IFC committed to making growth inclusive in India
Nearly 40% of India’s population lives on less than $1 per day. Despite strong economic growth in recent years, poverty remains widespread in India and a large proportion of the population continues to be excluded from the mainstream financial sector. Rapid growth is improving quality of life, but rural areas are lagging and infrastructure is insufficient to meet rising demand. The challenge in India is one of making a difference to the lives of those who are not yet seeing the benefits of growth. IFC South Asia Director, Paolo M. Martelli, struck by the stark economic contrasts in the country, emphasizes the need for connecting India's strong growth and favourable demographics to the need for inclusive growth.
IFC's strategic focus in India, therefore, is along the lines of improving rural productivity though a focus on agribusiness and linkage programs, facilitating access to services in financially underserved rural and urban markets, in addition to promoting private investment in infrastructure, providing advice on specific public private partnership projects, and supporting private sector solutions for climate change. Affordable housing for economically less privileged would be a key area of focus for example, says Martelli.
To support infrastructure development in India and across South Asia, IFC's experience of public-private partnerships will help to fund and offer advisory support for infrastructure development in the region. IFC's experience in advising governments on public-private partnership transactions in key infrastructure sectors, especially the road transport, airport, and port sectors was acknowledged when Andhra Pradesh state government recently appointed IFC as a lead advisory for PPP projects.
In support of the inclusion agenda, IFC has reinforced its microfinance focus in India by supporting a range of market players using a variety of financial instruments. While in recent years, IFC invested in collective investment vehicles such as Lok Capital that in turn supports the emergence and the growth of microfinance institutions, in FY07, a small investment was made in FINO, a start-up technology service provider offering end-to-end IT solutions that helps banks reach underserved rural banking markets in India, to address a large unmet demand in rural India. IFC's more recent investment in Aavishkaar Goodwell will facilitate the launch of up to 60 greenfield microfinance organizations in India. The focus on agribusiness has resulted in recent projects involving small companies include ABC Coffee, and Suguna Poultry, etc. Rural development initiatives are important priorities.
The Advisory team works closely with the World Bank to conduct investment climate assessments and to advise government agencies on Competition Policy and related areas in India’s case. In India, IFC’s Advisory portfolio currently comprises of about 40 active projects. These projects include Micro, Small and Medium Enterprises, Grassroots/Rural Business, Infrastructure, Environment, Access to Finance and Business Enabling Environment.
In addition to the Cairn Linkages Program focused on local supplier development, child and maternal healthcare and the dairy development project in Rajasthan, IFC has provided more than 3000 small and marginal farmers in Jharkhand with capacity building services and better income opportunities through a project with the CSR arm of Usha Martin, an IFC portfolio client.
IFC has partnered with Tata tea gardens to increase the incomes of workers by introducing non-tea and other agro-based innovative activities in North East India. The program has benefited over 1000 tea workers across 11 tea gardens by enhancing their incomes. The plantation business has been structured into a new company with 20% equity participation of workers.
Through IFC's support, Gujarat based Self Employed Women's Association, has been able to extend many of its services to their rural women members. This includes a managers’ training school that has trained 80,000 grassroots cadre in technical and management skills, and the SEWA Trade Facilitation Centre which has provided market access and secure livelihoods for their 15,000 members. IFC is also helping SEWA with the restructuring of their financial and accounting systems.
