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Last Updated: Friday, 27 August, 2004, 11:11 GMT 12:11 UK
India gets $12bn World Bank deal
A landslide near Mumbai (Bombay)
Better infrastructure and welfare projects are top targets
The World Bank is to raise its lending to India under a newly-drafted 4-year assistance programme, which starts in 2005.

The Bank has agreed to lend India a maximum of $12bn (6.6bn) over the four years, or $3bn a year.

It signalled that it is prepared to lend the whole $12bn this time whereas previously only about two-thirds of the available $12bn was disbursed.

India is home to one quarter of the world's poor, the Bank said.

'Strong mandate'

"I think today was a very strong mandate for us to push towards actually achieving an actual doubling of lending," said World Bank country director for India Michael Carter.

"The mandate we have been given is to scale up our activity to a level of $12bn," he added.

World Bank officials have said that actual lending under the expiring 4-year plan has been closer to $2bn a year than $3bn.

India's economy is powering ahead, with Finance Minister Palaniappan Chidambaram predicting growth of between 7% and 8% in the current year.

But the South Asian giant suffers from a huge wealth gap.

Anger of the poor

Rural voters and poor urban Indians showed their anger at being excluded from the economic boom by sweeping the left-leaning Congress government to power in May, a surprise victory that the party itself did not expect.

Unveiling the new lending programme, Mr Carter, who is the Bank's top official in India, said the country is suffering from a "substantial disparity of opportunity", particularly in healthcare, education and the prospects for women.

The gap is so marked that "what emerges is a picture of India occupying two worlds simultaneously", he said.

The Bank's announcement highlighted "stagnant" survival rates for young mothers and children aged less than five, and the rapid spread of HIV, which it said was putting the country "at risk of an epidemic".

During the new 4-year programme, the IMF wants to target the four poor states of Bihar, Jharkhand, Orissa and Uttar Pradesh.

Since Congress returned to power, a pay strike by bank workers and an ongoing anti-tax stoppage by truck owners have highlighted the cocktail of raised expectations and resistance that the government must juggle if it is to deliver promised social spending plans.

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