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$1 bn soft loan from World Bank

$1 bn soft loan from World Bank
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First Published: Sat, Mar 20 2010. 12 33 AM IST
Updated: Sat, Mar 20 2010. 12 33 AM IST
New Delhi: The World Bank has approved a $1.05 billion (around Rs4,780 crore) soft loan to fund India’s ongoing education projects, particularly those aimed at universal elementary education.
However, experts were sceptical about the utility of this loan; they claimed the aim should be to fix flaws in existing programmes, not raise new funds.
Of the $1.05 billion loan, the largest ever by the World Bank to fund education, $750 million has been earmarked for the bank’s third loan to Sarva Shiksha Abhiyan (SSA); the rest will support 200 competitively selected engineering colleges. The money has to be spent in the next two years.
“The real focus of this additional financing is on improving quality. More than 50% of SSA resources will be allocated over the next three years for activities to improve student learning such as teacher training, remedial education, provision of free text books and other learning material to enable more activity-based learning,” Sam Carlson, World Bank’s lead education specialist and project leader for SSA, said in a media statement.
SSA is the Central government’s flagship programme aimed at universal elementary education across the country. It is implemented jointly with state governments, who contribute 45% of the corpus.
According to Praveen Jha, professor at New Delhi’s Jawaharlal Nehru University (JNU), the primary challenge in such schemes is correcting flaws in design. Additional bank funding would hardly help, he added.
“All Centrally-sponsored schemes, in some sense, have contributed to incoherence in policymaking in states,” Jha said. “The basic design has serious flaws.”
States have struggled to find resources to match their commitments in SSA. Moreover, they have also been unable to find enough teachers to implement SSA as there are no permanent jobs on offer.
Data complied by the Centre for Budget and Governance Accountability, an independent body that analyses Union budgets, shows that states have struggled to spend even the full quantum of their approved budgets on SSA.
For three consecutive fiscal years ended 31 March 2008, states as a group spent 66.2%, 64.5% and 73.5%, respectively, of their approved budgetary allocation on SSA, the data shows.
Pramath Raj Sinha, former dean of the Indian School of Business and currently managing director of 9.9 Mediaworx Pvt. Ltd, doesn’t agree with most experts, however. He said the loan would help the cause of SSA.
“It will have an impact. The issue of quantity, which is one of the three issues related to education sector, does get affected by funding,” Sinha said.
The other issues are quality and access, he added. “It will not obviously improve the quality as funds cannot solve the issue. The disbursement of money is very important and the states have to implement the schemes effectively,” he added.
The Central government’s budget estimate of its own spending on SSA in 2010-11 was Rs13,602 crore, almost four times the size of the bank loan. The bank had earlier lent India $1.1 billion in two tranches to provide financial support for SSA.
The World Bank’s soft loans for education are to be repaid over a 35-year period with a moratorium on repayment over the first 10 years.
Typically, such International Development Association loans carry an interest rate of less than 1%.
The real problem with SSA is the way the scheme is structured by the Central government, said M.A. Baby, Kerala’s education minister. “Funding is required, but the yardstick for disbursement of these funds have been faulty,” he said on the challenges of executing SSA.
According to Baby, SSA’s success would require proper utilization, local involvement and well-designed projects. The Centre should understand one size doesn’t fit all, Baby added, implying that the scheme would have to factor in local requirements.
Jha of JNU agrees and said SSA is a highly centralized scheme where norms are decided in New Delhi.
“People sitting in Delhi do not know the various requirements of states,” Baby added.
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First Published: Sat, Mar 20 2010. 12 33 AM IST