ORISSA (ODISHA) FINANCE MINISTER: [inaudible] I wish to offer special thanks to Mr. Zoellick who has found time to visit Odisha despite his busy schedule of engagement. Quite clearly this signals his commitment as well as his willingness to offer assistance, both financial as well as technical so that there can be an inclusive development in a state like ours. You may recall that the World Bank’s engagement with the Government of Odisha is more than three decades old. During the eighties, the Bank had assisted the state government in the development of medium irrigation projects. During the nineties, the Bank had provided assistance to the state government for the water resources conservation project, WRCP, and the power sector reforms project during 2000-2005. The Bank provided technical and financial support to the state government for fiscal mobilisation.
As some of you may be aware, the President has visited the Bhitarkanika area today. His focus has been on some of the ground level challenges we have to address in the implementation of development programmes, and delivery of public services. He also had a brief meeting with our honourable Chief Minister, Naveen Patnaik. In the course of the discussion, Honourable Chief Minister indicated to Mr. Zoellick our medium term development priorities and has sought technical and financial assistance of the Bank for the sustainable and inclusive development of the state, water resources and for the upgradation of our basic infrastructure. The state has also sought support from IFC for improvement of investment opportunities for the private sector in the state including investments in PPP projects in the core infrastructure sector.
Mr. Zoellick had very kindly agreed to address the media and has also agreed to take a few questions. I now request Mr. Zoellick to address all of you.
MR. ZOELLICK: Well, thank you very much, and I first want to thank the Chief Minister, the Finance Minister, the Chief Secretary, and their colleagues for being such gracious hosts for our visit. I always try, when I come to India, in addition to the work that we do in Delhi, to visit another part of India to see about our work and how we can be of more help to the people of India.
I was particularly delighted to come to Orissa, and as I told the Chief Minister, we know well the success that Orissa has had in not only relatively rapid growth but, importantly, in the reduction of poverty, which has been quite significant over the course of the past decade.
But at the same time, we know that there is much work ahead, because there are still many poor people here, some of the tribal groups, and so, the purpose of my visit was to try to listen and learn and consult with our colleagues here in Orissa to see how the World Bank could be of greater assistance.
As the Finance Minister mentioned, we’ve had a long relationship with Orissa. We’ve worked together in many sectors, and our work in Orissa is also important for the rest of India, because some of the lessons that we learn here, we then seek to be able to work with the Union Government in expanding to other states in the country.
As the Finance Minister mentioned, this visit is also important because our colleagues from IFC, our private sector arm are with us, and in addition to making private sector investments, we’ve expanded our advisory services. And we are about ready to create a Special Cooperation Agreement with the State of Orissa that will help us in dealing with services for public-private partnerships, but also to try to build on some of the natural wealth of the state, for example, the expansion of agribusiness -building on agriculture, and small and medium enterprises, and some of the downstream industries in metals, since you have such great wealth in the mineral area.
I was very delighted to have a chance to visit Gupti Village this morning. This is a location that involves two of the Bank’s projects. One deals with rural livelihoods. That means working with communities to try to increase the income and participation of people in the village. So, I had some chance to see some of the handicrafts and other operations that women have learned and now sell to market, increasing incomes, meaning that they can support more for their children’s education and also for their basic family needs; but also, a project that we have just launched in the past 18 months or two years which deals with the coastal zone protection. Orissa is also blessed with some of the most extraordinary natural beauty and resources, and some of this is related to the mangroves.
As many of you know, with the terrible cyclone in 1999, the area in the coastal area was very badly damaged. And so, this helped build community interest in preserving and adding to the mangroves to stop erosion and to put basic protections.
However, when there are extra efforts at conservation, they sometimes limit what the fishermen can do. So, as you know, there’s also an extraordinary turtle population in that part of Orissa. And so, as to preserve the breeding season, the fishermen don’t fish in that time. They also don’t fish during the spawning period.
So, if they lose five or six months of fishing, they need alternative livelihoods.
So, this is a good example where we’re trying to work with the communities to move beyond being users of natural resources to becoming managers of natural resources, so they help preserve and protect them at the same time they expand their overall livelihoods.
So, in conclusion, we’ve had a very good history with Orissa. We’re proud to be partners with the state, and the opportunity we had today was to review the priorities that the state has so that the Bank can better serve them, whether through IBRD, led by our Country Director, Roberto Zagha, or IFC and our Vice President for East and South Asia, Karen Finkelston, is here as well as Tom Davenport, who runs our operation for India.
So, thank you.
MODERATOR: Any of you?
REPORTER: [inaudible] There are two projects, one is this integrated coastal zone management program which has two pilots – are you planning to further fund this project; the second project is the rural livelihood project – are you planning to expand this to other parts of the state? And what are new proposals that you want from the Chief Minister?
MR. ZOELLICK: The first project on coastal zones is, I think, about a $250 million project, and it’s just begun. And so, it’s important to be able to develop the project but also to learn from it so we can test what works and what doesn’t work, because in any of these projects, there is a part–lessons to be learned, and we hope to be able to expand it not only in Orissa but in other parts of India. We talked about some possibilities on the West Coast of India.
And the lessons really extend beyond India. About a month ago I was in Singapore, and I announced a blue economy initiative dealing with oceans, and part of the oceans initiative is the coastal regions. So, what we hope to learn from this project we hope will also be beneficial for other countries, as well.
Now, your second question dealt with the?
REPORTER: The livelihoods.
MR. ZOELLICK: I’ll ask Roberto about any plans for expansion of that.
ROBERTO ZAGHA: As, you all know, the rural livelihood project has been extremely successful not only in Orissa but in all 13 states of India. And as an result of that, the Government of India decided to do this national program, the National Rural Livelihood Mission (NRLM), which now extends to all the states in India. In that context, we may expand to a number of districts, but this has to be decided with the Government of India and the priorities it has. But it is very good program, and whether it is the World Bank that finances it or it is the Government of India that finances it, it’s not that important because now the model has been set, established [inaudible]–it’s a robust model that anyone can finance.
MR. ZOELLICK: And as for your second question, what we talked about in a brief meeting, but our colleagues from Orissa may wish to expand this, is the areas where we could provide not only financing but some technical assistance to draw in best practices, and these relate to issues of environment and social sustainability, natural resources, mining reforms, and also the continued work that I mentioned from IFC, our private sector side, but they may wish to add–and agribusiness, obviously, is an important area.
Do you wish to add to that?
MR. ZAGHA: Not.
B. K. PATNAIK, CHIEF SECRETARY GOVERNMENT OF ODISHA: Basically, as you know we have some of the ongoing projects that have been funded by the World Bank, as the President has mentioned. In addition to these World Bank associated projects we have now the IFC which is the private arm of World Bank and therefore we are now asking them to think about PPP through the IFC, and some of these programs are now being formulated, and once they reach a particular stage, the government will be willing to announce it.
REPORTER: Mr. President this is Nageshwar Patnaik from Economic Times. The World Bank in fact has been associated with Odisha now for over a decade, as you said rightly. It initiated reforms process in the power sector, and the other states learnt from it, but today there is a setback in power reforms in Odisha with the distribution sector totally floundering. Will World Bank aid come up with some kind of a plan so that this sector can be fine?
MR. ZOELLICK: I was talking with Roberto Zagha about the power sector reforms as we were driving here, and we think that there has been some important lessons learned, but there are challenges about some of the distribution networks and some of the investors in the scope of their preparation to deal with all the societal aspects.
Mr. Zagha told me that he thought that this was going to be strengthened and improved so that there needed to be further work in this area, but I’ll let him add any other points.
MR. ZAGHA: That sums it up pretty well. The power sector is a challenge all over India, and Odisha has been a pioneer in introducing power sector reform which has become a model for the rest of India national legislation has been changed as a result. But all over India, there are very few states, can hardly think of any at this juncture, [unclear] where the distribution companies are financially solvent. And once the distribution company is not financially solvable then it backs up transmission, generation and the whole sector becomes incapable of producing itself and expanding. So we think there’s a very quick [inaudible].
REPORTER: I have a question, Mr. President. I’m from the Times of India, Samir Mishra. The BRICS, Brazil, Russia, India, China, they want to discuss a proposal to have a development bank of their own. How does the World Bank view this?
MR. ZOELLICK: Well, I think it’s a sign that there’s even a greater need for financial support for India in particular, although the other BRIC countries have their own unique circumstances. And so, we’ve tried to expand our operations in India. Our total outstanding loans are about $33- $34 billion from IBRD and IDA together, and then there’s about three billion of investments from IFC. But for a country as vast as India, I think there’s a need for even more.
So, in the next couple of days when I have a chance to meet the Finance Minister, I will be talking about ways that we hope to be able to expand our lending in India. But if the BRICs also create an additional financial institution, we would look forward to working with it to see how we can leverage one another’s strengths.
One of the benefits of the World Bank is that it involves much more than finance. We’re an institution that has staffs that try to look at experience around the globe, whether it be private sector development, agriculture, irrigation, environment, and then we try to share that knowledge.
So, if a BRICS bank is formed, we would like to work with it to try to share the experience we have and perhaps it could add additional financing. This is the way we work with the regional development banks. And for example, there’s a regional development bank in Africa and there’s one in Asia and there’s one in Latin America. And so, it’s may be a complement to the kind of work we do.
Having said that, I think what I’ve seen over the years is putting together a new bank is a complicated venture. You have to get the capital. If you’re going to go to international markets, you have to get a rating.
The World Bank has a AAA rating. Many countries don’t have a AAA rating anymore. So, there would be challenges in organizing such an institution, getting it capitalized, getting it set up. But I think it is a sign of the broader developments you have in the world economy where the developing countries, I think, can play a larger role in the development of other developing countries.
REPORTER: Sir, how do you rate the state government’s efficiency in getting, and implementing and repaying the World Bank’s funds?
MR. ZOELLICK: I’m sorry, I didn’t quite hear the–implementing what?
REPORTER: Sir, how do you rate the state government’s efficiency and State Government’s efficiency in getting, and implementing and repaying the World Bank’s loans?
MR. ZOELLICK: Well, we very much have been proud of our partnership with Orissa. We have high regard for the Chief Minister, and obviously the people of Orissa do, too, since they keep reelecting him. He has an excellent team.
And so, that’s one reason why, given the vastness of the size of India, we want to try to work with Orissa because, even with its success, it’s still a lower income state. It needs to progress more. It has special issues of tribal and ethnic minorities, and that relates to the overall stability and security in India. And I would say that, while it’s a very good partner, that there’s also the need to continue to build capacity.
So, for any program, you have to expand the ability of people that can work in villages, help with engineering. And so, in some areas like roads, there’s been a little slower than we would like, but I think we’ve got those back on track.
So, we feel that this is a very impressive government at the official level as well as at the electoral level, and we want to deepen the partnership.
REPORTER: This is Vijay Mishra from Political and Business Daily [inaudible]. Considering the large scale of poverty in India, to the extent of two-thirds of Indian population, don’t you think limiting the IBRD exposure to 17.5 billion dollars is restrictive?
MR. ZOELLICK: Well, that is our limit for any individual country. And as you may know, we actually raised the limit for India alone. So, India is the only country in the world that gets that limit for $17.5 billion for what we call the IBRD lending.
In addition, we’ve had support from IDA, which is for the 79 poorest countries. As the income level of India increases, we are trying to look to see and work with the donors to IDA of whether we can work with transition agreements to keep additional financing above that amount through the IDA system.
And then, third, you have the IFC side. So, IFC invested–will probably invest about $1 billion this year in the private sector, and their total commitments or their total outstandings are about $3 billion.
So, when you look at the amounts for India, that 17.5 is just one amount. You have to add onto it the other amounts for IDA and IFC.
But having said that, I personally believe that one of the challenges for the World Bank will be to continue to find ways to extend and stretch its financial support for larger client countries, and India is a good example of that.
So, one of the things, again, that we’re going to discuss with the Finance Minister is how might we use some of our financial resources as guarantees or other support so as to leverage other funding, maybe from India, maybe from the private sector. And so, we need to continue to be innovative because I think it’s important for the World Bank to be a good partner in transferring knowledge as well as finance. The question about the BRICS relate to this. If there’s not enough financing from these institutions, people will look for others.
So, my own personal sense is I’ve tried to work with our Board, which represents 187 countries, to expand our resources for India, and I am personally pleased that during the financial crisis we greatly ramped up the lending. It was about $9 billion during the financial crisis. So, we tried to be a good partner in time of need.
But I think your issue is one that the Bank is going to continue to have to have to face, and it’s one that my successor will have to face.
REPORTER: [inaudible] …I am standing – the cameras just in front of me. I have just one small question. Any particular in your experience you’ve had in the past two days is there anything in particular you’d like to share with the media.
MR. ZOELLICK: Yeah, well, I’m glad you asked that, because I think the most important resource in the State of Orissa are the people of the State of Orissa. And probably one of the most striking aspects of this Rural Livelihoods Program is a chance to talk to some of the men but, in particular, the women who have benefited from this program.
And so, I saw some of the handicrafts and other products that they made. I bought some. My colleagues bought some. So we added to the local income [laughter]. But most important, I asked them a couple of questions.
And one I asked: How much income did it add? And you could see that, for these people, they’re small amounts, but it made a difference for them in terms of their school and their children and their clothing. Some of them said, “We couldn’t afford the types of clothes we have today except for this type of project.”
But as important as the money was the sense of dignity and self-worth that they brought. These are people who have enormous potential. They’re hardworking people. They just want a chance to be able to do more for their families, their state, and for India.
So, the major message I bring and take is that development is more than numbers of economic growth and poverty. It’s about people. And even though it was only a brief chance to meet with them today, you could see what a difference this made in the lives of people in a village, and that’s what we’re all about.
SPEAKER: So, thank you, friends