Direct cash transfer better than subsidy: World Bank

Direct cash transfer better than subsidy: World Bank
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First Published: Tue, Feb 13 2007. 12 17 AM IST
Updated: Tue, Feb 13 2007. 12 17 AM IST
New Delhi: As theWorld Bank pledged an average $4 billion (Rs17,600 crore) a year to India for the next three years, the Bank’s incoming country director said she hopes to implement a cash transfer programme to give money directly to India’s poor.
On Monday, the bank— which lends more money to India than any other nation— introduced Isabel Guerrero, who will become India’s first female director on 1 March. She previously worked in Mexico and Colombia.
In an interview with Mint, Guerrero said she is keen to adopt a popular and successful Mexican cash transfer programme in India called Opportunidas. The programme runs all over Mexico and has also been adapted by Brazil.
“This kind of programme is much more effective in fighting poverty than the subsidy system,” Guerrero said. “The poor needs both direct help from above and empowerment from the bottom.”
In a press conference, the World Bank’s regional vice president for South Asia, Praful C. Patel, also committed $12 billion over three years to India, beginning with thenext fiscal year. The amount represents a one-third jumpin the bank’s support compared with its commitments over 2004 to 2007.
For the current financial year, which runs July 2006 to June 2007, the Bank estimates it will lend $3 billion to $3.5 billion, compared to less than half that, $1.4 billion, in the last fiscal. It is currently engaged in 63 projects, from rural development to water management, spending $12.7 billion across India.
Guerrero said she was very optimistic of the country’s high growth prospects and expected it to continue. She said the bank’s focus area would be infrastructure, both economic and social. “Keeping up sustained infrastructure support, both rural and urban, is essential to ensure that the two Indias come closer and don’t disrupt high growth, especially when the higher growth is coming from the infotech and services sectors,” she said. “Else, it might not only disrupt the flow of physical capital but could also prove to be socially unsustainable,” she added.
In India, the bank spends the most on infrastructure and rural development, about a third of its total budget. This includes $1.25 billion for rural water resources management, $1.85 billion water resources management and rehabilitation of water bodies and $2 billion to highways, state and rural roads.
Apart from $850 million for supporting public-private partnership efforts in big infrastructure projects, most of the new lending will also be used to help the four least developed states of Bihar, Orissa, Jharkhand and Uttar Pradesh. The bank is also providing $500 million for a project to revive rural cooperative credit structure, adding to the $1 billion coming from the Asian Development Bank for the sector.
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First Published: Tue, Feb 13 2007. 12 17 AM IST