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India: Country Strategy Consultations in Bangalore, Karnataka

May 31, 2012


Discussion Highlights:
  • Infrastructure support in various sectors and manufacturing were identified as vital for Karnataka. Agriculture, health and education also desperately needed a boost, particularly in terms of technical assistance and managerial inputs.
  • The informal sector was playing a vital role, particularly in creating employment; this had to be recognized and supported.
  • Governance and sustainability of project gains was a major issue and should be a focus area of the Bank's new strategy. Participants felt that the World Bank should make civil society an active partner in its programs.

Details of Discussion

It was observed that Karnataka needs to focus on manufacturing in the Small and Medium Enterprises (SMEs) sector to improve the productivity of enterprises and integrate them with markets across the country. Several participants felt that for the manufacturing sector to develop to its full potential there was need to support sectors such as water, energy, roads and rail. Several participants pointed out the importance of the informal sector which at present was the biggest growth trigger and generated much more employment than the formal sector. More research on the potential of the informal sector was needed. It was mentioned that the health and education sectors had also suffered from poor infrastructural support. In the power sector, a participant pointed out, the scarcity of water had affected thermal power plants. Provision of drinking water supply was also a problem in many areas. Another participant mentioned that the energy sector was receiving substantial subsidy at the cost of other sectors like health.

A participant observed that buildings with infrastructure for special groups like the disabled, the elderly and the ailing were almost missing. The needs of children who required special facilities in education were also neglected. The speaker added that the phrase 'inclusive growth' could not be justified without an effective barrier-free environment for these groups. To do so, it was vital to include this aspect in the curriculum for civil engineers and architects.

A participant observed that urban growth was inevitable in India. A trillion US dollars would be needed for urban development over the next two decades to meet the needs of a rapid urbanizing population. However, it was suggested that allocations should go primarily to local governments and that transparency in public expenditure should be strengthened.

Urban health facilities were very poorly structured and the high cost of treatment often led to impoverishment. It was mentioned that an average family today spent more on health care than on education. One participant in fact observed that if it came to a choice, the World Bank should support health infrastructure rather than education. It was also pointed out that as health professionals did not want to go and settle in rural areas, it was necessary to train local people as paramedics to meet the immediate requirement of villages.

Referring to the Bank's country program of 2013-2016, a participant expressed surprise that there was no special mention of 'Health and Nutrition' and wanted to know whether the Bank was moving out of this critical sector.

Mention was made of the fact that modern healthcare services had become corporatized. It was observed that a PPP model in the health sector could be promoted, but targeted subsidy to protect the poor was necessary. It was suggested that the Bank's future outlook on supporting healthcare services should include preventive medicine (apart from curative medicine) and the promotion of alternative medicine systems like Ayurveda and Homeopathy.

Agriculture and related issues
In the agriculture sector, there was need to provide further support to the farmer in terms of improving crop insurance schemes and storage facilities. Technical assistance to farmers to help them become creditworthy was also important as agriculture, particularly in rainfed areas, was perceived as risky business by bankers. It was mentioned that there were several cases of sustainable agricultural practices doing well in the state and these needed to be further disseminated. It was observed that since the green revolution nothing innovative had been done in the area of agriculture, though the sector was facing problems of low productivity, lack of linkage with credit facilities and the market, as well as inadequate irrigation facilities.

One participant observed that the agriculture sector needed productivity, profitability and self-esteem for the farming community. This alone would make a difference and halt the process of rural youth moving out to urban areas for lowly-paid jobs.

One participant pointed out that the private sector had completely taken over education in the state. The state government was abrogating its responsibility to educate citizens, particularly the socio-economically weaker sections. Private sector schools were focusing on English, Mathematics and Computers and it was found that even children from low-income families preferred to attend private schools. Government schools had buildings but not enough students; they also lacked adequate classrooms. In the rural areas, many schools did not have toilets for girls, leading to high dropout rates among female students after class III. Moreover, the education policy followed in the state had created pressure on government schools to show 100 percent pass results.

One participant, quoting a study, mentioned that Sarva Shiksha Abhiyan (SSA) was successful in some matters, such as providing disabled-friendly infrastructure and remedial teaching. However, there was little progress on many other counts. It was pointed out that the obsession with enrolment numbers created a false impression of universal schooling. SSA's enrolment assessments done at class I and again at class VIII failed to capture actual class attendance, particularly of girls who dropped out after class III or IV due to a variety of reasons.

Another participant, highlighting the poor quality of education in Karnataka, stated that the percentage of students passing the primary and middle school dropped drastically at the board levels (class X and class XII) from over 90 percent to 57 percent, because students could not cope at the higher levels due to a weak academic foundation.

On the question of vocational education, a participant mentioned the problem of duplication of resources and the need to optimize their use. Moreover, the youth had low levels of motivation due to many government doles and subsidies. It was also stated that a kind of user fee should be imposed on private industry which recruited technically trained youth from government institutions and training programs, without investing in trained manpower.

Sustainability of World Bank Funded Projects

Several participants spoke of the lack of sustainability of Bank projects. They gave examples from various sectors where, after the project ended, things reverted to their earlier state. Special strategic planning cells created for project management disappeared after the project closed and many efficiently run structures were merged with government departments, leading to a loss of the earlier systems of efficiency and transparency. Examples were given of District Primary Education Program (DPEP) and India Population Project (IPP) in Karnataka, where the complete setup created under these projects failed to continue in the same manner after the project was over.

Some speakers suggested the need for stronger decentralization and community participation, apart from better planning of the Bank's exit process. A participant however cautioned that even decentralization was by itself not the panacea for fighting corruption as corruption could simply shift to a different level. The example of the Bhoomi Project in Karnataka, where kiosk owners started taking money for services rendered, was cited to highlight this point.

A participant explained that Karnataka did not appear to have its own focused development program and depended on funding agencies to design programs and projects which expectedly folded up after the project was over. This was in sharp contrast to the policies of Kerala where certain flagship programs (e.g. house building for the weaker sections) did not depend on funding from external agencies, or even the central government, as the state government was strongly committed to these programs.

Governance Issues and Community Empowerment

There was a lot of discussion on the question of governance. Some participants felt that the World Bank appeared less concerned about national governance issues now than in previous years, and was more concerned with local governance. It was also pointed out that a lot of information about the Bank itself was still not transparent or easily available for public scrutiny. A participant wondered whether the Bank was comfortable with honest feedback on its projects. This was because the scrutiny of the completion reports and aide memoires of Bank-funded projects showed that often frank criticism was diluted and honest feedback was compromised by the vested interests of various parties involved in evaluation and impact assessment.

One participant felt that the presentation made during the consultation session was not informative enough as it did not show the Bank's own assessment of the outcomes and lessons learned from the previous country assistance program (2009-2012). Another participant pointed out that more flexibility and innovation was obviously required for extracting the optimum value from future projects as it was clear that the earlier strategy had not given results to the extent desired. Some important sectors like health and nutrition appeared to have lost priority in the proposed program for 2013-2016, which was a cause for concern. A participant wanted to know about the lending rates for the new program (2013-2016) which had also not been dealt with in the presentation.

A participant spoke extensively on the need to empower local communities to ensure public participation and sustainability of project gains. It was observed that the country had many examples of successful community driven projects and there was good scope for knowledge sharing among communities which would vitalize the empowerment process. Reference was made to a project underway in Mangalore city involving 25 schools where the local community was provided equipment and training to monitor water quality in their areas. Funded by a multinational, it was felt that this project could generate demand from the community for better quality drinking water and ultimately reduce the incidence of water borne diseases.

A participant observed that studies had revealed that when beneficiary community themselves executed projects such as road construction works, costs were reduced by 30 percent compared to those incurred by state agencies.

Several participants stated that civil society and community based organizations should have a say in governance, public investments, and solutions. They should be treated more like shareholders than simply stakeholders or 'contractors'. It was felt that the World Bank needed to realign itself with the new economic realities and could perhaps play a role in reconstructing the vision and outlook of the country's political establishment. A participant felt that the Bank was providing funding and technical assistance for the long-term but not addressing issues related to the immediate economic crisis facing the country. It was stated that the next two years were critical for the country, and this needed immediate attention. It was also observed that for the new country program the World Bank should focus on policy, governance, strengthening the informal sector, and the present economic crisis.

Database and Community Monitoring

Mention was made by several participants about outdated and meaningless data which was completely useless in planning projects and allocating resources. Similarly, the data on outcomes was also weak and not regularly disclosed. Many NGOs had been campaigning for better data and disclosure. The example was given of the pressure created by civil society on municipal corporations to make public their financial statement every year. It was further mentioned that the financial act which mandated public disclosure of expenditure on public assets was never notified. Moreover, the BMC required enhancement in human resources in terms of experts and specialists but had not yet filled up about 40 percent of positions lying vacant in the corporation. There was also the problem of general administrative cadre officials manning specialist positions.

It was revealed that many states had enacted legislations on fiscal responsibility and public disclosure (on the lines of a central legislation on fiscal responsibility) to enable them to take loans from external agencies, but most states had still to notify the rules and ensure implementation.

The need for data sharing among government departments for better decision-making was also highlighted. It was further stated that outcomes and data must be regularly updated and disclosed in any program that used public funds and that the World Bank should insist on a more robust public disclosure system.

World Bank Response

The World Bank team clarified that India was graduating to the status of a middle income country and, as such, may soon be ineligible for IDA's concessional loans. At the same time, there were constraints of funds and the Bank was planning to increase inputs in terms of innovation, leveraging, and managerial assistance. Accordingly, the Bank was moving from supporting projects to supporting programs, including India's flagship programs. As an example, it was mentioned that the Bank would be a part of the revamped ICDS program where it would mainly provide managerial and technical inputs. Special provisions were also being planned to ensure the sustainability of project gains.

On governance and corruption, the World Bank officials clarified that the Bank was a development agency and had to fight corruption through the country's own law enforcement agencies. On overall governance, the Bank's policy was to work on systems without interfering directly in the operations of structures already in existence. The Bank appreciated the point that decentralization by itself would not solve corruption problems; strong community empowerment and oversight on the ground would be more effective.

On the matter of feedback to the Bank, it was pointed out that the project completion report was a detailed document which thoroughly scrutinized the implementation and impact of a project. It was further mentioned that the World Bank's independent evaluation group (IEG) was an independent authority which examined the various internal assessments and Bank records on their own terms. Their evaluation reports often censured the operational methods or other aspects of Bank projects.

The Bank officials expressed satisfaction over the level of discussion and the fact that there was appreciation of the Bank's strategy to put more focus on technical assistance, leveraging and managerial inputs rather than the funding of projects. Participants were assured that their comments and suggestions would be reflected accurately in the annex to the country program strategy document. They would also be able to send comments online before the strategy document for 2013-2016 was finalized.

The Bank team assured the participants that engagement with civil society was increasing over the past few years and the Bank would continue with the process in the future.

Comments and suggestions can still be sent at the following email address: consultationsindia@worldbank.org

City-wise Consultations

Raipur, Chhattisgarh - May 23, 2012
Guwahati, Assam - May 29, 2012
Bangalore, Karnataka - May 31, 2012
Lucknow, Uttar Pradesh - June 13, 2012
Delhi - June 26, 2012