with international competitors. The prime minister has made infrastructure a top priority. He wants to raise revenue through a GST goods and services tax that would be hard to evade.
He wants to reduce the sand that Indian federalism currently throws into the wheels of Indian economic development. He even wants to loosen up Indian industrial relations. But the early returns on PM Modi are that his great plans and powerful rhetoric are yet to translate into real change on the ground. That is why Modi is spending so much time focused on upcoming state elections. There is a chance his BJP and its governing National Democratic Alliance coalition will do well enough to gain effective control of the national upper house.
There is nowhere India is more different from China than the world of politics. The raw material India has to work with is so rich. The challenge now is to catalyze it. How will East Asia respond to challenges like slower Chinese growth and higher U. Hopefully with more economic cooperation. Dean Geoffrey Garrett examines three iconic American companies to argue why Trump's trade policy won't lead to more production or employment. There should not be any doubt about the strong role that the State has to play even in the context of market driven paradigm of development.
The legal system, the regulatory system, and the monitoring functions of the State need to be strengthened and made effective.
Foreign direct investment should be permitted and encouraged only in those sectors which would significantly contribute to income generation, employment creation, and net export earnings. The stipulations that the right to invest by the multinationals should become a legal right without any interventions of the State, which is envisaged in the proposed Multilateral Agreement on Investment MAI , should not be acceded to, under any circumstances.
On the contrary, India along with other likeminded countries, should mount pressures in the WTO and other fora to include code of conduct and the obligations of the multinationals for transferring technology, sharing information and promoting employment, in any multilateral agreement.
The approach of globalising the financial markets without commensurate globalisation of the real sector could have dangerous consequences of excessive short term debt resulting in instabilities and crisis situations of the Mexican type. There are already many signals of instabilities driven by volatile capital markets, and these need to be checked by enforcement of proper disciplines on the capital markets.
It is not yet the right time for bringing about total convertibility of the Indian currency since many of the necessary conditions for total convertibility to be successful are not yet met. India should endeavour to strengthen the infrastructure, and human resources covering areas such as universal literacy and health for all, for improving what one may call as the social capability of the economy for taking advantages of the globally competitive environment.
As indicated by the recent theories of the industrial organisations, it is necessary that the industrial organisation structure should be based upon the principles of blending competition and cooperation on the lines of industrial clusters and cooperative societies, for facilitating optimum utilisation of the scarce resources of knowledge and information. The sweeping statement that competition alone promotes efficiency in resource use and resource allocation has been belied by the recent experiences of flexible forms of industrial organisations which combine competition with cooperation.
India should take leadership role on various international economic issues for mobilising support from likeminded countries of the world for strengthening the bargaining positions of the developing countries on the current issues of negotiations. For example, the Singapore meeting on WTO has decided to set up a working group for setting the implications of the proposed multilateral agreement on investment. The developing countries will have to get ready to present their stand on this issue.
Similarly, the issues of social clause and labour standards would be soon becoming major issues of negotiations in the WTO. India should take initiatives to organised intellectual debates and consultations at the political level for evolving a consensus.
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