Three World Bank loan/credit agreements amounting to US$ 944 million were signed here today in the presence of visiting World Bank President Mr. Robert B. Zoellick and the Finance Minister Shri P. Chidambaram. Commerce & Industry Minister Shri Kamal Nath & Labour Minister Shri Oscar Fernandes were also present on this occasion. The agreements were signed by Shri Madhusudan Prasad, Joint Secretary, Ministry of Finance, on behalf of Government of India, and Ms. Isabel Guerrero, Country Director, India for the World Bank.
The loan/credit agreements are for Strengthening Rural Credit Cooperatives Project for US$ 600 million loan and credit; India Vocational Education Training Project for US$ 280 million credit; and additional financing for the Karnataka Community Based Tank Management Project for US$ 64 million loan and credit.
Extending a very warm welcome to Mr. Zoellick on his first visit to India as the President of World Bank, Shri Chidambaram said “The agreements are being signed today for about 950 million dollar of World Bank assistance in three critical areas – rural finance, vocational training and restoration of water bodies. It gives me personally a great satisfaction to see the culmination of project preparation process, as all these three relate to announcements that I have made in my Budget Speech in the Parliament.
A well functioning system of finance is essential for sustaining agricultural growth and alleviating rural poverty. Our rural credit cooperatives have been a key pillar in the system of rural finance and the World Bank assistance will help in revitalizing these institutions and provide credit to farmers with significantly enhanced access to formal finance. The World Bank project envisages assistance of $ 600 million, which is, I understand, the largest single project funded by the World Bank in India. NABARD would be helping in implementing this project. The second project addresses the issues of improving the quality of vocational training, in keeping with the Government’s keenness to ensure greater competitiveness of the labour force. Under the World Bank project, Industrial Training Institutions will be strengthened to enable our workers to upgrade their skills and contribute to the country’s growth process. With $ 280 million of IDA assistance envisaged in this project, 400 ITIs will be upgraded over a period of 4 years.
In several States, traditional water bodies have been an important source of irrigation and livelihood support over centuries. We had initiated a pilot project for restoration and repair of these water bodies to unlock the huge potential they hold for improving agricultural production and livelihoods of the rural people. Based on the pilot scheme, the World Bank has already finalized projects for Tamil Nadu and Andhra Pradesh. The project for Karnataka, which we are signing today, is the third in the series and it envisages Bank assistance of $ 64 million. I understand that this would cover 1225 tanks and bring an estimated 52,000 hectares under improved irrigation. All the three projects being signed today reflect Government of India’s priorities in rejuvenating the rural economy. They also embody the important development partnership we have with the World Bank. I wish all the best to the project authorities for the successful implementation of these projects and also look forward to a strengthened engagement of India with the World Bank under the leadership of Mr. Zoellick.”
Speaking on the occasion, Minister for Labour & Employment Shri Oscar Fernandes said “India’s population profile is such that we will have a large proportion of younger age-groups in the coming decades. To convert this potential to an advantage, my country needs to work simultaneously on growth with concomitant employment opportunities, on enhancing skills and productivity; and for reducing inequality.
Thus, the Agreement for Vocational Education Project that is being signed today is a significant and important link in this country’s strategy for skill enhancement of the workforce. Together with our other initiatives for upgrading the education and skill levels of our young men and women, India would be poised to bridge the critical gaps in the labour markets. This strategy has implications for poverty reduction and spreading the benefits of economic growth to large segments of our population.
Given the shortages of labour in the developed world, they too stand to gain by the strategic shift towards human resource development.”
At the signing, Mr. Robert B. Zoellick, President of the World Banksaid,“The three projects being signed today reflect the Government of India's very pertinent focus on revitalizing the rural economy and on removing skill gaps that could impact India's sustained growth. The Bank is committed to supporting these priorities.” Reforming and revitalizing the country's rural cooperative credit institutions will provide millions of farmers access to affordable credit for their critical needs, be it for better quality seeds and fertilizers, or a higher breed of cattle. The Vocational Training Project will not only help revamp India’s vocational training system, but also enable India's young and growing workforce attain multi-skilling and constantly upgrade their skill sets in a fast changing global economy. The ongoing Karnataka Tanks project is helping farmers rejuvenate tanks, an integral part of the traditional village water bodies, which have been put to disuse because of inadequate maintenance.” Strengthening Rural Credit Cooperatives Project - US$ 600 million loan and credit supports the Government of India’s initiative to reform and revitalize the country’s rural cooperative credit institutions and is designed to transform access to financial services for India's poorest farmers. These institutions include some 31 State Cooperative Banks, 367 District Central Cooperative Banks and over 100,000 Primary Agricultural Credit Societies.
India Vocational Training Improvement Project - US$ 280 million credit is being earmarked towards helping the Government of India improve the vocational training system through policy reform and by making the design and delivery of training more demand responsive by improving the quality and relevance of training in 400 eligible Industrial Training Institutes.
Karnataka Community Based Tank Management Project - US$ 64 million loan and credit in additional financing to the original project that has so far mobilized 1,518 Tank User Groups (TUG) to develop and manage some 1,681 irrigation tanks since April 25, 2002, when the original project was approved by the World Bank. The project will continue to improve rural livelihoods and reduce poverty by developing community-based approaches to improving and managing small reservoirs, locally known as 'tanks'.