PUCL Bulletin, March 2004

Response from the World Bank

The World Bank (New Delhi Office)
International Bank for Reconstruction and Development
International Development Association
70, Lodi Estate
New Delhi – 110 003

K.G. Kannabiran
National President, People’s Union for Civil Liberties
300, East Marredpally, Secunderabad,
Hyderabad, Andhra Pradesh 500 023

Dear Kannabiran,

Subject: Second Andhra Pradesh Economic Reform Loan/Credit

Thank you for your letter of December 15, 2003, addressed to Wolfensohn.
Under his leadership, the World Bank has actively sought the engagement and participation of various stakeholders in the shared challenge of poverty reduction, and we greatly appreciate learning your views on the situation in Andhra Pradesh as well as on the Bank’s efforts to contribute to development in this key state.

We are also deeply concerned about severe poverty and inequality in the state, and cycles of violence, wherever it may spring from. We commend your dedication to human rights and the rule of law, and join you in opposing and condemning all forms of violence. Finally, we agree with you that poverty reduction and development, especially when it promotes the participation of the poor, is the best means to address these pressing issues.
Indeed, poverty reduction and development are the main objectives of the reform programme being implemented by the Government of Andhra Pradesh (GoAP), and the shared commitment to these goals is the basis for strong Bank support for both the reform programme as well as the wider development programme in the state.

Andhra Pradesh was one of the earliest reforming states to receive Bank support, aimed at the eradication of poverty. For example, the Velugu Programme, which is supported by the Bank’s Andhra Pradesh Rural Poverty Reduction Project (February 2002), promotes increasing incomes of the poor and enhances social protection by increasing poor people’s access to social programmes - notably education and health, where we support the aim of the GoAP to expand its expenditures as a key element of its reform programme.

Reforms and broader development efforts are beginning to show results, as reflected in improving social indicators and strong economic performance in the 1990s. For example, the share of the population living in poverty declined from 30.4 percent in 1990 to 21.6 percent in 2000, Over the same period, the literacy rate (among 15 to 24 year olds) rose by 31.5 percent, access to safe water expanded by 42.6 percent, and the proportion of births attended by a health professional increased by 59.2 percent. Overall economic performance has also been robust. Real GSDP growth averaged 5.9 percent in Andhra Pradesh over the last five years, compared to the national average of 5.4 percent.

Although this progress is encouraging, major effort is needed to accelerate poverty reduction, reach the Millennium Development Goals and quicken growth. The Second Andhra Pradesh Economic Reform Loan/Credit (APERL2) currently under preparation is an important part of the Bank and DFID’s contribution to this effort. As described in the project documents, the proposed assistance is in support of an ongoing reform programme broadly aimed at restoring fiscal stability, refocusing public expenditure towards faster poverty reduction, improving service delivery, and sharpening accountability. The programme also emphasizes and supports efforts to mitigate adverse impacts stemming from the implementation of reforms, for example by putting in place the VRS and social safety net scheme to compensate employees for the loss of jobs and assist them in finding alternative employment. Restructuring inefficient public enterprises has helped liberate resources to be spent on better uses, including services for the poor.

We believe that the progress made to date in addressing the grinding poverty and inequality in Andhra Pradesh, the commitment of the state government to implementing reforms that will accelerate poverty reduction and development, and the immense potential of this key state, warrant the continued strong support and engagement of the World Bank.

Thank you again for your letter and for giving us the opportunity to respond to your concerns. -- Michael F. Carter, Country Director, India, February 5, 2004


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