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World Bank Group

World Bank group provides loans to developing countries for capital programs. The World Bank is a component of the World Bank Group, and a member of the United Nations Development Group.
The World Bank's official goal is the reduction of poverty. According to its Articles of Agreement, all its decisions must be guided by a commitment to the promotion of foreign investment and international trade and to the facilitation of capital investment.
The World Bank should not be confused with the United Nations World Bank Group, a member of the United Nations Economic and Social Council and a family of five international organizations that make leveraged loans to poor countries:
  • International Bank for Reconstruction and Development (IBRD)
  • International Development Association (IDA)
  • International Finance Corporation (IFC)
  • Multilateral Investment Guarantee Agency (MIGA)
  • International Centre for Settlement of Investment Disputes (ICSID)

International Bank for Reconstruction and Development

IBRD is an international financial institution which offers loans to middle-income developing countries. The IBRD is the first of five member institutions which compose the World Bank Group and is headquartered in Washington, D.C., United States. It was established in 1944 with the mission of financing the reconstruction of European nations devastated by World War II. Following the reconstruction of Europe, the Bank's mandate expanded to advancing worldwide economic development and eradicating poverty. The IBRD provides commercial-grade or concessional financing to sovereign states to fund projects that seek to improve transportation and infrastructure, education, domestic policy, environmental consciousness, energy investments, healthcare, access to food and potable water, and access to improved sanitation.

The International Development Association (IDA)

The IDA is an international financial institution which offers concessional loans and grants to the world's poorest developing countries. The IDA is a member of the World Bank Group and is headquartered in Washington, D.C., United States. It was established in 1960 to complement the existing International Bank for Reconstruction and Development by lending to developing countries which suffer from the lowest gross national income, from troubled creditworthiness, or from the lowest per capita income.

International Finance Corporation (IFC)

The IFC was established in 1956 to support the growth of the private sector in the developing world. The IFC’s stated mission is “to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people’s lives. ”IFC provides loans and equity financing, advice, and technical services to the private sector. The IFC also plays a catalytic role, by mobilizing additional capital through loan syndication and by lessening the political risk for investors, enabling their participation in a given project.

The International Centre for Settlement of Investment Disputes (ICSID)

The ICSID is considered to be the leading international arbitration institution devoted to resolving disputes between States and foreign investors, also known as BIT arbitrations. Based in Washington, D.C. (U.S.A.) and operating under the World Bank, ICSID was established in 1965 by the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (known as the ICSID Convention or Washington Convention).

The Multilateral Investment Guarantee Agency (MIGA)

The MIGA is an international financial institution which offers political risk insurance and credit enhancement guarantees. Such guarantees help investors protect foreign direct investments against political and non-commercial risks in developing countries. MIGA is a member of the World Bank Group and is headquartered in Washington, D.C., United States. It was established in 1988 as an investment insurance facility to encourage confident investment in developing countries.

World Bank Group Strategy to Help India Achieve Its Vision

The World Bank Group’s new Country Partnership Strategy will guide its support to India from 2013 through 2017. The strategy aims to help the country lay the foundations for achieving its longer-term vision of “faster, more inclusive growth.”
A key feature of the new strategy is the significant shift in support toward low-income and special category states, where many of India’s poor and disadvantaged live. The new strategy proposes a lending program of $3 billion to $5 billion each year over the next five years. Sixty percent of the financing will go to state government-backed projects. Half of this, or 30% of total lending, will go to low-income or special category states, up from 18% of lending under the previous strategy.

IMF Vs. World Bank

IMF and World Bank are Bretton Wood Twins. Both the institutions were established to promote international economic cooperation but a basic difference is found in the nature of economic assistance given by these two institutions. World Bank provides long term loans for balanced economic development, while IMF provides short-term loans to member countries for eliminating BOP disequilibrium. Both these institutions are complementary to each other. The eminent world economist George Schultz had suggested in American Economic Association Conference in January 1995, for the merger of IMF and World Bank.

Membership of the World Bank and Voting Right

Generally every member country of the IMF automatically becomes member of World Bank. Similarly, any country which quit IMF automatically expelled from the World Bank's membership. But under a certain provision a country leaving the membership of IMF can continue its membership with World Bank. If 75% member of the bank gives their vote in its favour.
Any member country can be debarred from the membership of World Bank on following grounds:
  1. Any member country can quit the bank simply by written notice to bank, but such country has to repay the granted loans on terms and conditions decided at the time of sanctioning the loan.
  2. Any country working against the guidelines of bank can be debarred from membership by the board of governors.
Like IMF, World Bank has also two types of members: 'founder members' and 'general members' the world bank has 30 founder members that attained membership by December 31, 1945. India is also among these founder members. The countries joining the World Bank after December 13, 1945 come under the category of general members. At present total membership of the World Bank is 182. The voting right of member country is determined on the basis of member country's share in the total capital of the bank. Each member has 240 votes plus one additional vote for each 1,00,000 shares of the capital stock held.

Capital Resources of World Bank

The initial authorized capital of World Bank was $ 10,000 million, which was divided in 1 lakh share of $ 1 lakh each. The authorized capital of the bank has been increased from time to time with the approval of member countries. On June 30, 1996 the authorized capital of the bank was $ 188 billion out of which $ 180.6 billion (96% of total authorized capital) was issued to member country in the form of shares. Member countries repay the share amount to the World Bank in following ways:
  1. Two percent of allotted shares are repaid in Gold, USD or SDR.
  2. Every member country is free to repay 18% of its capital share in its own currency.
  3. The remaining 80% share is deposited by member country only on demand by the World Bank.
Bank is managed by an elected President. On July 1, 2007, Robert B. Zoellick became the 11th President of the World Bank. The headquarter of World Bank is at Washington DC.
IDA (established on September 24, 1960) and IFC (established in July, 1956) are the two main associate institutions of IBRD. These institutions work under the supervision of World Bank. MIGA is also an associate institution in the World Bank group.

Banks Lending Operations

IBRD gives loan to members in anyone or more of the following ways:
  1. By granting or participating in direct loans but its own funds.
  2. By granting loans out of the fund raised in the market of a member or otherwise borrowed by the bans and
  3. By guaranteeing the whole or part loans made by private investors through the investment channels.
Before a lone is made or guaranteed the bank ensure that the -
  1. Project for which the loan is asked has been carefully examined by the competent committee as regards the merits of the proposal.
  2. Borrower has reasonable prospect for the repayment of loans.
  3. The loan is meant for productive purposes and
  4. The loan is meant for reconstruction and development.

Functions of the World Bank

Presently, The World Bank is playing the main role of providing loans for development works to member countries, especially to under-developed countries. The World Bank provides long-term loans for various development projects of 5 to 20 years duration. The loaning system of the bank can be explained with the help of following points:
  1. Bank can grant loans to a member country upto 20% of its share in paid up capital.
  2. Bank also provides loan to private investors belonging to member countries on its own guarantee, but for this loan private investors have to seek prior permission from those countries where the amount will be collected. For such loans the consent of that country is also required whose currency is given in loans. For granting such guarantee, the Bank charges 1% to 2% as service charge.
  3. The quantum of loans, interest rate and term and conditions are determined by the Bank itself.
  4. Generally, Bank grants loan for a particular project duly submitted by the member country.
  5. The debtor nation has to repay either in reserve currencies or in the currency in which the loan was sanctioned.
Besides, granting loans for reconstruction and development, World Bank also provides various technical services to the member countries. For this purpose, the Bank has established 'The Economic Development Institute' and a Staff College in Washington.

International Fund for Agricultural Development (IFAD)

The International Fund for Agricultural Development (IFAD), a specialized agency of the United Nations, was established as an international financial institution in 1977 as one of the major outcomes of the 1974 World Food Conference. IFAD is dedicated to eradicating rural poverty in developing countries. Seventy-five% of the world’s poor live in rural areas in developing countries, yet only 4% of official development assistance goes to agriculture.
The strategic policy of IFAD is detailed in Strategic Framework for IFAD 2011-2015: Enabling the Rural Poor to Overcome Poverty. Its headquarters is in Rome and is a member of the United Nations Development Group.
IFAD's goal is to empower poor rural women and men in developing countries to achieve higher incomes and improved food security.
IFAD will ensure that poor rural people have better access to, and the skills and organization they need to take advantage of:
  • Natural resources, especially secure access to land and water, and improved natural resource management and conservation practices
  • Improved agricultural technologies and effective production services
  • A broad range of financial services
  • Transparent and competitive markets for agricultural inputs and produce
  • Opportunities for rural off-farm employment and enterprise development
  • Local and national policy and programming processes

India and IFAD

India is one of the original members of IFAD. IFAD’s strategy in India centres on improving the access of rural sectors to economic and social resources. By working in close partnership with the Government of India and other donors, IFAD funds projects for rural development, tribal development, women's empowerment, natural resources management and rural finance. Since 1979, the organization has financed 21 programmes and projects, approving loans for a total of approximately US$564.4 million.

IFAD assistance for Maharashtra Rural Credit Project - (SDR 17.77 M)

The IFAD assisted MRCP was under implementation since January 1994 in 12 districts of Maharashtra. The project implementation came to an end on 31 March 2002. It covered 1483 villages in 12 districts of Maharashtra through 677 branches of 8 commercial banks, 7 DCCBs and 5 RRBs. The IFAD funded nearly 60% of the total project outlay of US $ 48.4 million by way of soft loan to Government of India (GoI). The balance amount was funded by GoI, Government of Maharashtra and the participating banks. The project resulted in uplifting nearly 78000 individuals above the poverty line. The number of SHGs formed in the project area crossed 9000 mark with 90% of SHGs being exclusively women groups. Nearly 8000 SHGs were linked to banks. There were 1483 Village Development Councils functioning as Peoples' Representative Bodies in the project villages. The project made a positive impact not only on the living conditions of the rural poor in the project area but also brought about a change in the attitude among bankers and Government functionaries at grass root level. The amount of loan sanctioned for the project was SDR 15.24 million.


Rounds of GATT Negotiations
Between 1947 and the last year of GATT there were 8 rounds of negotiations between the participating countries. The first 6 rounds were related to curtailing tariff rates. 7th round included the non-tariff obstacles. The 8th round was entirely different from the previous rounds because it included a number of new subjects for consideration. This 8th round known as ‘Uruguay Round’, which became most controversial. The discussions at this round only gave birth to World Trade Organisation (WTO).

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