Skip to Main Navigation

Overview

  • AT A GLANCE

    Since the 2000s, India has made remarkable progress in reducing absolute poverty. Between 2011 and 2015, more than 90 million people were lifted out of extreme poverty.

    However, the COVID-19 pandemic has reversed the course of poverty reduction, at least temporarily. The economic slowdown triggered by the outbreak is believed to have had a significant impact on poor and vulnerable households.

    After March 25, 2020, when a national lockdown was implemented, economic activity slowed sharply. As a result, output fell by a whopping 25 percent (year on year) between April and June, the first quarter of the FY21 fiscal year.

    The informal sector, where the vast majority of India’s labor force is employed, has been particularly affected. As in most countries, the pandemic has exacerbated vulnerabilities for traditionally excluded groups, such as youth, women, and migrants.

    Real GDP is estimated to have contracted by 8.5 percent in FY21 overall, but it has become positive again in the second half of the year. As growth resumes, poverty reduction is expected to return to its pre-pandemic trajectory.

    The response of the Government to the COVID-19 outbreak has been swift and comprehensive. A national lockdown to contain the health emergency was complemented by a comprehensive policy package to mitigate the impact on the poorest households (through various social protection measures) as well as on small and medium enterprises (through enhanced liquidity and financial support).

    To build back better, it will be essential for India to stay focused on reducing inequality, even as it implements growth-oriented reforms to get the economy back on track. The World Bank is partnering with the government in this effort by helping strengthen policies, institutions, and investments to create a better future for the country and the people through green, resilient an inclusive development.

    Economic Outlook

    After growing at very high rates for years, India’s economy had already begun to slow down before the onset of the COVID-19 pandemic. Between FY17 and FY20, growth decelerated from 8.3 percent to 4.0 percent, with weaknesses in the financial sector compounded by a decline in the growth of private consumption.

    The implementation of a national lockdown on March 24, 2020 (i.e. on the eve of the new FY21 fiscal year), brought economic activity to a halt, affecting both production and consumption. As a result, growth was negative in the first half of the fiscal year (April to September 2020) and only modestly positive in the second half. Over the entire FY21, India’s economy is estimated to have contracted by 8.5 percent. 

    In response to the COVID-19 shock, the Government and the Reserve Bank of India took several monetary and fiscal policy measures to support vulnerable firms and households, expand service delivery (with increased spending on health and social protection) and cushion the impact of the crisis on the economy. Thanks in part to these proactive measures, the economy is expected to rebound - with a strong base effect materializing in FY22 - and growth is expected to stabilize at around 6-6.5 percent thereafter.

    Last Updated: Mar 31, 2021

  • THE WORLD BANK GROUP AND INDIA

    The World Bank Group’s (WBG) seven decade-long partnership with India is strong and enduring. Since the first loan to Indian Railways in 1949, the WBG’s financing, analytical work, and advisory services have contributed to the country’s development. International Development Association – the WBG’s soft-lending arm created for developing countries like India - has supported activities that have had a considerable impact on universalizing primary education; empowering rural communities through a series of rural livelihoods projects; revolutionizing agriculture through support of the Green and White (milk) Revolutions; and helping to combat polio, tuberculosis, and HIV/AIDS.   In FY18, the relationship reached a major milestone when India became a low middle-income country and graduated from International Development Association financing.

    COUNTRY PARTNERSHIP FRAMEWORK

    The WBG’s present engagement with India is guided by its Country Partnership Framework for FY18-22 (CPF).  The CPF builds on the  decades-long partnership and seeks to address the country’s development aspirations and priority needs identified in the Group’s Systematic Country Diagnostic for India. It aims to work with India so that the country’s rapidly growing economy makes much more efficient use of resources; fosters inclusiveness by investing in human capital and generating more quality jobs; and develops strong public sector institutions that are capable of meeting the demands of a rising middle-class economy. The CPF’s approach combines a focus on ‘what’ the WBG will work on as well as ‘how’ it will engage India in the process. 

    What will the WBG work on?

    • Promoting resource-efficient growth, including in the rural, urban, and energy sectors as well addressing disaster risk management and air pollution;
    • Enhancing competitiveness and enabling job creation, including improving the business climate, access to finance, connectivity, logistics, skilling, and increasing female labor force participation;
    • Investing in human capital through early childhood development, education, health, social protection, and rural water supply and sanitation. 

    How will the WBG amplify the impact of its work in India?

    • By leveraging the private sector
    • By harnessing India’s federalism
    • By strengthening public institutions
    • By supporting Lighthouse India to foster knowledge exchanges within the country and between India and the rest of the world. 

    In all its activities, the WBG will seek to address climate change, gender gaps, and the challenges and opportunities afforded by technology.  

    WORLD BANK GROUP PROGRAM

    The World Bank’s lending program includes 97 lending operations ($22.7 billion in commitments, of which $17.8 billion is IBRD, $4.8 billion is IDA, and $0.1 billion is from other sources, primarily grant funding from the Global Environment Fund). 

    Roughly a third of the operations and around 56% of commitments are either to central or multi-state operations, while the remainder consist of state-specific operations in 21 of India’s 28 states. 

    The three largest portfolios are Water (12 projects totaling $4.2 billion in commitments), Transport (12 projects totaling $3.2 billion), and Agriculture (15 operations totaling $3.2 billion). 

    In FY21, the Bank has so far approved 8 operations amounting to $1.6 billion.  Of this, $1.2 billion is lending from IBRD and $0.4 billion from IDA (recommitted from cancelled IDA programs). A further 7 projects totaling approximately $1.6 billion are scheduled in the remainder of the year. There is a robust pipeline for FY22 which is expected to deliver around 15 operations with total commitments of $3-3.5 billion. 

    For the IFC, India is the largest client country, accounting for 11 percent (US$6.3 billion) of its global portfolio. Since its first engagement in 1958, IFC has invested more than US$24 billion (including mobilization) in more than 500 companies in India. India is the sixth largest shareholder in IFC with a 4.01 percent stake.

    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 projects that provides solar power at record low cost. IFC and the World Bank had a similar collaboration under the government’s flagship Clean Ganga program for sewage treatment plants using hybrid annuity-based PPP projects. IFC led the PPP mandate while the World Bank loan is helping provide payment guarantees to increase the private sector’s participation in the sector.

    The Multilateral Investment Guarantee Agency (MIGA) does not have exposure in India. 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. At present, MIGA is exploring a potential non-honoring sub-sovereign transaction involving the state of Kerala, in which IFC is also involved.

    The WBG has a wide-ranging program of Advisory Services & Analytics. 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 March 2021, some 14 analytical studies and 22 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

    Last Updated: Mar 31, 2021

  • WBG financing supported India’s achievement of numerous results over the past five years, highlights of which include:

    Education: Since 2001, India’s Education for All program –WBG supported Sarva Shiksha Abhiyan (SSA) - has brought nearly 20 million children into primary school. Between 2012-13 and 2015-16, the net enrollment in upper primary school has increased by 10 percent. There are now 102 girls for every 100 boys in primary school, compared to just 90 in 2001.

    Rural Livelihoods: Over the past 15 years WBG has invested $3 billion in promoting a unique approach to the development of rural livelihoods in India - by empowering poor rural women. WBG supported self-help groups have been successful in mobilizing 45 million poor rural women who have been empowered with skills, access to finance, links to markets, and help in business development.  Women are now taking charge, becoming entrepreneurs, and providing jobs to other women. They have also gained greater voice, food security, and better health and nutrition. Since 2013, they have leveraged $25 billion in financing from commercial banks.  

    Rural Water Supply and Sanitation: Since 2000, WBG projects have contributed over $3.4 billion in financing for rural water supply and sanitation. This has helped about 36 million people in 40,000 villages—with populations ranging from 150 to 15,000—gain better access to drinking water. In addition, some 23 million rural people have benefitted from improved sanitation. Many projects have helped promote women’s participation in discussions around changing age-old sanitation behaviors, as well as in making decisions about the use and maintenance of water and sanitation infrastructure. 

    Rural Roads: Since 2004, World Bank financing totaling $2 billion has helped India’s National Rural Roads Program and state roads projects build some 40,000 km of all-weather roads mostly in economically weaker and hill states. World Bank support has helped introduce many reforms and governance changes in the program including improved institutional effectiveness of the road agencies, use of green and climate-resilient road construction, improved asset management that focuses on creating an efficient road network of good quality rather merely construction, improved road safety, and better delivery of the national program. India’s National Rural Roads Program has been recognized as one of the country’s top 50 achievements since independence.

    Health: World Bank support to India’s health sector began in 1972. Over the years, it has focused on helping India meet the health MDGs, improve child nutrition, and tackle the long-standing burden of disease. Over the last 2 decades, World Bank projects have increasingly focused on improving the quality of health services provided by the public sector. State operations to provide obstetric and neonatal care in Tamil Nadu and Karnataka contributed to decline in infant mortality of 30 and 36% between 2005 and 2015.  In Karnataka at least 80% of babies in the state, even in the most disadvantaged districts, are delivered by skilled health personnel, up from 39% in 2007.  Since 1997, WBG supported Revised National Tuberculosis Control Program has treated over 20 million patients and, in 2006-15 alone, averted 3.5 million TB related deaths. While India has the world’s largest burden of tuberculosis (TB), the TB mortality rate in the country has fallen by 50% since 1990, and the TB prevalence rate has reduced by 55%.  WBG support contributed to averting an estimated 41,300 new infections among high risk populations, equivalent to a 32% reduction from 2007 to 2015.  WBG has contributed to India’s strong response to HIV, which has been lauded as a global success story. India’s adult HIV prevalence rate has continued to fall - from 0.34% in 2007 to 0.26% in 2015.

    Nutrition: Since September 2015, WBG assisted Integrated Child Development Services Systems Strengthening and Nutrition Improvement Project has reached approximately 29.7 million pregnant and lactating women (PLW) as well as children aged between 6 months to 3 years across 162 districts in eight states. The program’s ability to provide timely and effective services within the critical 1000-day window has improved. This was done by introducing innovative methods to build the capacity of community nutrition workers (Anganwadi Workers), combined with behavior change communication, as well as by making innovative use of technology to monitor and manage the program.

    Agriculture: Over the past decade, WBG support has helped 2.3 million farmers in the rain-fed regions of Karnataka, Himachal Pradesh and Uttarakhand implement soil and water conservation measures and raise agricultural productivity. Lessons learnt have helped shape the Government of India’s Common Watershed Guidelines and the design of national watershed programs. World Bank has developed and improved, more water efficient irrigation for over 2 million hectares; productivity gains for crops ranging from paddy to horticulture; and an increase of over 200,000 farmers’ share of retail prices for several commodities by over 20 percent in Assam and Maharashtra states.

    Energy: Since 1993, a series of World Bank investments totaling over $2.5 billion, together with intensive support for capacity-building, has helped POWERGRID, India's state-owned power transmission company, emerge as the third largest transmission utility in the world. WBG has supported Madhya Pradesh’s government to set up the largest single-site solar power project in India, attracting private investments of about US$750 million, where the rigorous structuring of the project risk-sharing mechanism led to intensely competitive bidding that resulted in the lowest ever solar tariff bid—some 33 percent lower than lowest preceding bid—in India in 2017.

    Last Updated: Oct 25, 2019

Api


LENDING

India: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments

MULTIMEDIA

Image
click


PHOTO GALLERY

More Photos Arrow

Additional Resources

Country Office Contacts

Sudip Mozumder

70 Lodi Estate
New Delhi
India
+91-11-41479301 / 49247000
smozumder@worldbank.org