With most developed countries reluctant to consider beefing up the capital of the World Bank,India may lose out on a sizeable portion of its assistance from the multilateral institution two years from now. India,in fact,fears that the quantum of lending may even decline to levels that existed prior to the global economic crisis.
Against an average annual lending of $2.5 billion,the World Bank had almost doubled its assistance to India post-crisis. Though India has been making a strong pitch to global leaders about the need to adequately increase the Banks capital,it has found little support among developed countries. The Bank will be able to lend more only if it has a robust capital base.
In Pittsburgh last month,Prime Minister Manmohan Singh had asked G-20 leaders to atleast double the capital base of the World Bank from $19 billion now. With assistance levels having been increased for developing nations by the Bank,available resources will not be sufficient to keep the support at pre-crisis levels after 2-3 years, a government official told The Indian Express. The World Bank has committed lending of $100 billion over three years to help developing countries tide over the crisis.
Indias concern is rather obvious as it is one of the largest borrowers from the bank. In the recent past,the bank has financed projects on urban infrastructure,infrastructure development in power and roads,agriculture etc.
India has also pushed the case for doubling the World Bank assistance capital at the ongoing annual meet of the IMF at Istanbul in Turkey. Developing countries face fiscal constraints in maintaining their investments in education,health and infrastructure. The struggle to achieve the millennium development goals (MDGs) has suffered a serious setback. The demand for World Bank assistance would remain high for many years to come. The Bank needs to be well capitalized to meet this demand, Finance Minister Pranab Mukherjee said on Tuesday.
To keep Indias assistance levels to at least pre-crisis levels,the finance minister has asked for an early ratification of the April 2008 package of quota reforms for the IMF. It is based on this quota that countries get a share of financial assistance from the World Bank. The next quota review is expected to be completed by January 2011. To preserve the Fund as a quota-based institution,at the minimum there should be a doubling of quotas, Mukherjee said.