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FEATURE STORY

India: Country Strategy Consultations in Lucknow, Uttar Pradesh

June 13, 2012

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Discussion Highlights:
  • Enhancing support to agriculture was the overarching concern. This included the development of related infrastructure, as well as research and extension services, and ensuring better incomes for farmers. The state's MSME sector already had a strong base but needed policy support and a skilled workforce to make the most of its potential.
  • A strong plea was made to support service delivery in vital sectors such as health, education etc. There was a need for technical assistance and managerial inputs and to build capacity at various levels. There was also a need for skills training and vocational education to meet the demands of industry.
  • Governance issues, particularly the need to tackle corruption, were a recurring theme. Private investment would be attracted only with better governance, it was noted. While finalizing the World Bank's support to lagging states, the sheer size of the state (and per capita gains) would need to be kept in mind.

Details of Discussion

Agriculture
A participant pointed out that agriculture in UP was top-heavy and more people were required at the grassroots level as also in the research and extension systems. It was mentioned that seeds replacement was low and that there was shortage of both skilled and unskilled labor. In addition to water issues, this was adversely impacting productivity. Many farmers were giving up rice cultivation. It was felt that without technological support, storage capacity and primary level processing capacity at the grass roots, the farming sector was not going to improve.

Another participant talked about support to animal husbandry and the need to protect the gene pool of healthy livestock. This gene pool was gradually eroding and creating a shortage of healthy dairy animals and other livestock. It was also suggested that traditional time-tested farming techniques such as the preservation and reuse of local seeds by small farmers should be left alone and not destroyed by new systems that are detrimental to this practice. There was general agreement that infrastructure and technology related to agriculture, supported by locally available inputs (seeds, machinery) were critical for improvement of the farm sector in UP. It was also suggested that for mass adoption of any technology, entrepreneurship development at the local level was imperative. In addition, it was pointed out that monsoon rainfall had become more erratic, and early droughts were more frequent. There was therefore a need for climate-responsive technology in agriculture.

A participant suggested that agriculture and industry should be made to complement each other and both these sectors should boost the services sector.

Health
Participants pointed out that UP's social infrastructure was poor. Health indicators like the birth rate, MMR, IMR, etc. were all higher than the national average. The percentage of population with access to formal health care was also very low. Moreover, 80 percent of health expenditures came from the private sector; public sector investment was handicapped by poor management and leakage. Rural UP in particular faced huge problems in health and sanitation. This impacted the quality of the state's human resources. Regional and sectoral imbalances in UP could not be corrected until investment in the social sectors was substantially improved. ICDS IV had not really taken off, and malnutrition among women and children in particular continued. Inadequate human resources in health services were an important contributor to poor health care facilities.

One participant stated that mental health had not been given enough focus and this problem had to be recognized.

Education and Vocational Training

A participant observed that while investment in education was rising, the quality of education showed no commensurate improvement. It was stated that Sarva Shiksha Abhiyan (SSA) had given greater weightage to the numbers enrolled rather than the quality of education provided. The number of out-of -school children was also a serious concern.

The speaker asked whether the Bank would be interested in supporting higher education, perhaps as a demonstration project on a small scale. For instance, the Bank could adopt one or two universities and transform them into world class institutions.

A participant pointed out that the biggest problem with education was that it did not promote entrepreneurship. The state desperately required vocational education and skills training for the youth. It was pointed out that there were 1.5 lakh engineering seats but only 25,000 ITI and 35,000 polytechnic seats; this distorted the actual market needs, considering the employment potential and trends in industry. Skills training was particularly necessary as the Micro, Small and Medium Enterprises (MSME) sector in UP had a huge potential for growth and employment generation. It was suggested that, given its potential, the MSME sector could be served by dedicated financial systems and institutions which could provide expertise along with financial support. It was also observed that the World Bank could act as a catalyst and counselor for this sector in particular, and for industrial development in general in the state.

Governance and Corruption Issues

Several speakers articulated their concerns on this and referred to the level of corruption in the state and its notoriety as a 'leakage state'. One participant stated that "development had become synonymous with corruption", and thus it was not certain whether investment would be put to efficient use. A new mechanism for the oversight of funds flow in projects involving the government, NGOs and social activists could be considered. It was felt that governance and transparency would not improve without an educated public with capacity for oversight and concerted action. The example was given of the murder of a whistleblower who had exposed corruption in a road project. Inquiries into the case remained inconclusive.

It was suggested that capacity building at the grass roots, particularly strengthening of the PRI institutions, was an essential input to boosting good governance. A further suggestion made was on the use of Information Technology and a strong grievance redressal mechanism to boost transparency and tackle governance issues. Laws like the RTI also had to be better implemented in the state. There was general consensus that it was imperative to fight corruption, improve work culture and the law and order situation in the state.


Areas requiring World Bank Support

Most participants were quite categorical in identifying areas and priorities that needed support from the World Bank. Apart from a special focus on agriculture and small industry, participants highlighted the need to plan, keeping in mind access to markets, enhancing the capacity of the bureaucracy to handle reforms, and improving service delivery with technical and managerial assistance. It was pointed out that Indian agriculture lost about a trillion rupees annually due to lack of storage infrastructure and, of this, UP's share was about 30 percent. Storage systems were critical at least at the block level to the ensure protection for seed, food grains and other farm produce and to enable farmers to hold their stock for a better price. It was suggested that the private sector would be interested in investing in this vital area provided policy support was ensured. Several speakers also pointed to the need to support agricultural research, extension services and technology dissemination, and to ensure that they were available to farmers at the right time and in the right form.

Another participant emphasized human resource development and pointed out that a strategy was as good as the quality of human resources implementing it. The speaker underlined two important focus areas for the Bank's attention and possible support: (1) Service delivery improvement with technical inputs for the whole chain; and (2) Technical assistance to formulate an effective and implementable District Action Plan complete with all ingredients including resource mapping done at the village level. The speaker emphasized that capacity enhancement for service delivery at every level was vital as it cut across all sectors and inherently included governance issues.

One participant suggested that the World Bank should look at urbanization issues in tier II and III cities to ensure proper planned growth, keeping in mind rapid urbanization trends and the potential for wealth creation in cities.

There was also some discussion on the power sector. It was observed that shortage of power was a major hurdle in the development of almost every vital sector. It was mentioned that the per capita consumption of power in the state was very low - 350 kWh annually - which was below the national average and one-fortieth of the European and Scandinavian average. Though power generation was slowly improving, the utilities were running into debt. Some participants felt that the Bank should support renewable energy in the state, particularly solar energy, as there was an abundance of sunshine. The Bundelkhand region was suggested as a possible site for solar energy projects.

One participant wanted the Bank to use its leverage to enable federations of self help groups (SHGs) and community based organizations (CBOs) to play a greater role in local governance. This was particularly in the context of NRLM which was soon to be taken up in UP. The success story of the CBO and SHG federations in Andhra Pradesh was cited and mention was made of a special legislation there to register such federations. UP did not have this advantage.

Health and malnutrition were also discussed as priority concerns. It was felt that the Bank should continue to support these areas as they had a direct bearing on the quality of India's human resources. It was also suggested that the investment climate in UP had to be improved. For this, the Bank could assist in creating an enabling environment that would attract private investors and entrepreneurs. One suggestion was the creation of project development facilities at different levels in the state.

The regional imbalances within UP, particularly the backwardness of the Tarai, Bundelkhand and eastern UP was highlighted. It was suggested that the government's goal should be to replicate urban facilities in rural areas as much as possible to improve the quality of life and halt migration to urban centers.

One participant spoke at length about structural issues and the Bank's support for second generation reforms which had not come about as expected. It was observed that these reforms were going to take place at the state level but would be difficult to implement, and would need a lot of handholding. The state, it was noted, did not even have the capacity to institute PPP models. The participant affirmed that progress in different critical sectors like agriculture, health, education and small industry was not possible without taking the reforms forward.

Several participants further urged the Bank to support research on some critical gap areas including inter-sectoral links, women in the unorganized sector, mental health challenges and disappearing traditional occupations/trades due to urbanization and social biases. A suggestion was made that women in BPL families had to be specially targeted in poverty alleviation programs to ensure they were really reached and empowered. Studies were also needed to estimate the requirement of human resources in various sectors over the next five years.

Some participants drew the World Bank's attention to the deteriorating environment, including water, air and soil pollution. They suggested that the Bank should help the state to come up with a climate change response for the medium and long term.

Many participants highlighted the fact that UP was a very large state and could not be compared to other smaller, lagging states like Chhattisgarh and Jharkhand. The same investment and project scope had less per capita impact in UP as compared to the smaller states. It was suggested that the Bank should factor this into its business plan with regard to supporting backward states.

World Bank Response

The World Bank team thanked the participants and clarified that it would continue its dialogue with civil society, the state government and others to get greater clarity on what would work best in the state, considering the resource constraints. It was mentioned that UP was an important state for the World Bank and many issues identified in the discussion overlapped with government priorities. The Bank team also emphasized that the next phase of support would see an enhanced focus on ensuring the quality of implementation on the ground.

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


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