The World Bank

WHAT IS THE WORLD BANK? 

The World Bank is a global monetary bank that lends and offers financial help to governments in lower to middle income nations to fund capital projects. The International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA), two out of the five World Bank Group’s (WBG) global organisations, are together called the World Bank. 

The World Bank is led by a president, 29 vice presidents as well as 25 executive directors. There are 189 and 174 member nations involved in the IBRD and IDA, respectively. The United States, Japan, China, Germany, and the United Kingdom get the most votes. The World Bank Group president has traditionally always been an American proposed by the United States, the WBG’s largest shareholder. 

The bank provides loans to developing countries in order to alleviate poverty.  It is involved in numerous international alliances and initiatives, as well as helping to combat climate change. The World Bank has several training departments and also collaborates with the Clean Air Initiative and the United Nations Development Programme. It is affiliated with the Open Data Initiative and holds an Open Knowledge Repository.

WHEN WAS THE WORLD BANK ESTABLISHED?

The World Bank was established in July 1994 at the Bretton Woods conference in New Hampshire, USA. At the same time, the International Monetary Fund (IMF) was created.  Under the International Bank for Reconstruction and Development, the World Bank was established to reconstruct post-World War II Europe.

Both the World Bank and the IMF are headquartered in Washington, D.C., in close collaboration.  The IMF and the World Bank were established in the Gold Room of the Mount Washington Hotel.

The U.S. and the U.K. were the 2 most influential countries present at the Bretton Woods Conference, and so dominated the proceedings, despite the presence of several other countries. The World Bank was established with the primary objective of granting temporary financial help or loans to low earning nations that were not able to get funds. It may also offer loans and seek policy changes from beneficiaries.

FUNCTIONS OF THE WORLD BANK

Currently, the World Bank serves an essential responsibility of granting loans to member nations for development projects, particularly to developing and underdeveloped countries. The bank offers loans for a wide range of development projects with terms ranging from 5 to 20 years.

The functions of the World Bank are listed below.

• The World Bank determines the amount of loan service, interest rate, and terms and conditions.
• On its own assurance, the bank lends to private investors who belong to the members, but the private investors must first obtain authorisation from their own country. It levies service fees ranging from 1% to 2%.
• The debtor country must pay back the loan in reserve currencies or the currencies in which it was granted.
• In most cases, the bank gives loans for a specific project that has been officially filed to the bank by the member nation. In addition, it offers member countries financial, economic, and technical guidance on any of their initiatives.
• It assists conflicted countries by providing them with finances for reconstruction. The Bank is able to provide financial help or loan to its member countries up to 20% of its share in paid-up capital form. 
• They have a wealth of experience and financial powers and utilise these assets to assist underdeveloped countries in growing their economies, decreasing poverty, and improving their standard of living. It aids developing countries by providing development finances.
• It lends money to governments for drinking and irrigation, farming, supply of water, healthcare, and education.
• It encourages overseas investment by insuring loans to other institutions.
• As a result, it promotes the growth of industries in developing nations through different economic changes.

WORLD BANK’S LOAN TO INDIA

The World Bank loaned to India a number of times in the past. India has been funded by the World Bank for several projects of poverty reduction, growth in infrastructure, healthcare, rural development etc. IDA fundings are among the most advantageous overseas loans for the Indian government, and they are primarily employed in social welfare initiatives that help to the attainment of the millennium developmental objectives. 

The very first World Bank loan to India was for US dollars 86 billion in 1948. As of March 2011, IBRD’s debt disbursed and due was US dollars 11.28 billion, whereas IDA’s was US dollars 27 billion.

AIDING INDIA’S HEALTHCARE INDUSTRY IN COVID-19

The World Bank is helping to meet the country’s urgent health requirements through a $1 billion COVID-19 Emergency Response and Health System Preparedness Project. And over 50% of this fund went to help states strengthen their healthcare facilities, purchase key medical supplies like testing equipment and kits, personal protective equipment (PPE), gloves, masks, oxygen cylinders etc. and insure 2.2 million forefront health care workers.

ASSISTING IN THE STABILISATION OF THE ECONOMY.

It is helping in the stabilisation of the economy via the $750 million Emergency Response Program for Micro, Small, and Medium Businesses, providing help for 1.5 million small enterprises, which are the foundation of the Indian economy. This initiative is assisting MSMEs with liquidity, mitigating possible solvency issues and mass unemployment, and laying the groundwork for a better MSME finance ecosystem as the recovery starts.

So far, the programme has assisted over 4 million eligible MSMEs in obtaining liquidity and credit.

India faces tremendous obstacles in its recovery while the pandemic continues. In these efforts, the World Bank is dedicated to cooperating effectively with the Indian government.

CONCLUSION 

The very first loan of the Bank was to France in 1947, after a sluggish start. Its aim in the 1970s was to provide financial help to developing countries, but it veered away from that purpose in the 1980s. It has incorporated NGOs and environmental conservation groups in its lending portfolio for the past 30 years. Its lending approach is driven by the Millennium Development Goals, as well as environmental and social safeguards.

The World Bank has seen criticism for encouraging inflation and hampering economic growth. It has also been chastised for the way it is run. There have been substantial protests opposing the bank. The bank was also criticised for its approach to the Covid-19 epidemic.