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World Bank Group President Jim Kim Visits Uttar Pradesh

March 12, 2013

World Bank to step up support to Uttar Pradesh

LUCKNOW, India, March 12, 2013 -- World Bank Group President Jim Yong Kim today agreed to support the request of the Government of Uttar Pradesh (GoUP) for increased development assistance, especially in the area of rural and urban infrastructure.

Earlier, in a meeting with the World Bank Group president, the Uttar Pradesh Chief Minister, Akhilesh Yadav, shared the state government’s development priorities and sought assistance of more than $3.5 billion over the next three to five years. In addition, the state is also set to gain from over $1.6 billion support through other projects already being planned during this period. These requests will be formally posed to the Department of Economic Affairs, Ministry of Finance, Government of India.

Kim is on a daylong visit to Uttar Pradesh – India’s most populous state and home to the largest number of poor in India – to gain a firsthand view of some of the state’s economic and social challenges and to find out how best the World Bank Group could support the state’s development agenda.

“The government of Uttar Pradesh is striving to achieve high economic growth for its people. The state faces significant challenges, particularly in the areas of infrastructure such as roads, water supply and sanitation, urban transportation and power,” Chief Minister Yadav said. “The announcements today signify an increased engagement of the World Bank in Uttar Pradesh’s development program – which aims to combat poverty in a faster and more efficient manner,” he added.

The assistance requested by the Uttar Pradesh government include $1.5 billion for state roads (in three phases of $500 million each) and $1 billion for strengthening and setting up urban systems. Other projects being considered are in the power, municipal solid waste management and tourism sectors.

“The World Bank Group’s mission of eradicating global poverty and boosting shared prosperity cannot be fulfilled if Uttar Pradesh continues to be home to 66 million of India’s poor – the highest in any state. We are committed to step up our engagement in Uttar Pradesh to help the government meet the aspirations of millions of people, especially those below the poverty line,” Kim said. “The new government has identified some of the key challenges to growth. By supporting this vision, through investments in rural and urban infrastructure, we hope to help the people of Uttar Pradesh gain access to better jobs and services,” he added.

Uttar Pradesh is also likely to receive assistance of about $1.6 billion through projects already under preparation. Of this $460 million will be for the Uttar Pradesh Water Sector Restructuring Project II ($360 million). The remaining assistance of $1.24 billion will come from national-level/multi-state projects covering Uttar Pradesh. These are the second phase of the Eastern Dedicated Freight Corridor (EDFC II, ($1.05 billion), the Rural Water Supply and Sanitation Project for Low-Income States (Uttar Pradesh component: $155 million) and the Informal Settlements Improvement Project (state component: $60 million).

Currently, the state has two projects that include the $196 million Uttar Pradesh Sodic Lands Reclamation III Project and the $148 million Uttar Pradesh Health Systems Strengthening Project. In addition, Uttar Pradesh receives about $1.8 billion as part of ongoing national/multi-state projects, including the National Ganga River Basin Project and EDFC I – where Uttar Pradesh is the largest beneficiary.

Later in the day, the World Bank President will visit a village in Uttar Pradesh to gain insights into the realities of rural life that might compel migration to towns and cities.  He will then travel to a low-income neighborhood in Kanpur to see first-hand some of India’s urban challenges. India’s urban population is expected to increase by 10 million each year, posing a huge demand for housing, jobs and basic services. He will interact with the residents to learn about their efforts to secure vital services such as water supply and sanitation.

In Kanpur, Kim will also be briefed on the challenges the government faces in its efforts to clean the Ganga River. The World Bank is supporting the National Mission Clean Ganga through a $1 billion project which is being implemented in five basin states, including Uttar Pradesh. Kanpur city lies on the critical middle stretch of the river where pollution loads are at their highest.

He will also see work being done under two innovative International Finance Corporation (IFC)-supported private sector projects for financial inclusion – Financial Inclusion Network & Operations Pvt. Ltd.(FINO) and Aadhar Housing Finance Private Ltd. While FINO is using biometric smart cards to allow for low-cost, reliable financial transactions between banks and their poorest customers, Aadhar Housing Finance Private Ltd is a housing finance company serving low-income households in states like Uttar Pradesh.

India is the largest client of the World Bank Group. Between 2009 and 2013, the Group lent around $ 25.5 billion to India. This includes $12 billion from the International Bank for Reconstruction and Development (IBRD), $8.3 billion from the International Development Association (IDA) and a further $5.2 billion in investments from the International Finance Corporation (IFC). As of January 2013, total IBRD and IDA net commitments stood at $23.1 billion (IBRD $13.2 billion, IDA $9.9 billion) across 77 projects. At the end of January 2013, IFC’s portfolio contained 219 projects, amounting to committed and disbursed exposure of $4.1 billion.