Statement by India to the 27th Session of IFAD's Governing Council

I begin by expressing my appreciation of H.E. Bungaran Saragih for having steered so ably the deliberations of the Governing Council during the past two years and welcoming H. E. Guido Mantega to the Chair. We greatly value the Chair’s guidance in our collective efforts in pursuing IFAD’s objectives.

The deliberations of the Governing Council have truly reflected emerging development issues and concerns. By launching projects over the past 27 years valued at $ 23 billion, in 115 countries, benefiting an estimated 250 million people, IFAD has emerged as a premier financial institution in the sphere of agriculture and rural development. India has consistently supported IFAD’s growth and has been one of its largest beneficiaries. We have actively contributed to create an excellent repertoire of best practices and approaches to core issues of poverty and deprivation. In the light of experience gained, IFAD must now aim to extend and strengthen its role and seek to influence the other players involved in the battle against poverty.

The theme for this year’s interactive discussion on trade and rural development is an important opportunity for engaging members in meaningful dialogue towards creating a consensus on international cooperation, especially in world trade, and in highlighting some of the priority areas that must be addressed to eliminate extreme poverty. In recent years, inequalities in the world have deepened and the playing field has become less even. Millennium Development Goal No.8 relating to global partnership for development emphasizes an open trading system that is non-discriminatory and rule-based. The Monterrey Consensus and Doha Declaration recognize that trade has significant bearing on poverty reduction and it is generally accepted that reduction of agricultural protection by developed countries would provide opportunities for producers in the developing world. We need to take this debate forward so that the 800 million poor people of the world – who comprise IFAD’s core constituency – may be effectively enabled to overcome their poverty.

Mr. Chairman, global poverty is predominantly a rural phenomenon. The focus of my government’s efforts in rural poverty alleviation has been on providing access to resources; introducing appropriate technologies and best practices in the agricultural sector; facilitating enhanced access to markets; and undertaking productive works such as rural roads, watershed development, rejuvenation of tanks, afforestation, irrigation and drainage, and ensuring maintenance of infrastructure. We believe that a credible poverty alleviation strategy must necessarily address the need to enhance access of the rural poor to markets and to eliminate bottlenecks in agricultural marketing and trade. Several steps in this direction have been initiated in recent years. A model Act on agricultural marketing has been formulated to promote direct marketing, contract farming and development of agricultural markets in private and co-operative sectors. A bank-financed scheme for construction of rural warehouses by individuals, groups of farmers and co-operatives is being implemented to avoid wastage and deterioration of produce. Agricultural markets are being connected through the internet to facilitate speedy collection and dissemination of weather and price-related information. And we have recently launched a 24-hour help-line for farmers to seek technical advice and support.

Timely availability of credit to farmers and the rural poor at affordable rates is needed not only to boost agricultural investment but also to protect them from high rates of interest charged in the informal sector. My government has recently taken several measures to achieve this. The rate of interest for crop loans by public sector banks has been reduced significantly; collateral security has been made proportionate to the value of loans, and co-operative credit is being revitalized. A novel scheme for Farm Income Insurance has been introduced and an Agricultural Infrastructure and Credit Fund has been created to provide credit at competitive rates.

Apart from the various growth-oriented strategies that impact poverty through ‘trickle-down’, a targeted approach to eliminate poverty has been an important feature of our developmental planning. These programmes generally fall into two categories: wage employment generation and asset creation. The attack on poverty through Self-Help Groups has achieved remarkable success. Multilateral agencies like IFAD and the World Bank have played a catalytic role in institutionalizing the community-driven approach to development and in deepening the SHG movement.

I am glad inform you that our efforts have shown good results. The incidence of poverty expressed as the percentage of people below the poverty line has witnessed a singular decline from 55% in 1973-74 to 24.4% in 2000-2001. We aim to reduce the poverty ratio to 19.3% by 2007 and are comfortably placed to meet the Millennium Development Goal of halving poverty by 2015.

It is estimated that an additional $ 50 billion as ODA is needed each year, at the global level, if the Millennium Development Goals are to be achieved by 2015. We are pleased that the Monterrey Consensus recognized the need for substantial increases in ODA and debt relief, together with reforms to strengthen international monetary, financial and trading systems. The World Summit on Sustainable Development reiterated this commitment. Even though an increasing number of developing countries have implemented major reforms in economic and political governance and the financial situation of donor countries has improved, net ODA to developing countries has declined. It is matter of concern that despite the realization that poverty is largely concentrated in the agricultural and rural sector, ODA to this sector has been declining and at present only 12% of ODA is targeted at this critical area. We once again urge the developed world to honour their commitment to raising of the level of ODA to 0.7% of their GNP.

We are disappointed at the outcome of the Consultation on the Sixth Replenishment of IFAD’s resources. We had hoped that the expressions of concern and intent of developed countries at various fora would be reflected in a significantly expanded portfolio of IFAD. India had expressed its support for the Organization and satisfaction with its programmes by pledging a 25% increase in our contribution, from $ 12 million to $ 15 million. Although many countries did indicate substantial increases in their contributions, the overall level of the Sixth Replenishment does not meet our expectations and the lending level shows little change from that of the previous Replenishment period.

Several important policy issues emerged from the Replenishment Consultation, which were deliberated on during the preceding year. The exceptionally heavy workload of 2003 resulted in the formulation of a new evaluation policy and launching of an independent and external evaluation of IFAD’s activities, introduction of a Performance Based Allocation System, a pilot programme for strengthening of IFAD’s field presence and a new policy on grant financing. All these measures were introduced after comprehensive discussion with the membership and we hope that IFAD, as an organization, will benefit in the long run from these measures. We would like to caution, however, against IFAD attempting to mirror the larger IFIs and replicating their experience without reinforcing its own unique characteristics.

We have repeatedly applauded the unique nature of IFAD: its emphasis on innovation and beneficiary participation, and its role in advocacy and in providing replicable models. IFAD is also unique in that around 20% of its resources are raised from developing countries, who play a significant role in the organization at the policy level. We would like to see this role safeguarded and strengthened in the Board as well as in the staff of the organization.

IFAD projects in India have addressed some of the most marginalized communities, in the most difficult and remote geographical areas. Although small in size, the impact of IFAD projects is significant and they provide models in our development planning at national and state levels. Mr. Chairman, we understand that it has been decided to encourage IFAD Directors to visit projects in the field. We would be happy to receive them in India as such visits will demonstrate the impact of the organization and enrich the deliberations of the Board.

Finally, Mr. Chairman, we expect IFAD to be a significant partner in our continuing endeavour to fight poverty, hunger, and illiteracy and to build further on the successes we have achieved. On my Government’s behalf, we assure our full cooperation and support to IFAD.