World bank brief history

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Information about World bank brief history

Published on April 6, 2014

Author: afukhan


1 CHAPTER 1 INTRODUCTION TO WORLD BANK World Bank Motto Working for a World Free of Poverty Established July 1944 Type International organization Legal status Treaty Purpose/focus Crediting Location Washington, D.C., U.S. Membership 188 countries (IBRD) 172 countries (IDA) President Jim Yong Kim Main organisation Board of Directors Parent organization World Bank Group

2 MEANING The World Bank is an international financial institution that provides loans to developing countries for capital programs. The World Bank's official goal is the reduction of poverty. According to its Articles of Agreement (as amended effective 16 February 1989), all its decisions must be guided by a commitment to the promotion of foreign investment and international trade and to the facilitation of capital investment. The World Bank comprises two institutions: the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). The World Bank should not be confused with the World Bank Group, which comprises the World Bank, the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA), and the International Centre for Settlement of Investment Disputes (ICSID).

3 HISTORY The World Bank was created at the 1944 Bretton Woods Conference, along with three other institutions, including the International Monetary Fund (IMF). The World Bank and the IMF are both based in Washington DC, and work closely with each other. Although many countries were represented at the Bretton Woods Conference, the United States and United Kingdom were the most powerful in attendance and dominated the negotiations. Traditionally, the World Bank has been headed by a citizen of the United States, while the IMF has been led by a European citizen. 1944–1968 Before 1968, the reconstruction and development loans provided by the World Bank were relatively small. The Bank's staff was aware of the need to instill confidence in the bank. Fiscal conservatism ruled, and loan applications had to meet strict criteria 1968–1980 From 1968 to 1980,the bank concentrated on meeting the basic needs of people in the developing world. The size and number of loans to borrowers was greatly increased as loan targets expanded from infrastructure into social services and other sectors.

4 1980–1989 In 1980, McNamara was succeeded by US President Jimmy Carter's nominee, A.W. Clausen. Clausen replaced many members of McNamara's staff and instituted a new ideological focus. His 1982 decision to replace the bank's Chief Economist, Hollis B. Chenery, with Anne Krueger was an indication of this new focus. Krueger was known for her criticism of development funding and for describing Third World governments as "rent- seeking states." PURPOSE OF THE WORLD BANK Purposes of The World Bank • Granting reconstruction loans to war devastated countries. • Providing loans to governments for agriculture, irrigation, power, transport, water supply, educations, health etc. • Promoting foreign investment by guaranteeing loans provided by other organizations. • Encouraging industrial development of underdeveloped countries by promoting economic reforms. • Providing technical, economic and monetary advice to member countries for specific projects.

5 PROCUREMENT: The World Bank works to ensure that procurement in Bank-financed projects and programs is conducted in accordance with its Articles of Agreement, which require that loan proceeds are used only for the purposes for which the loan, grant, or credit was granted. The Procurement Policy and Services Group of the World Bank is charged with providing the Policy and Guidance necessary to carry out this mandate for the Bank’s operational clients. The Bank gives equal importance to supporting the management and reform of public procurement systems in borrower countries. Increasing the efficiency, fairness, and transparency of the expenditure of public resources is critical to sustainable development and the reduction of poverty.

6 CHAPTER 2: FORMATION OF WORLD BANK MEMBERS: The International Bank for Reconstruction and Development (IBRD) has 188 member countries, while the International Development Association (IDA) has 172 members. Each member state of IBRD should be also a member of the International Monetary Fund (IMF) and only members of IBRD are allowed to join other institutions within the Bank (such as IDA). World Bank Made up of 5 different organizations: –  International Bank for Reconstruction and Development (IBRD)  International Development Association (IDA)  International Finance Corporation (IFC)  Multilateral Investment Guarantee Agency (MIGA)  International Center for the Settlement of Investment Disputes (ICSID)

7 International Bank for Reconstruction and Development (IBRD) The IBRD came into existence in 1945 and currently has 188 member countries. These countries also must be members of the International Monetary Fund. The IBRD is a bank with the highest rating (AAA) and can borrow funds on the global financial markets at the most favourable conditions and can then lend them to its members (developing countries in particular). The IBRD offers mid- and long-term loans, usually for a period of 15-20 years, with a repayment holiday of up to 5 years. The provided loans must be backed by governmental guarantees. Goals of the institution  supporting sustainable economic development and reducing poverty in member countries, mainly through the provision of loans and technical services for certain projects and programmes of economic reform aimed at economic and social needs in health care, education, regional development and basic infrastructure  supporting the comprehensive and consistent development of international trade and maintaining the balance of accounts of payments  providing financial support to governments when reforming structural and social policies which are crucial for more effective development of both the private and public sectors and the reduction of poverty

8 Capital  initial deposits by members (bonds)  money gained by issuing short-term or long-term bonds  loans from financial market and governmental agencies  profits from its own active operations IBRD bodies The Board of Governors is the highest managing body; all member countries appoint a governor and an alternate to the Board. This position is usually taken by Ministers of Finance or Central bank Governors. The Board of Executive Directors has 24 Executive Directors who are responsible for the general activities of the institution

9 International Development Association (IDA) The International Development Association was established in 1960 and currently has 165 member countries. The IDA's managing bodies are identical to those of the IBRD. Goals of the institution  providing help to the poorest developing countries under such conditions which do not burden the balance of payments of these countries to the extent of IBRD loans. This help currently focuses mainly on countries with an annual GDP per capita lower than USD 1,025  stimulating economic and social progress in developing countries through productivity growth, thus improving living conditions in those countries  providing technical assistance  providing advisory services Capital  initial deposits by members (bonds)  contributions from member countries  profits achieved in the IDA The IDA provides loans only to governments of developing countries for a period of 35-40 years with a 10-year repayment holiday and with no interest charge. Only an annual administrative fee amounting to 0.75% of each loan provided must be paid.

10 International Finance Corporation (IFC) The IFC was established in 1956 and currently has 178 member countries. The IFC provides loans for development projects, without the guarantee of the corresponding government, for a period of 3-12 years, with a repayment holiday up to 3 years. The IFC receives the necessary capital by issuing bonds in member countries. IFC activities are often connected to PHARE activities. Goals of the institution  helping develop the private sector, especially in developing countries  helping develop local capital markets through international capital inflow advisory services  preparing and training of economic staff  advising governments on how to improve conditions for private investments (e.g. helping them develop domestic investment markets and restructuring and privatising state-owned companies) IFC bodies IFC managing bodies are identical with those of the World Bank. The IFC also has an independent bank advisory committee with representatives from eight world banks and a business advisory council comprising representative from 39 globally important companies.

11 Multilateral Investment Guarantee Agency (MIGA) The MIGA was established in 1988 and formally started its operations in 1990. It currently has 167 members. The MIGA's managing bodies include the Board of Governors and the Board of Directors. Goals of the institution  supporting the inflow of foreign investment into the production sector of member countries, especially in developing countries  providing guarantees to foreign investors against losses connected to political risks  providing advisory and consultancy services Capital  initial deposits by members (bonds)  contributions by member countries  profits achieved in the MIGA

12 International Centre for Settlement of Investment Disputes (ICSID) The ICSID is an autonomous international institution established in 1966 under the auspices of the World Bank under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (Convention). As of January 2006, the Convention had been signed by 155 countries and ratified by 143 of them. Goals of the institution  solving investment disputes between member countries and foreign investors who are nationals of other member countries. Member countries which signed the Convention agree that the decisions by the arbitral tribunal should be binding for both parties, i.e. both parties are obliged to comply with and fulfil the conditions of such decisions. A breach of this agreement can be a matter for a court proceeding at the International Court of Justice in The Hague  solving ad hoc disputes which are dealt with according to the arbitrational rules of the United Nations Commission on International Trade Law (UNCITRAL)  creating and harmonising legal norms.

13 ICSID bodies The Administrative Council is comprised of members appointed by each country which has signed the Convention. The president of the Administrative Council is the President of the World Bank. The annual Council meetings are held together with the Annual Meetings of the IMF and World Bank. The Secretariat of the ICSID administers arbitral proceedings. VOTING POWER In 2010, voting powers at the World Bank were revised to increase the voice of developing countries, notably China. The countries with most voting power are now the United States (15.85%), Japan (6.84%), China (4.42%), Germany (4.00%),United Kingdom (3.75%), France (3.75%), India (2.91%), Russia (2.77%), Saudi Arabia (2.77%) and Italy (2.64%). Under the changes, known as 'Voice Reform – Phase 2', countries other than China that saw significant gains included South Korea, Turkey, Mexico, Singapore, Greece, Brazil, India, and Spain. Most developed countries' voting power was reduced, along with a few poor countries such as Nigeria. The voting powers of the United States, Russia and Saudi Arabia were unchanged. The changes were brought about with the goal of making voting more universal in regards to standards, rule-based with objective indicators, and transparent among other things. Now, developing countries have an increased voice in the "Pool Model," backed especially by Europe.

14 Additionally, voting power is based on economic size in addition to International Development Association contributions. The Five Pillars 1. Integrate China into the world economy 2. Reduce poverty, inequality, and social exclusion 3. Resource management and environmental challenges 4. Development of capital markets 5. Improving public and market institutions

15 Chapter 3: CRITISIM AND BENEFITS OF WORLD BANK TO COUNTRIES The World Bank has long been criticized by non-governmental organizations, such as the indigenous rights group Survival International, and academics, including its former Chief Economist Joseph Stiglitz, Henry Hazlitt and Ludwig Von Mises. Henry Hazlitt argued that the World Bank along with the monetary system it was designed within would promote world inflation and "a world in which international trade is State-dominated" when they were being advocated. Stiglitz argued that the so-called free market reform policies which the Bank advocates are often harmful to economic development if implemented badly, too quickly ("shock therapy"), in the wrong sequence or in weak, uncompetitive economies. One of the strongest criticisms of the World Bank has been the way in which it is governed. While the World Bank represents 188 countries, it is run by a small number of economically powerful countries. These countries (which also provide most of the institution's funding) choose the leadership and senior management of the World Bank, and so their interests dominate the bank. Titus Alexander argues that the unequal voting power of western countries and the World Bank's role in developing countries makes it similar to the South African Development Bank under apartheid, and therefore a pillar of global apartheid.

16 In the 1990s, the World Bank and the IMF forged the Washington Consensus, policies which included deregulation and liberalization of markets, privatization and the downscaling of government. Though the Washington Consensus was conceived as a policy that would best promote development, it was criticized for ignoring equity, employment and how reforms like privatization were carried out. Joseph Stiglitz argued that the Washington Consensus placed too much emphasis on the growth of GDP, and not enough on the permanence of growth or on whether growth contributed to better living standards. The United States Senate Committee on Foreign Relations report criticized the World Bank and other international financial institutions for focusing too much "on issuing loans rather than on achieving concrete development results within a finite period of time" and called on the institution to "strengthen anti-corruption efforts". Criticism of the World Bank often takes the form of protesting as seen in recent events such as the World Bank Oslo 2002 Protests, the October Rebellion, and the Battle of Seattle. Such demonstrations have occurred all over the world, even amongst the Brazilian Kayapo people. Another source of criticism has been the tradition of having an American head the bank, implemented because the United States provides the majority of World Bank funding. "When economists from the World Bank visit poor countries to dispense cash and advice," observed The Economist in 2012, "they routinely tell governments to reject cronyism and fill each important job with the best candidate available. It is good advice. The World Bank

17 should take it." Jim Yong Kim is the most recently appointed president of the World Bank. Structural adjustment The effect of structural adjustment policies on poor countries has been one of the most significant criticisms of the World Bank. The 1979 energy crisis plunged many countries into economic crisis. The World Bank responded with structural adjustment loans which distributed aid to struggling countries while enforcing policy changes in order to reduce inflation and fiscal imbalance. Some of these policies included encouraging production, investment and labour-intensive manufacturing, changing real exchange rates and altering the distribution of government resources. Structural adjustment policies were most effective in countries with an institutional framework that allowed these policies to be implemented easily. For some countries, particularly in Sub-Saharan Africa, economic growth regressed and inflation worsened. The alleviation of poverty was not a goal of structural adjustment loans, and the circumstances of the poor often worsened, due to a reduction in social spending and an increase in the price of food, as subsidies were lifted. By the late 1980s, international organizations began to admit that structural adjustment policies were worsening life for the world's poor. The World Bank changed structural adjustment loans, allowing for social spending to be maintained, and encouraging a slower change to policies such as transfer of subsidies and price rises. In 1999, the World Bank and the IMF introduced

18 the Poverty Reduction Strategy Paper approach to replace structural adjustment loans. The Poverty Reduction Strategy Paper approach has been interpreted as an extension of structural adjustment policies as it continues to reinforce and legitimize global inequities. Neither approach has addressed the inherent flaws within the global economy that contribute to economic and social inequities within developing countries. By reinforcing the relationship between lending and client states, many believe that the World Bank has usurped indebted countries' power to determine their own economic policy. Fairness of assistance conditions Some critics, most prominently the author Naomi Klein, are of the opinion that the World Bank Group's loans and aid have unfair conditions attached to them that reflect the interests, financial power and political doctrines (notably the Washington Consensus) of the Bank and, by extension, the countries that are most influential within it. Amongst other allegations, Klein says the Group's credibility was damaged "when it forced school fees on students in Ghana in exchange for a loan; when it demanded that Tanzania privatise its water system; when it made telecom privatisation a condition of aid for Hurricane Mitch; when it demanded labour "flexibility" in Sri Lanka in the aftermath of the Asian tsunami; when it pushed for eliminating food subsidies in post-invasion Iraq."

19 Sovereign immunity The World Bank requires sovereign immunity from countries it deals with. Sovereign immunity waives a holder from all legal liability for their actions. It is proposed that this immunity from responsibility is a "shield which [The World Bank] wants to resort to, for escaping accountability and security by the people." As the United States has veto power, it can prevent the World Bank from taking action against its interests BENEFITS OF WORLD BANK

20 Chapter 4: THE INTERNATIONAL MONETARY FUND AND WORLD BANK The IMF and the World Bank are institutions in the United Nations system. They share the same goal of raising living standards in their member countries. Their approaches to this goal are complementary, with the IMF focusing on macroeconomic issues and the World Bank concentrating on long-term economic development and poverty reduction The International Monetary Fund and the World Bank were both created at an international conference convened in Bretton Woods, New Hampshire, United States in July 1944. The goal of the conference was to establish a framework for economic cooperation and development that would lead to a more stable and prosperous global economy. While this goal remains central to both institutions, their work is constantly evolving in response to new economic developments and challenges. The IMF’s mandate: The IMF promotes international monetary cooperation and provides policy advice and technical assistance to help countries build and maintain strong economies. The Fund also makes loans and helps countries design policy programs to solve balance of payments problems when sufficient financing on affordable terms cannot be obtained to meet net international payments.

21 IMF loans are short and medium term and funded mainly by the pool of quota contributions that its members provide. IMF staff are primarily economists with wide experience in macroeconomic and financial policies. The World Bank’s mandate: The World Bank promotes long-term economic development and poverty reduction by providing technical and financial support to help countries reform particular sectors or implement specific projects—for example, building schools and health centers, providing water and electricity, fighting disease, and protecting the environment. World Bank assistance is generally long term and is funded both by member country contributions and through bond issuance. World Bank staff are often specialists in particular issues, sectors, or techniques. THE WORLD BANK OPERATION:  The World Bank exists to encourage poor countries to develop by providing them with technical assistance and funding for projects and policies that will realize the countries’ economic potential.  The Bank views development as a long- term, integrated endeavor. During the first two decades of its existence, two thirds of the assistance pro- vided by the Bank went to electric power and transportation projects. Although these so-called infrastructure projects remain important, the Bank has diversified its activities in recent years as it has gained experience with and acquired new in- sights into the development process.

22  The Bank gives particular attention to projects that can directly benefit the poorest people in developing countries. The direct involvement of the poorest in economic activity is being promoted through lending for agriculture and rural development, small-scale enterprises, and urban development.  The Bank is helping the poor to be more productive and to gain access to such necessities as safe water and waste-disposal facilities, health care, family-planning assistance, nutrition, education, and housing. Within infrastructure projects there have also been changes.

23 Chapter 5 WORLD BANK IN INDIA India Projects & Programs: The World Bank Group’s Partnership Strategy for India (2013-2017) will help India lay the foundations for achieving “faster, sustainable, and more inclusive growth” as outlined in the government’s 12th five year plan. The World Bank Group will support India with an integrated package of financing, advisory services, and knowledge. As of July 2013, total net commitments in India stood at $22.3 billion (IBRD $12.6 billion, IDA $ 9.7 billion) across 78 projects. Maharashtra Rural Water Supply and Sanitation Program The objective of the Maharashtra Rural Water Supply and Sanitation Program Project (RWSS) for India is to improve the performance of Maharashtra's sector institutions in planning, implementation and monitoring of its Rural Water Supply and Sanitation Program and to improve access to quality and sustainable services in peri-urban villages, and in water-stressed and water quality-affected areas. India has been one of the fastest growing economies in the last decade, but its economy now shows signs of slowing

24 down. Between 2004 and 2011, a period that includes the global financial crisis, India's growth averaged 8.3 percent per year. Expanding social programs lowered the poverty rate by 1.5 percentage points per year during 2004-09, double the rate of the preceding decade. India's growth rate however slipped to a decade low of 5 percent in 2012-13 due to a combination of domestic and external factors, including high inflation, high fiscal deficit and weak external demand for the country's exports. This slowdown carries high social costs for millions of Indians, and threatens the gains made in poverty reduction over the past decade. Under its current 10- year RWSS program, Government of Maharashtra (GoM) seeks to significantly expand the frontiers in the sector with a focus on increasing house connection coverage, ensuring continuous water supply with adequate pressure and minimum quality standards, and ensuring that 100 percent of the rural population has access to safe water and basic sanitation. However, delivering this vision requires building capacities of institutions through appropriate implementation and management models. Maharashtra is also a rapidly urbanizing state with many large villages (each with a population of more than 10,000 people) and a growing number of peri-urban areas that are demanding higher levels of service. Finally, the state also faces challenges in addressing the needs of water-stressed and water quality affected areas, managing drinking water quality, and ensuring drinking water security in the face of increasing droughts and climate change impacts on rainfall patterns and the yield of existing sources

25 INDIA: UTTRAKHAND RWSS ADDITIONAL FINANCING The development objective of the Additional Financing for Disaster Mitigation of the Uttarakhand Rural Water Supply and Sanitation Project (UKRWSSP) for India is to improve the effectiveness of rural water supply and sanitation (RWSS) services through decentralization and increased role of Panchayati Raj institutions and local communities in the state of Uttarakhand. The additional financing is aligned to the Bank's country partnership strategy to enhance disaster risk management systems and anchored within the "strategic engagement area 3: inclusion" of the India CPS, which states that the World Bank's investments in this area will: (i) help build institutional capacity to prepare for and manage the impact of natural disasters, and (ii) help people protect themselves from natural disasters and recover quickly from them. The additional financing will modify the project development objective of the project and add new component D, RWSS disaster mitigation activities. The creation of a separate component D will bring more clarity and strengthen the reporting requirements for the additional financing, as distinct from new schemes under the on-going UKRWSSP. Further, the decentralization program, including institutional and implementation arrangements, will be different under component D. The change in implementation arrangements is necessitated by the emergency nature of the project.

26 Odisha Disaster Recovery Project The development objective of the Odisha Disaster Recovery Project for India is to restore and improve housing and public services in targeted communities of Odisha, and increase the capacity of the state entities to respond promptly and effectively to an eligible crisis or emergency. The project has five components. The first component is resilient housing reconstruction and community infrastructure. It has following two sub- components: (i) housing reconstruction for the reconstruction of about 30,000 houses in the designated rural areas in the coastal belt 5 km from the high tide line (HTL) in the districts of Ganjam and Puri, and 5km from the Chilika lake boundary as defined by the survey of India in the district of Khordha; and (ii) selected community infrastructure for public infrastructure improvements to complement the housing reconstruction. The second component, urban infrastructure in Berhampur will finance investments to improve public services in Berhampur while at the same time reduce the vulnerability of its population. Improved public infrastructure will reduce vulnerability through improved drainage to reduce floods, and increasing the resilience of public service infrastructure. It has following four sub- components: (i) upgrading of slums; (ii) public service infrastructure; (iii) community participation; and (iv) technical assistance. The third component, capacity building in disaster risk management objective is to support Odisha State Disaster Management Authority (OSDMA) in strengthening their overall capacity towards better risk mitigation, preparedness, and disaster response, in line with global best practices. The fourth component,

27 implementation support will finance the incremental operating costs of the project management units (PMUs) in OSDMA and the Department of Housing and Urban Development (H and UD), and the project implementation unit (PIUs) in OSDMA and the Berhampur Municipal Corporation (BeMC). The fifth component, contingent emergency response will draw resources from the unallocated expenditure category and or allow the Government of Odisha (GoO) to request the Bank to re-categorize and reallocate financing from other project components to partially cover emergency response and recovery costs.

28 India: Bihar Integrated Social Protection Strengthening Project The development objective of the Bihar Integrated Social Protection Strengthening Project for India is to strengthen institutional capacity of the Department of Social Welfare and the Rural Development Department to deliver social protection programs and services and expand outreach of social care services for poor and vulnerable households, persons with disabilities, older persons, and widows in the state of Bihar. The project has two components: the first component, strengthening social protection systems and capacity will strengthen core systems and capacity of the Bihar Rural Development Society (BRDS) and the State Society for Ultra-Poor and Social Welfare (SSUPSW), which are the program implementation arms of the Rural Development Department and the Department of Social Welfare respectively, at the state, district, and block levels. This component has two sub-components: (i) strengthening systems and capacity for safety net delivery; and (ii) strengthening systems and capacity for social pension and social care service delivery. The second component is establish and strengthen social care services. This component will support establishing social care services across the state through social care service centers (referred to as Buniyad centers) that will provide high quality care, support, and rehabilitation services for older persons, widows, and persons with disabilities. It has following three sub-components: (i) establish and strengthen social care services; (ii) pilot models in social protection delivery; and (iii) innovation window.

29 India: Rural Water Supply and Sanitation Project for Low Income States The objective of the Rural Water Supply and Sanitation Project for low income states for India is to improve piped water supply and sanitation services for selected rural communities in the target states through decentralized delivery systems and to increase the capacity of the participating states to respond promptly and effectively to an eligible crisis or emergency. The project consists of the following components: 1) capacity building and sector development; 2) infrastructure development; 3) project management support; and 4) contingency emergency response. The first component supports the building of institutional capacity for implementing, managing and sustaining project activities. The infrastructure development component supports investments for improving water supply and sanitation coverage, including construction of new infrastructure and rehabilitation and augmentation of existing schemes. The third component includes project management support to the various entities at the national, state, district, and village levels for implementing the project, including staffing, consultancy and equipment costs, and internal and external financial audits. The final component deals with the utilization of resources from unallocated expenditure and allows the Government to request the Bank to re-categorize and reallocate financing from other project components to partially cover emergency response and recovery costs in the event of an emergency or crisis.

30 National AIDS Control Support Project The objective of the National AIDS Control Support Project for India is to increase safe behaviors among high risk groups in order to contribute to the national goal of reversal of the HIV epidemic by 2017. The project has three components. (1) Scaling up targeted prevention interventions component will support the scaling up of Targeted Interventions (Tis) with the aim of reaching out to the hard to reach population groups who do not yet access and use the prevention services of the program, and saturate coverage among the High Risk Groups (HRGs). In addition, this component will support the bridge population, i.e. migrants and truckers. (2) Behavior change communications will include: (i) communication programs into society and to encourage normative changes aimed at reducing stigma and discrimination in society at large, and in health facilities specifically, as well as to increase demand and effective utilization of testing and counseling services; (ii) financing of a research and evaluation agency to assess the cost-effectiveness and program impact of behavior change communications activities; and (iii) establish and evaluate a helpline at the national and state level to further increase access to information and services. (3) Institutional strengthening component will support innovations to enhance performance management including fiduciary management, such as the use of the computerized financial management system, at national and state levels

31 India Low-Income Housing Finance The development objective of the Low Income Housing Finance Project for India is to provide access to sustainable housing finance for low income households, to purchase, build or upgrade their dwellings. The project has three components. The first component is capacity building. Under this component activities will be financed to strengthen the capacity of National Housing Bank (NHB), qualified intermediary institutions, and Qualified Primary Lending Institutions (QPLIs). The aim will be to develop new financial products, loan standards, risk management tools, and financial literacy and consumer protection capacity. In addition, pilots will be designed, launched and monitored. Building upon and complementing National Housing Bank (NHB’s) monitoring and evaluation (M&E) systems and processes, this component will also support an impact assessment to independently assess the social and household level impact of the project. The second component is financial support for sustainable and affordable housing. This component will finance NHB to refinance, directly or indirectly through qualified intermediary institutions, low-income housing loans made by QPLIs to primary borrowers to purchase, build or upgrade their dwelling. NHB has recently prepared a refinancing scheme for secured low-income housing loans to borrowers with formal and informal incomes. NHB will develop guidelines (to be formulated and reflected in the project’s operations manual) for the provision of alternatively secured housing loans to formal and informal borrowers. The third component is project implementation. A Project Implementation Unit (PIU) will be set up within

32 NHB to help implement the project, carry out monitoring and evaluation, be responsible for legal issues and grievance redressal, overseeing and monitoring the social and environmental due diligence (including conducting annual third party audits of QPLIs), keeping the project’s operations manual updated, and financial management and carry out any procurement necessary under the project. Low-income housing expertise will also be added to the PIU to provide technical inputs to the procurement of consultants’ services under component one. External communications on the project will also be covered by NHB staff. Lastly, NHB will also take on responsibility for dissemination and communication activities under its own budget, such as conferences or workshops.

33 Rajasthan Road Sector Modernization Project The development objective of the Rajasthan Road Sector Modernization Project for India is to improve rural connectivity, enhance road safety, and strengthen road sector management capacity of the state of Rajasthan. The project has three components. The first component is rural connectivity improvement. This component will support construction of about 2500 kilometer (km) rural roads to provide connectivity to about 1,300 revenue villages with population between 250 and 499 people in the areas of the state not covered by Pradhan Mantri Gram Sadak Yojana (PMGSY) and introduce good practices of cost effective low volume technologies. The second component is road sector modernization and performance enhancement. This component will support implementation of a road sector modernization plan (RSMP) in the following key areas: improved policy framework; modernization of engineering practices and business procedures; sustainable asset management; institutional and human resource development; preparing a pipeline of feasible projects for implementation; and enhancing governance and accountability in public works department (PWD). The third component is road safety management. This component will support the strengthening of road safety management systems in Rajasthan with the objective of reducing the number of fatalities and serious injuries from traffic accidents in the state.

34 Uttar Pradesh Water Sector Restructuring Project. The objective of the Second Phase of the Uttar Pradesh Water Sector Restructuring Project for India is to: (a) strengthen the institutional and policy framework for integrated water resources management for the entire state; and (b) increase agricultural productivity and water productivity by supporting farmers in targeted irrigation areas. There are six components to the project, the first component being strengthening of state-level water institutions and inter-sector coordination. This component aims to provide support to the institutions in the state responsible for overall integrated water resources management and implementation of the state water policy. The second component is the modernization and rehabilitation of irrigation and drainage systems. The third component is the consolidation and enhancement of irrigation institutional reforms. This component will enhance the efficiency of the Uttar Pradesh Irrigation Department (UPID) and strengthen the Participatory Irrigation Management (PIM) approach both in the department as well as in the community. The fourth component is the enhancing agriculture productivity and on-farm water management. This component (to be implemented directly by the Department of Agriculture) aims to improve the overall agriculture productivity and water-use efficiency at the field level. The fifth component is the feasibility studies and preparation activities for the next phase. This component is to prepare detailed surveys and designs for future third phase areas. These new areas will be identified by the Government of Uttar Pradesh and will make use of similar design principles (and the lessons learned) adopted under this second phase operation. Finally, the sixth component is the project coordination and monitoring.

35 OTHER NAMELY PROJECTS ARE: Project Title Project ID Commitment Amount * Status Approval Date Maharashtra Rural Water Supply and Sanitation Program P126325 165.0 Active March 12, 2014 INDIA: UTTRAKHAND RWSS ADDITIONAL FINANCING P148009 24.0 Active March 4, 2014 Odisha Disaster Recovery Project P148868 153.0 Active February 20, 2014 India: Bihar Integrated Social Protection Strengthening Project P118826 84.0 Active December 30, 2013 India: Rural Water Supply and Sanitation Project for Low Income States P132173 500.0 Active December 30, 2013 Second Gujarat State Highway Project (GSHP II) P114827 175.0 Active December 13, 2013 India:Improving Development Programmes in Tribal Areas P145058 0.5 Active November 25, 2013 National Highways Interconnectivity Improvement Project P121185 500.0 Active October 29, 2013 Rajasthan Road Sector Modernization Project P130164 160.0 Active October 29, 2013 Uttarakhand Disaster Recovery Project P146653 250.0 Active October 25, 2013

36 Uttar Pradesh Water Sector Restructuring Project Phase 2 P122770 360.0 Active August 28, 2013 Tamil Nadu and Puducherry Coastal Disaster Risk Reduction Project P143382 236.0 Active June 20, 2013 India Low-Income Housing Finance P119039 100.0 Active May 14, 2013 India Second Kerala State Transport Project P130339 216.0 Active May 14, 2013 National AIDS Control Support Project P130299 255.0 Active May 1, 2013 Himachal Pradesh Watershed Management Project P104901 8.0 Active November 20, 2012 HP State Roads Project - Additional Financing P130616 61.7 Active October 25, 2012 India - Bihar Panchayat Strengthening Project P102627 84.0 Active September 27, 2012 India: Karnataka Health Systems Additional Financing P130395 70.0 Active September 27, 2012 AF - HP Mid-Himalayan Watershed Development Project P130944 37.0 Active September 27, 2012

37 CONCLUSION: The World Bank's activities are focused on developing countries, in fields such as -human development (e.g. education, health), -agriculture and rural development (e.g. irrigation, rural services), -environmental protection (e.g. pollution reduction, establishing and enforcing regulations), -infrastructure (e.g. roads, urban regeneration, electricity), and -governance (e.g. anti-corruption, legal institutions development). It provides loans at preferential rates to member countries, as well as grants to the poorest countries. Loans or grants for specific projects are often linked to wider policy changes in the sector or the economy. For example, a loan to improve coastal environmental management may be linked to development of new environmental institutions at national and local levels and to implementation of new regulations to limit pollution. Technically the World Bank is part of the United Nations system, but its governance structure is different. Membership gives certain voting rights that are the same for all countries but there are also additional votes which depend on financial contributions to the organization. As a result, the World Bank is controlled primarily by developed countries, while clients have almost exclusively been developing countries. Some critics argue that a different governance structure would take greater account of developing countries' needs. As of November 1, 2004 the United States held 16.4% of

38 total votes, Japan 7.9%, Germany 4.5%, and the United Kingdom and France each held 4.3%. As major decisions require an 85% super-majority, the US can block any change. Structural adjustment: Is a term used to describe the policy changes implemented by the International Monetary Fund (IMF) and the World Bank (the Bretton Woods Institutions) in developing countries. These policy changes are conditions (Conditionalities) for getting new loans from the IMF or World Bank, or for obtaining lower interest rates on existing loans. Conditionalities are implemented to ensure that the money lent will be spent in accordance with the overall goals of the loan. Conditions Some of the conditions for structural adjustment can include:  Cutting expenditures, also known as Austerity.  Focusing economic output on direct export and resource extraction  Trade liberalization, or lifting import and export restrictions  Increasing the stability of investment (by supplementing foreign direct investment with the opening of domestic stock markets).  Balancing budgets and not overspending.

39  Removing price controls and state subsidies  Privatization, or divestiture of all or part of state-owned enterprises.  Enhancing the rights of foreign investors vis-a-vis national laws. Improving governance and fighting corruption.


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