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Interviews | Parmesh Shah, the World Bank’s lead rural development specialist for South Asia speaks to Parakram Rautela
Parmesh Shah, the World Bank’s lead rural development specialist for South Asia speaks to Parakram Rautela

Parmesh Shah, the World Bank’s lead rural development specialist for South Asia speaks to Parakram Rautela

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published Published on Mar 11, 2014   modified Modified on Mar 11, 2014
-The Times of India blog


Between 2011 and 2017, the World Bank will spend $4 billion on rural development in India. Parmesh Shah, the bank's lead rural development specialist for South Asia, talks to Parakram Rautela about how that money is going to be spent and how they're working towards their ultimate aim - a world free of poverty

Q. It's one thing to say that you want to eradicate world poverty - the World Bank's tagline is "Working for a world free of poverty" - but how exactly do you do that?

A. The two things we try and do is remove extreme poverty, and promote shared growth. Removing extreme poverty could include explaining thrift to our poorest communities - the poor very often don't understand the concept of debt, so income very often goes towards paying off just the interest on a loan. Which is why one of the things we've done is introduce bank mitras (friends) into these communities, who then counsel people on their debt. Shared growth could involve programmes like pensions for widows, and bima yojanas or health insurance.

The farmer sells cauliflower for Rs 5 a kg, which the urban consumer buys for Rs 35 a kg - the basic idea is to put a little more of that Rs 35 into the farmer's pocket. So, for example, if you built a small cold storage in his village and stored his cauliflower for a week, he would get Rs 12 a kg for it. But you've got to keep finding markets for his produce, because that's what fetches him more money.

Q. Can you give me an example of where this has worked well?

A. In Bihar, we worked with self-help groups. The first thing we did was get rid of their high-cost debt. By doing that, we were able to save Rs 100 crore. That money was then revolved within the groups - members borrow money at 12% interest from the groups themselves - turning it into Rs 400 crore. With that money, we then focused on paddy cultivation and increased yields by increasing the gap between two rows of saplings which allows more growth.

The following years we looked at vegetable cultivation, and then livestock and poultry rearing. The same Keggs eggs you buy in supermarkets come from some of these farmers. And finally, we offered young boys who wanted it vocational and skills training.

Q. And another where it hasn't?

A. We had trouble developing irrigation around litchi cultivation in Bihar. The cultivation wasn't a problem but finding a market for the fruit was.

Q. I remember speaking to a farmer in Punjab who told me that to qualify for a loan as a farmer, you basically need to convince the bank that you don't actually need that loan... How right was the farmer?

A. I can believe him. Rural banking does need a complete overhaul in this country. Unfortunately, the people who're posted to rural banks tend to think of them as punishment postings. And it is difficult for people to understand what loans they can avail of. It's one reason why our bank mitras are so popular. The mitras are paid for by the community but after about three years, the banks all say they will pay their salaries.

Q. The World Bank will, in the six years between 2011 and 2017, spend $4 billion in India. Where is that money, broadly speaking, going to go?

A. Towards irrigation, watershed development in rain-fed areas, and rural livelihoods development.

Q. How much is corruption an issue in India?

A. It can be in the beginning. Which is why we don't invest money right at the very start. What we try and build is social capital and invest in processes that bring about change. The governments that stick with the process for two to three years will reap the benefits.

Q. How well does the government of India work with the World Bank?

A. It depends on the bureaucrat who is in charge of implementing a programme, and how much change he wishes to bring about. Andhra Pradesh for example has been able to raise $8 bn in 10 years, all of it from commercial banks. They're now raising $2 bn annually - once you do that, every government wants to do the same.

Q. In this economy, there is the worry that the World Bank will have lesser funds to disburse. How much does that affect your programmes?

A. It hasn't so far but yes, it might.

Q. The World Bank has also begun to concentrate on urban programmes, believing that that is where the most jobs will be created. How much does that affect rural development programmes?

A. It actually makes sense if you look at the figures. For example, 60% of Brazil's poor are urban. In South Africa, the figure is 50%. Plus, a majority of the rural poor are found in urban areas - that's where they go to find jobs. So, obviously, if the poor are going to be urban, then we will have to go there too. In a sense we're staying ahead of the problem by telling the people who're going to make the shift, from rural areas to urban centres, how best they can do it.

The Times of India, 10 March, 2014, http://blogs.timesofindia.indiatimes.com/foot-soldier/entr
y/rural_banking_needs_a_complete_overhaul_in_this_country

Image Courtesy: The Times of India


The Times of India, 10 March, 2014, http://blogs.timesofindia.indiatimes.com/foot-soldier/entry/rural_banking_needs_a_complete_overhaul_in_this_country


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