India has made a strong pitch for increased lending by the World Bank and its affiliates for Bangladesh, India, Bhutan and Sri Lanka, in a meeting of the World Bank and International Monetary Fund held in Washington on Saturday.
The combined gross domestic product of India, Bangladesh, Bhutan and Sri Lanka will cross $3 trillion this year, said Subhash Chandra Garg, secretary of the economic affairs department at India's finance ministry.
These four countries not only constitute the highest growing economic block in South Asia and the world at large but also face widespread poverty, Garg said while addressing the meeting as a representative of the four countries.
The region attracts close to $100 billion of foreign direct investment and portfolio investment and will grow around 7.5 percent this year, he said.
The four also faces enormous developmental challenges, Garg said.
“Our constituency (comprising India, Bangladesh, Bhutan and Sri Lanka) members continue to make notable progress and set an example for other emerging middle-level developing countries.”
The Indian official said Bangladesh has made significant progress in reducing poverty.
Over 20 million people have been lifted out of poverty in that country in the last two decades with poverty rate declining below 24 percent, he said.
He said Bangladesh is expected to grow at 7.2 percent this year.
Bangladesh has also made rapid progress in human development. Its Infant mortality rate—34 per 1,000 live births—and maternal mortality rate—176 per 100,000 live births—are much improved and better than the global averages, he said.
"Bangladesh's progress towards low middle income country category and its eventual transition to 'gap' and 'blend' status under World Bank group are a testimony of the massive developmental efforts of the government of Bangladesh.”
The World Bank Group—Inter-national Bank for Reconstruction and Development (IBRD), International Finance Corporation (IFC), Interna-tional Development Association (IDA), Multilateral Investment Guarantee Agency (MIGA)—has supported the growth and development of the four countries, he said.
“It will need to continue to do so in the foreseeable future.”
This is the reason capital increase has been a matter of critical interest for India, he added.
Garg expressed happiness that there is now an agreement on the capital increase package and that it is reasonably large – a 13 billion-dollar capital increase in IBRD and IFC together, “which from the historical context, is a truly unprecedented.
"The regional growth momentum is backed by robust domestic demand, strong FDI inflows, infrastructure spending, and supportive macroeconomic policies.”
India is poised to remain as the fastest growing large economy in the world. “In 2018, we expect India to grow at over 7.4 percent, Bangladesh 7.2 percent, Sri Lanka 4.6 percent and Bhutan 7.5 percent.”
He expressed the hope that increased lending for middle income countries will start flowing soon and single borrower limits revised upwards quickly.
Garg said the current capital increase package was due in 2015 but its delivery was delayed and delivered in 2018.
The next capital review, as agreed, is due in 2020, he said and urged the World Bank management to start preparation for the same well in time to deliver it on time.
Garg said the background paper for last annual meeting of the World Bank spelt out an ambition of $130 billion for the Bank and its affiliates but “we are now looking at a further lowered ambition of only $100 billion”.
Garg is currently on an official tour of Washington to attend the Spring Meetings of the IMF and the World Bank and other associated meetings.