The World Bank Group’s Draft Country Partnership Framework for India FY18-22

The World Bank Group Country Partnership Framework for India (FY18-22): Supporting India’s Transformation Synopsis of Draft for Public Comment

The Country Partnership Framework (CPF) underpins how the World Bank Group engages with India IBRD-IFC-MIGA •

The CPF sets the strategic focus for WBG activities, which corresponds to the “sweet spot” of three elements: • •

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Government of India’s development priorities, WBG’s assessment of constraints to progress towards the twin goals of ending extreme poverty and promoting shared prosperity, which is separately analyzed in the already completed Systematic Country Diagnostic (SCD); Self-assessment of where the WBG has comparative advantage to achieve results

Lessons learned on what has worked and what is not working so well in the WBG’s experience over the past five years.

Legacy of portfolio and already planned activities which will be major source of results during the CPF period.

India’s Development Priorities Constraints to Progress on the Twin Goals (SCD)

WBG Comparative Advantage and Capacity

CPF

Lessons Learned from the Preceding CPS

Portfolio and Already Planned Activities

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The CPF will carry through on lessons learned from preceding country partnership strategy • Delivery of development results depends more on the length and depth of WBG engagement than the amount of financing.

• Engagement in states needs to build greater synergies among projects and knowledge work, ensuring that the sum of WBG’s work is greater than the parts.

• National programs provide for scope, but it is critical to ensure that they allow for local flexibility and innovation; • While there were notable successes, there is untapped potential for leveraging the WBG’s institutions and private finance • Renewed focus is needed to provide for better implementation of projects, including greater emphasis on project management arrangements and procurement planning and execution 3

The SCD Perspective on India’s Historic Journey Elimination of extreme poverty is within reach in the next decade Realistic aspiration to shift towards high middle income by its centenary India’s role in global goods: what matters for India matters for the world But the SCD poses questions about the potential constraints to a resilient and convergent India with service levels commensurate with middle income standards

Three Challenges Confront India in its Aspiration to Become a Middle Class Country

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Scarcity and inefficiency of resources: land, water, air

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Disparities and divergence in creation of jobs and inclusion across locations

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Uneven state capability (organizational, institutional, and across a federal India)

The SCD identifies three priorities to act upon today for ensuring a prosperous tomorrow

Pivoting to a more Resource-Efficient Growth Path

Accelerating Inclusion for Growth and Jobs

Strengthening the Public Sector

Scarce resources used inefficiently within sectors and misallocated between sectors

Large disparities between locations, people and social groups

Weak delivery of core public functions

Enhancing productivity and livability of cities

Creating a climate for growth: infrastructure, finance, firms

Augmenting resources, improving accountability mechanisms.

Investing in people

Stronger federal compact is a potential game changer.

Changing policies for agri. and wider rural economy Reforms and correcting distortions in energy, water, land

Special attention to excluded & vulnerable groups

Administrative reforms for a more effective State.

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WBG CPF for India: From coinciding GoI and SCD priorities to “What” and “How” the WBG will deliver

Implementing the CPF: “How” the WBG Delivers CPF Focus Areas:

Government of India Development Priorities

SCD Priorities Forging a resource efficient growth path

Accelerating Inclusion by creating jobs and building human capital

Promoting Resource Efficient Growth Enhancing Competitiveness & Creating Jobs Investing in Human Capital

Leveragin g Private Finance Federalis m: State Partners hips

Strengthening the public sector India’s global impact and importance

Lighthouse India: Knowledge in Implementa tion

Strengtheni ng Public Sector Institutions

CPF Objectives: What the WBG Delivers • Promote more resource efficient, inclusive, and diversified growth in the rural sector • Improve living conditions and sustainability of cities • Improve management systems for controlling air pollution • Increase access to sustainable energy • Improve disaster risk management and resilience to climate change

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Improve the business environment and select firm capabilities Increase resilience of the financial sector and financial inclusion Improve connectivity and logistics Increase access to quality, market-relevant skills development

• Enable more quality jobs for women

• Enhance investment in the early years of children’s development • Improve the quality of education in schools and colleges • Increase access to improved water supply and sanitation services • Improve the quality of healthcare service delivery and financing • Improve the coverage and coordination of social protection systems

Cross cutting themes Gender:

Climate Change, Technology

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The ‘Whats’: Focus Areas & Objectives where the WBG will seek results

Resource Efficient Growth Promote more resource efficient, inclusive and diversified growth in rural sector Improve living conditions and sustainability of cities Improve management systems for controlling air pollution Increase access to sustainable energy Improve disaster risk management and resilience to climate change

Enhancing Competitiveness and Creating Jobs Improve business environment and firm capabilities Increase the resilience of the financial sector and financial inclusion Improve connectivity and logistics

Increase access to quality, market-relevant skills development Enable more jobs for women

Investing in Human Capital Enhance investment in early years of children’s development Improve quality of education in schools and colleges Increase access to improved water supply and sanitation Improve quality of health service delivery and financing, access to quality healthcare Improve coverage and coordination of social protection systems

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Projects and analysis pursuing specific objectives will cumulatively address key cross-cutting priority themes Addressing climate change in support of India’s National Determined Contributions on climate change • • • • •

Developing renewables and promoting for energy efficiency Shifting agriculture to be more climate resilient Shifting to low carbon transport mobility Better management of natural resources to enhance carbon sinks and increase resilience Developing market mechanisms to facilitate financing for climate change mitigation and adaptation

Addressing Gender Gaps • •

Providing for analysis of gaps, steps to address these gaps, and measurable indicators of progress in operations Targeted analysis and knowledge exchange, particularly focusing on women’s economic empowerment

Addressing the impacts of technological change • •

Harnessing high-impact technology to maximize efficiency gains Anticipate disruptions and opportunities triggered by technological change

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The ‘Hows’: combination of what WBG works on and how it approaches development is the operational model for the CPF Addressing implementation challenges – at scale – is critical to achieving development success in India.

Leveraging Private Finance

Federalism: State Partnerships

Strengthening Public Sector Institutions Lighthouse India: Knowledge in Implementation

The WBG will systematically apply four key approaches to improve implementation: • Leveraging the WBG’s diverse expertise and leveraging private finance and expertise to maximize finance for development • Engaging with a federal India, identifying entry points and change levers at various levels of government, particularly in states, increasingly the key arena for development in the country; • Strengthening public sector institutions, sustaining a focus on improving the service delivery chain between inputs and outcomes, with a focus on aligning incentives • Supporting a Lighthouse India to facilitate exchange of knowledge in implementation within India and between India and the rest of the world.

These four ‘Hows’ will not be filters for a WBG activities, but rather impact multipliers to be tactically across the portfolio.

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Leveraging private finance: increasing focus on facilitating private sector solutions to development challenges Leveraging collective strength of the WBG: the World Bank, which works primarily with government, the International Finance Corporation which works with the private sector, and the Multilateral Investment Guarantee Agency, which is dedicated to leveraging.

Examples of successful leveraging: ➢ Ultra Mega solar Power Project – IBRD loan for power evacuation infrastructure, IFC provided innovative transaction advisory for project structuring, and $ 440 million loan to private developers. ➢ First IBRD Guarantee to support EESL for market development and scaling-up energy efficiency.

Improving the ecosystem for leveraging private finance ➢ ➢ ➢

Infrastructure Sector assessment to identify gaps and reforms to facilitate private investments Advisory and lending support for PPP transactions Partnership with domestic financial institutions such as the National Infrastructure Investment Fund and associated credit enhancement facility

Applying a ‘Cascade’ approach to maximize finance for development through promoting where appropriate private sector solutions to address development needs ➢

Energy, transport, logistics, urban development sectors offer potential for cascade approach

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Flexibly engaging a federal India: working at national, state and local levels, recognizing their respective roles • Support the National Government on high priority areas – with a shift from a focus on centrally sponsored schemes to more support for innovative development solutions in implementation • Strategically partner with 3-5 specific states – which over will become a primary the mode of WBG engagement • Flexibility to allow innovative projects and specific demands from any State and the national government – following the “finance plus” approach to develop new practices and approaches with broad relevance for India • Sustain and consolidate the focus in Low Income and Special Category states – with an increased focus on implementation.

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Developing strategic state partnerships: platforms to address state priorities and capability constraints A state partnership entails a joint commitment of WBG and State to partner on strategic priorities, addressing complex multi-sector issues, developing innovative solutions, and holistically improving implementation capability. State partnerships will be developed in a mix of states with different trajectories of development, which will offer opportunities for cross state learning.

Process and Criteria for Partnership • • • •

Partnership premised on high level state political commitment and ownership of reforms aimed at sustainable growth and poverty reduction.

Well defined priority area of reforms and institutional capacity development identified for WBG programmatic engagement Demonstrated fiscal responsibility reflecting ability to borrow Presence of substantial portfolio of WBG projects and engagement

Partnership Instruments • • •

“Core partnership” operation, either policy based lending series or PforR, to bring together work in multiple sectors as well as upstream core governance issues.

Comprehensive capacity building support Regular portfolio reviews by state leadership, DEA, WBG Country Management Team.

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Strengthening Public Sector Institutions: Improving Capability to Deliver Services Strengthening core public sector capabilities at national and state Levels • • • • • •

Public sector financial management and procurement Domestic resource mobilization Debt management practices Developing accountability mechanism including support for digital platforms Planning, monitoring and evaluation Strengthening statistical tools and capabilities with the National Statistics Office

Strengthening implementation capabilities of sector institutions • • • • • •

Sector policy and reforms Planning and prioritizing programs and projects Public investment management and program implementation Strengthening SOEs – financial, managerial, commercial corporate governance capabilities Strengthening governance in service delivery (systems, processes, incentives, technical capacity) Monitoring, citizen engagement and feedback loops

Building capacity among rural Panchayat Raj Institutions and Urban Local Bodies

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Supporting a Lighthouse India: a knowledge agenda connecting states in India and amplifying India’s global role as a development leader • Enhanced WBG’s knowledge and advisory services to support policy, reforms, capacity building and program implementation • Technical Assistance, Reimbursable advisory services, as well as potential to use/enhance government authorized trust funds • Bring relevant global experience and customize for India • Knowledge sharing and peer-to-peer learning across states to accelerate implementation of good policies & programs • Supporting India’s role as a leader on key global goods and sharing its development experience with other countries – Solar energy, disaster resilience, skill development, – Fostering greater regional cooperation

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A evolving, maturing partnership India’s size, scale, and stability means that dramatic inflection points are not expected and the WBG has a large ongoing program that merits follow through.

Therefore gradualism and evolution should define the WBG’s program in India going forward, with greater shifts – From focusing on extreme poverty towards broader engagement that includes issues of upward mobility and addressing vulnerability – From standard national schemes toward programs that are more adaptive to state and local conditions – From basic issues of access to services toward also improving their quality and financing – From sector operations toward more holistic approaches that address complex challenges – From a development partner in India toward a partner with India in harnessing its vast experience for global development

This shift will be achieved through a disciplined combination of the applying the ‘How’ approaches to ‘What’ the WBG aims to achieve 16