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ASCI JOURNAL OF MANAGEMENT 34(1&2), 64-73

Copyright 2005 Administrative Staff College of India.
MICHAEL F. CARTER
1
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The World Bank and India:
Working in Partnership for
Achievement of MDGs
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India today is poised at the verge of a great opportunity. If it can achieve the MDGs, what it will be doing in effect is
ensure that hundreds of millions of otherwise excluded Indians are equipped in terms of skills, education, health, and
reduced vulnerability to seize the opportunities that growth, reform and globalization are bringing to this country. It could
very quickly become an economic and cultural power and along with China make the twenty-first century its own. But if
missed, it will be a tragedy both for itself and the world as a whole.
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Grand visions are constructed brick by brick. The Millennium Development Goals (MDGs) might be seen as a
device to measure how well the construction is going. Since the MDGs were launched at the Millennium Summit
in New York in September 2000, they have become the most widely accepted yardstick of development efforts by
governments, donors and NGOs. MDGs, as is well known, are a set of numerical and time bound targets related to
key achievements in human development. They include:
Halving income-poverty and hunger.
Achieving universal primary education and gender equality.
Reducing infant and child mortality by two-thirds and maternal mortality by three-quarters.
Reversing the spread of HIV/AIDS and other communicable diseases; and
Halving the proportion of people without access to safe water.
These targets are to be achieved by 2015, from their levels in 1990. Almost all the countries in the world,
including India, have committed themselves to attaining the targets embodied in the Millennium Declaration.
Attaining the MDGs is vital if India is to take its rightful place among the developed nations of the world. It is
useful to remember too that achievement of the MDGs globally is only possible if Indias own efforts to achieve
the MDGs are broadly successful since, despite the impressive progress of the past two decades, India is still home
to over one quarter of the worlds poor people.
Occupying Two Worlds Simultaneously
Indeed, several of Indias Tenth Plan targets are even more ambitious than the MDGs. Some might argue that
India is well on the way to achieving these goals. After all, the rapid economic growth of the last 10 years has
averaged a comfortable six percent; population growth has dropped below two percent for the first time in 40
years; most important, poverty incidence is now below 30 percent and literacy has climbed to 65 percent. In
addition, Indias huge and impressive middle class is fuelling a consumer boom, the services sector has come into
its own and Indian infotech and biotech firms are world leaders in their spheres. India sits on external reserves
worth over US $ 100 billion and its eventual place on the global high table of economic superpowers is almost
taken as inevitable.
But there is another India that cannot be forgotten. This India is still home to more than 250 million poor people.
More than half of these live in the four states of Bihar, Madhya Pradesh, Orissa and Uttar Pradesh alone; and more
**
Michael F. Carter is Country Director India, The World Bank. The paper is based on the C.C. Desai Memorial Lecture delivered by the author
at the Administrative Staff College of India.
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than two-thirds in rural areas. This is the India where a crisis-prone agriculture sector still supports two-thirds of
the population and is an increasingly unreliable source of livelihood; where per capita incomes remain abysmally
low; where, each year, more than 100,000 women do not survive childbirth; where more than 60 percent of
households are without electricity, over 20 percent without a safe and clean water source, and more than 70
percent without adequate sanitation.
Survival rates for young mothers and children under the age of five are stagnant and HIV/AIDS is spreading
quickly, putting the country in danger of a growing epidemic. This is the India with an unacceptable number of
children out of school a quarter of the worlds total; with gender disparities and discrimination against the girl
child, which surprisingly appears to increase with improved incomes; with huge numbers of people suffering and
dying from curable communicable diseases.
Thus, India at this time is occupying two worlds simultaneously. In the first, economic reform and social changes
have begun to take hold and growth has had an impact on peoples lives and opportunities have opened up. In the
other, citizens appear almost completely left behind by public services, employment opportunities and prospects
for improving their quality of life. Clearly, a lot remains to be done. If one were to sum up the challenge before
India in one word, it would perhaps be inclusion. How is every section of the population ensured that it is
included in the process of growth and development and that every citizen has equal access to the benefits and
opportunities that economic progress will bring?
MDGs are thus, more than just number-tracking devices. What they do, fundamentally, is help us address this
essential question just posed. For, if India can achieve the MDGs, what it will be doing in effect is ensure that
hundreds of millions of otherwise excluded Indians are equipped in terms of skills, education, health, and reduced
vulnerability to seize the opportunities that growth, reform and globalization are bringing to this country.
The Evidence
In concrete terms, Indias focus must be on the rural sector, which still supports two-thirds of the population
though it contributes just about a third of GDP. Improving rural infrastructure and livelihood opportunities is the
key. This requires investments in rural roads, electrification, school and healthcare facilities, e-governance, and
the like.
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But as yet, there is little understanding of what precisely it will take by way of economic growth,
infrastructural investments and sectoral interventions to attain the different MDGs in India.
To help kick off a policy discussion therefore, The World Bank published a report earlier this year titled,
Attaining the millennium development goals in India: Role of public policy and service delivery. This report
focuses on five of the MDGs child and infant mortality, child malnutrition, schooling enrollment and
completion, gender disparities in schooling, and hunger-poverty. The selection of these particular MDGs for
detailed analysis was determined in large part on the availability of reliable sub-national data in India. There are
several major findings and implications for policy that come out of this report.
First, there are very large disparities across and within the different states of India. Some of these sub-state regions
rank low on some millennium development indicators but not on others. However, there are 18 in the country that
rank consistently low on three or more of the five indicators that were studied, and two in particular the
southwestern region of Madhya Pradesh and the southern region of Rajasthan can be considered the most
deprived regions in the country. These inter- and intra-state disparities have important implications for the
targeting of interventions and resources. But they also have another important implication the need for
state-specific approaches that allow for greater flexibility in addressing problems.
2

A second and related finding is that many of the millennium development indicators have high levels of
geographical concentration in India. For instance, one-fifth of the villages and districts account for about one-half
of all the infant deaths and underweight children in the country. Amazingly, three-quarters of all the out-of-school
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children aged 6-11 years are concentrated in only 20 percent of the countrys villages. Unfortunately, currently
available data do not allow an identification of these villages because the sample surveys on the basis of which
these observations are made are not large or representative enough at the village level. It would be worthwhile to
explore the use of promising new methodologies
3
so that policy interventions could be better targeted to them.
Third, there are other types of disparities in most of the indicators, the reduction of which would help in the
attainment of the MDGs. Gender disparity is one. It is estimated that overall child mortality in the country would
drop by 20 percent if girls had the same mortality rate as boys between the ages of one month and five years.
Likewise, the overall school enrollment rate for children aged 6-11 years would increase by about seven percent if
girls of these ages had the same enrollment rate as boys.
4
Just as geographical targeting is likely to narrow regional
disparities, targeting by gender can help reduce gender inequalities. Another manifestation of disparity is along
caste and tribal lines.
5
Given that these groups constitute between one-quarter and one-third of the total population
of the poor states in the country, improving their millennium development indicators would help significantly in
the attainment of the MDGs in these states.
Fourth, there is evidence of significant synergies among the different MDGs. For instance, a reduction in the
proportion of underweight children is strongly associated with a reduction of child mortality. Although maternal
mortality was not analyzed in this report, it is clear that interventions that reduce maternal mortality will also bring
about large reductions in infant (especially neonatal) mortality. Likewise, reducing child malnutrition is likely to
result in improvement in both schooling quantity and quality. These synergies imply that proceeding with
simultaneous action on all these measures will have the greatest impact on attainment of the MDGs.
Fifth, despite appreciable improvement in many of the millennium development indicators during the 1990s, the
analysis suggests that attainment of at least the five specific goals considered in this report will remain extremely
challenging in the poor states of India. Yet attainment of the MDGs by the poor states most notably, Bihar, Uttar
Pradesh, Madhya Pradesh, Orissa and Rajasthan is critical to MDG attainment by the country as a whole,
because these states currently account for a disproportionately large proportion of the countrys population and
will account for an even larger population share by 2015 owing to more rapid population growth.
Sixth, the simulations carried out in this report indicate that in the poor states economic growth that brings about
an improvement in household living standards is strongly associated with virtually every millennium development
indicator. For example, real economic growth of three percent per annum in the poor states could alone bring
down the child underweight rate from 51 percent in 1999 to 37 percent in 2015. Likewise, three percent annual
growth could bring about an increase in the net primary enrollment rate from 50 percent in 1999 to 74 percent in
2015. Again, a real growth rate of three percent would be associated with a 12 percentage point decline in the
incidence of hunger-poverty. In other words, rapid economic growth could make a very significant contribution to
an improvement in most millennium development indicators by 2015.
Seventh, this report also indicates the importance of infrastructure in attaining the MDGs. For example, simply
bringing the poor states to the average levels of road, electricity and sanitation coverage in the non-poor states
would be associated with reductions of 12 percent in the proportion of underweight children and of 18 percent in
the infant mortality rate. These associations are most likely underestimated, since they do not consider the indirect
association between infrastructure and the millennium development indicators via the positive association
between infrastructure and gross state domestic product.
Eighth, consistent with the findings of numerous empirical studies from around the world, this report finds
evidence of strong associations between female adult schooling and virtually every MD indicator considered. This
suggests that the large increases in girls school enrollment that are likely to occur in the coming years will fuel
major improvements in all of the millennium development indicators. The rise in girls enrollment is anticipated
in part due to the Government of Indias Education for all initiative, which The World Bank is supporting. Of
course, increases in female primary enrollments may not show their full effects on fertility, child and infant
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mortality, child nutrition, and child schooling for a generation or so, but increases in female secondary enrollments
are likely to show their results much sooner well before 2015, the MDG reference year.
Ninth, notwithstanding the importance of the general interventions mentioned above such as economic growth,
infrastructure expansion, and female schooling, the analysis suggests that carefully-targeted, sector-specific
interventions will also be important in attaining the MDGs. For instance, a package consisting of expanded child
and maternal immunization, antenatal care coverage, nutritional supplementation
6
and home-based neonatal
services
7
is likely to bring about significant reductions in both infant mortality and child malnutrition. Likewise,
the results confirm that an expansion in the number of primary schools would improve access and likely raise
school and primary school attendance rates among 6-11 year olds, while a lowering of the pupil-teacher ratio at the
primary level would raise primary completion rates.
Tenth, and this cannot be stressed enough, none of these interventions are likely to work unless they are
simultaneously accompanied by systematic reform of the institutions of service delivery in India.
8
The poor states
of India typically have the most serious problems with governance and service delivery in social and other sectors.
Better delivery of public services
9
is a complex and difficult task that entails creation of right institutions and
incentives, including devolving responsibility for service delivery to local governments and communities,
contracting out certain types of service delivery to the non-government sector, empowering consumers to demand
better services from government facilities, introducing competition among public providers and ensuring the
motivation of front-line workers. The problem of making publicly-provided services work, especially for the poor,
has received a great deal of attention in the Banks World Development Report of 2004.
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Finally, the importance of systematically monitoring millennium development outcomes at disaggregated levels
and evaluating the impact of public programs cannot be overemphasized. This report has highlighted the paucity
of reliable, district-level data on most indicators. The lack of such data makes it virtually impossible to monitor
progress toward attainment of the MDGs at lower levels of administration. In addition, despite the fact that much
has been spent by the government on public programs such as the Integrated Child Development Services and the
District Primary Education Program, these programs have not been adequately subjected to rigorous, independent
evaluation. In order to choose the right set of interventions with which to attain the MDGs, it is critical to know
which programs have been successful in improving millennium development indicators and which have not.
Erasing Fault Lines
By summarizing the essence of The World Bank report on the MDGs in India, an attempt has been made to do two
things describe the extent of the MDG challenge in India along with policy options that suggest themselves and
simultaneously illustrate a key dimension of The World Banks partnership with India. That dimension is
knowledge. By undertaking the research and meticulous number crunching that went into this report, the Bank
hopes to have added to the knowledge pool of Indias policymakers and contributed some ideas as they weigh
their options.
Let us now broaden the question. The World Bank understands the MDG challenge with all its complexities, but
where do we even begin to erase the fault lines the disparities of income, gender, state and region, and the poor
human development indicators that scar the face of India?
To attempt an answer to that, it is necessary to turn to another knowledge product of The World Bank. Last year, a
development policy review for India titled India: Sustaining reform, reducing poverty, was published In order
for India to meet its poverty reduction and MDG targets, it suggested a two-pronged policy agenda one, better
management of public resources, and two, improving the investment climate.
Under the first, it recommended a program of fiscal reform aimed at curbing the fiscal deficit and raising revenue
so that public resources could be diverted away from non-productive expenditure towards investments in
development, especially infrastructure and the social sector; and suggested a reform of the governance and service
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delivery systems to ensure that resources and services reached their intended targets. Under the second, it
examined product and factor market distortions and infrastructure bottlenecks that are hindering job-creating
investment and devoted an entire section to policy recommendations to improve agricultural productivity and rural
development.
India must unlock each of these areas fiscal mismanagement and unproductive expenditure; weak service
delivery, especially in social services like healthcare, education and sanitation; hindrances to investment;
infrastructure bottlenecks; and, as emphasized earlier, the rural crisis if it is to crack the formula for MDG
attainment. All these ideas, along with an understanding of the development priorities of Indias policymakers and
people that The World Bank derived from an intense yearlong consultation process with Indias government, civil
society and opinion makers, have fed into the Banks New country strategy for India or CAS. This strategy will
underpin the Banks work in India during the period 2005-2008, a critical period for the international community
if the MDGs, such as halving poverty by 2015, are to be met globally.
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CAS aligns itself exactly with the message emanating strongly from Indias people, opinion leaders and policy
makers and is expressly geared towards helping India achieve the MDG outcomes. The strategy has thus identified
three program priorities: To help improve government effectiveness; to support investments in people and
empowering of communities; and to promote private sector-led growth. In line with these priorities and at the
express invitation of the government, the Banks program and lending will be expanded in infrastructure, which
includes roads, transport, power, water supply and sanitation, irrigation and urban development to underpin both
accelerated growth and improved service delivery; human development: that is, education, health, and social
protection; and rural livelihoods: with an emphasis on community-driven approaches.
The strategy document commits the Bank Groups work in India to an increased focus on results, emphasizing
selectivity so that resources can be directed to activities where assistance is welcomed and can also be the most
effective. A commitment to sharper knowledge services will shape the Banks products in ways that can be
realistically applied to the Indian context. The strategy also proposes some important shifts in the approach to
Indias states. Since 1997, the Bank strategy has included a focus on states undertaking comprehensive reforms.
For example, during the last CAS period, the focus was on Andhra Pradesh, Karnataka, and Uttar Pradesh. With
the widening gulf between Indias faster and slower growing states, some shifts in this approach are warranted.
These include:
First, in consultation with the Government of India and other partners, the Bank will seek to ensure that all of the
largest and poorest states of India that so wish are engaged in a dialogue on cross-cutting reforms.
Second, the Bank will work proactively to try to build a productive development relationship with four states where
poverty is increasingly concentrated in India: Bihar, Jharkhand, Orissa, and Uttar Pradesh.
Third, state-level adjustment lending operations aimed at supporting the achievement of the MDGs will be an
important part of the Bank program.
Fourth, instead of concentrating on focus states, investment lending will be channeled more broadly to states on the
basis of guidelines for each sector, where the guidelines attempt to set out the sector-specific conditions that experience
has shown to be necessary for project success.
The challenge the Bank has tried to address in this CAS, therefore, is how best to leverage the intellectual and
financial resources that the Bank Group can offer in a way that maximizes impact most helpfully on Indias
development efforts. Given the importance, size, diversity and complexity of India and the Banks relatively small
presence, this is a strategic challenge for the Bank Group. A number of aspects of the response to this challenge
that the CAS incorporates are highlighted here:
First, many aspects of the Banks previous strategy remain valid, notably the emphasis on support to reform at the
state level (where much of the responsibility for development activities lies), the need to exercise selectivity and the
choice of key program priorities. These reflect an appropriate continuity in the Banks long-term development
partnership with India.
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Second, the Bank has tried to address more directly the tension between performance and need inherent in shifting
support towards the poorest states. The Bank believes that emphasis on performance remains essential if support is to
be effective, but also that it can do more to proactively foster engagement with the poorest states. In this connection,
policy dialogue, sharing global experience and efforts to support institution building will be as important as lending.
Third, the Bank believes that it is very important for it to look for opportunities to reduce transaction costs and
increase development impact of its lending by supporting key sector-wide government programs, relying on government
fiduciary systems, particularly when this can help strengthen a constructive partnership with other financiers.
12

The World Bank resources are modest in relation to the size of Indias economy and the scale of its economic and
social development needs. The Bank hopes to increase the level of its lending to US $ 3 billion a year a tiny drop
in the huge ocean that is Indias economy but along with its intention to be a facilitator, convener and generator
of global knowledge for India and its desire to help Indias poorest states in particular, it is hoped that the Banks
value will be worth more than just the money it lends.
The World Banks partnership with India goes back all the way to 1944. India cumulatively is its biggest client. Its
present portfolio of projects in India is its second biggest worldwide. The New Delhi office is the Banks largest
country office; it is also among the most empowered and decentralized with more than half of the tasks led out of
the field office by Indian national staff. The Bank is very proud and honored to partner India in its development
efforts, and support it in achieving the MDGs. It looks forward to this partnership growing and flourishing.
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Notes:
1. This belief, by the way, underpins The World Banks latest country strategy for India, which will be discussed later.
2. What works in a state such as Tamil Nadu may not work well in another state such as Orissa. It will thus be important to make
centrally-sponsored schemes, which are perhaps the biggest source of funds for programs that impact the MDGs, more flexible and
more responsive to local conditions.
3. Based on merging of household survey and population census data, to identify the villages with the worst indicators in the country.
4. Among older children, the equivalent increase in enrollment rates would be even greater.
5. Scheduled tribes and, in many cases, scheduled castes have significantly higher levels of infant mortality and child malnutrition and
significantly lower levels of schooling indicators than mainstream groups.
6. Including promotion of breast-feeding.
7. Including treatment of pneumonia.
8. Additional schools are unlikely to increase enrollment or school completion if teachers frequently are absent from school. A
package of home-based neonatal services is unlikely to reduce neonatal mortality rates if health workers are not sufficiently
motivated to reach out into the community and deliver the package of services to the poor and most-at-risk.
9. Whether in health, schooling, nutrition or infrastructure.
10. It is hoped that its analyses and suggested options have been of help to Indian policymakers.
11. CAS is a public document and can be accessed on The World Bank website.
12. The Banks support to Education for all or SSA in partnership with the centre, states and other donors, is an example of this
approach.
Carter The World Bank and India