According to the World Bank (Calculated using Atlas method)India is a low income country along with 53 other countries. Low income countries are countries which have a GNI per capita of less than $876. So the Indian development projects are aided by the International Bank For Reconstruction And Development (IBRD) and the International Development Association (IDA).
On August 1st 2006, the World Bank (WB) approved the Orissa Socio-Economic Development Loan II which provided development aid to the state on Orissa inIndia. The commitment of the entire project was a huge $225 million.
Surprisingly, health, education and the primary sector each gets 10% of the aid. (I was of the opinion that these were the crucial areas where growth is needed.) A greater chunk of aid is going for the development of Public administration, law and justice.
Let’s take a look at the Orissa economy. According to Census 2001
1) The overall literacy rate in the state was 63.61.
2) Sex ratio was 972.
According to the Economic times, “Despite its rich endowment of mineral wealth, forests, lakes, rivers and a long coastline facing South-East Asia, Orissa remains among the poorest of India’s major states.” And also that Orissa has the third highest concentration of scheduled tribes inIndia, accounting for 22.2 per cent of the total population and more than 40 per cent of the total number of poor.”
The aid is flowing in and we are accumulating large external debt which is a burden on the economy as a whole. But I wonder if the outcomes are pro-poor or for that matter even pro-development.
Greg Mankiw’s blog: Letting poor nations prosper would be worth a lot more than the equivalent amount in foreign aid.