World Bank and India relationship over the years..

Nagesh Prabhu author of Reflective Shadows: Political Economy of World Bank Lending to India, has a post on the topic.

The focus is usually on IMF but World Bank has been as  big a partner in India’s journey:

It is undeniable that India has been one of the main partners in the world economic operations and the World Bank (also known as the Bank). America, being the largest contributor to the funds of the Bank, has enormous influence in the functioning of the Bretton Woods Institutions (BWIs). The Bank has played a major role in transforming the Indian economy and the country’s emergence as a credit worthy nation. Like India-US relations, the journey of India and the Bank also had its ups and downs.

It is noted that the current situation evolved from skepticism to friendship with many a blips in between. Today, the relationship has matured, but the experience is worth recording. Both India and the Bank share the fundamental goal of achieving poverty reduction marked by sustainable growth. India’s relationship with the Bank has undergone different phases with unmistakable imprints of the world of political pulls and pressures.

The relationship strained in 1966 after the Indian economic crisis. The Bank’s diminished role after that lingered briefly in memory. But the timely aid from the Bank (under President Robert McNamara) soon revived and increased many-folds. Though this phase did last longer, mutual trust got some beating on different occasions. While the Indian government accepted the need for reform, suggested by economist Bernard R. Bell, the Bank’s pressure caused resentment in the rank and file of the Indian polity. During this period, the Indian political scenario was also undergoing many upheavals. That had its own reflections on the Banks policies towards India.

The Bank’s presence in every sector was quite visible as well as the achievements. It introduced the structural adjustment policy in India in 1981 when loans were sought from BWIs owing to the second oil crisis and severe droughts across the country.


While during the seventies and eighties, the Bank paid more emphasis on project and sector lending, after the nineties the Bank was focused more on the macro economics of India. After setting right a few macro-economic policies, in the mid-1990s, the Bank launched its new assistance strategy – policy-based lending to sub-national governments – to set right lopsided development across states with the national interest. The Bank loans triggered reforms in some reform-oriented states but not to the extent envisaged.

It is really something to see how much intervention Bretton Woods institutions have done in several economies over the years..

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