GS Paper 2
Syllabus: International Institutions
Source: HT
Context: Indian Finance Minister has said that the World Bank’s call for revitalization presents a “historic opportunity” to make the institution “fit for purpose” to achieve sustainable development goals and address national and global developmental challenges.
| The issue with World Bank | Description |
| Governance | Non-democratic governance structure dominated by industrialized countries, decisions made without consulting poor and developing countries, under-representation of emerging countries like India, key roles held by Americans and Europeans |
| Transparency | Lack of transparency in lending deals and interest rates |
| Anti-poverty agenda | Criticism of the effectiveness of World Bank loans and financial assistance in reducing poverty |
| Structural Adjustment Programs (SAP) | Criticism of the negative impact of SAPs on developing countries, including enforced privatization, government spending cuts, imposition of user fees, market-based pricing, higher interest rates, and trade liberalization |
| Climate and development assistance | Difficulty in finding the right balance between climate and development assistance, and climate emission and adaptation priorities |
| Reliability of reports | Criticism of the reliability of World Bank reports and economic performance predictions |
| Capacity | The Bank, according to the road map, requires over $2 trillion to meet expanded commitments for newer challenges it faces |
| Definition of global development challenges | The need to build consensus on the definition of global development challenges and priorities |
Steps to reform World Bank at different levels:
| Leadership | Establish a diverse and independent board of directors with the skills, expertise, and independence |
| Remove the monopoly of America on the appointment process of the President | |
| Strategy and Policies | Reform the Bank’s lending and investment policies to prioritize climate-friendly projects and investments |
| Adopt a “do no harm” principle that ensures that the Bank’s activities do not harm vulnerable communities, or undermine human rights | |
| World Bank decisions should be inclusive, consensus-based, and recognize the development perspectives and priorities of client countries | |
| Operations and Implementation | Increase transparency and accountability in the Bank’s operations by improving data collection, monitoring, and reporting |
| Strengthen partnerships with other development actors, such as governments, civil society organizations, and private sector actors, | |
| India has asked for the following reforms | Building consensus on the definition of global development challenges.
Augmenting the financial and operational capacity of World Bank Group.
The right balance between climate and development assistance, and climate emission and adaptation priorities. |
Insta Links
Mains Links:
The World Bank has supported India since its independence by giving large loans for its economic development. Evaluate its role as a facilitator of developmental objectives. (250 words)
Prelims Links:
Q1. India’s ranking in the ‘Ease of Doing Business Index’ is sometimes seen in the news. Which of the following has declared that ranking? (UPSC 2016)
(a) Organization for Economic Cooperation and Development (OECD)
(b) World Economic Forum
(c) World Bank
(d) World Trade Organization (WTO)
Ans: C
With reference to ‘IFC Masala Bonds’, sometimes seen in the news, which of the statements given below is/ are correct? ( UPSC 2016)
- The International Finance Corporation, which offers these bonds, is an arm of the World Bank.
- They are rupee-denominated bonds and are a source of debt financing for the public and private sectors.
Select the correct answer using the code given below:
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer: C
