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Statement by India to the Twenty-Eighth Session of the IFAD Governing Council

Mr Chairperson,
Mr President
Distinguished Governors,
Ladies and Gentlemen,

I begin by welcoming Mr. Nelson Machado to the Chair. We would greatly value the Chair's guidance in our collective efforts in pursuing IFAD objectives.

Over the past 25 years, IFAD has acquired deep and valuable experience in the field of agriculture and rural development. Indeed, it is the only multilateral organization which exclusively targets the rural poor. However, given the small size of its programme portfolio—around $ 400 million per year—its direct impact on alleviating poverty and achieving the MDGs is marginal. IFAD must, therefore, capitalize on its unique niche so as to leverage results that are larger than the finances invested by the organization. In order to justify its existence and to survive in the future IFAD must, therefore, do things differently and do them better. Innovation, demonstration of new models, uspscaling and replicability lie at the core of IFAD's strategic framework. By experimenting and taking risk, by focusing on the poorest and most marginalized, by targeting geographically remote and difficult areas, IFAD can play a significant role in the global development scenario and make an impact that is not limited by the size of its financial portfolio.

IFAD must position itself as a development institution and not as a financial institution. By modeling itself on large IFIs it will lose its comparative advantage and its very raison d' etre may be in question. IFAD must adopt approaches based on its uniqueness and specificity, and it must be more effective in ensuring delivery to its target group. Historically, developing countries have played an important role in IFAD, both in terms of financial contributions and political influence. The policies of the organization must reflect the needs and concerns of developing countries and IFAD should establish itself as a credible voice of the poor.

Mr. Chairman, global extreme poverty is mostly a rural phenomenon. My government has made it its mission to eliminate rural poverty in the shortest possible period. We believe that one of our greatest assets are our human resources, our people. Empowering the people, especially the poor, and facilitating their full participation in the growth process through gainful employment will enhance their welfare. A keystone of the economic policy of the Government of India is assuring 100 days employment to each family.

The Government of India has recently taken several measures in its assault on poverty and unemployment. We recognize that micro-finance initiatives are cost effective way to take the banking system to the poor. Under the Self Help Group (SHG) – bank linkage program, 167 million families had benefited through 1.08 million SHGs financed by banks. Agriculture and the rural economy have been recognized to be critical to sustain our overall annual growth of 7-8 percent. A massive scheme to repair, renovate and restore all water bodies that are directly linked to agriculture has been started. Doubling agricultural credit in three years, providing farm and livestock insurance, improving agricultural product markets and promoting agri-businesses are some of the major initiatives in this sector.

I am glad to share with you that our efforts have shown good results. The incidence of poverty expressed as a percentage of people below the poverty line has witnessed a singular decline from 55% in 1973-74 to 26.1 % in 1999-2000. We aim to reduce the poverty ratio to19.3% by 2007 and are comfortably placed to meet the Millennium Development Goal of halving the poverty by 2015.

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 are expected to provide models in our development planning at national and state levels. Experience has shown that poverty alleviation programmes work successfully when they are designed and implemented in consultation with, and with full participation of the beneficiaries. Since most of IFAD projects are in the nature of community assets development or livelihood support, IFAD should, as a matter of policy, insist on involvement of NGOs and community organizations in the development and implementation of projects supported by it. Our experience in the IFAD supported Livelihoods Security project for the Earthquake affected rural households in Gujarat and implemented by an NGO-the Self Employed Women's Association (SEWA) only confirms this belief. We are happy that Board Directors got the opportunity to visit this project and experience the lives that very poor families lead in Indian villages. We hope that this will give them a greater sensitivity to the core issues of poverty and will better inform their outlook on IFAD's work.

We applaud the response of donors across the world to the recent tsunami in our region, but once again we would urge the developed world as a whole to keep their commitment to contribute 0.7% of their GNP as ODA so that hunger and poverty everywhere is eliminated. It is matter of concern that despite the realization that poverty is largely concentrated in the agricultural and rural sector, ODA to this sector in particular has been declining.

The Consultation for Sixth Replenishment of IFAD's resources did not meet our expectations. Although many countries did indicate substantial increases in their contributions, the overall level of Sixth Replenishment is well short of the target and the lending level shows little change over that of the previous replenishment period. In order to increase the scope and span of its activities, IFAD must generate more resources. Although the proposed level of $ 500 million in 2005 is an improvement over past years, and an acknowledgement of our persistent demand, IFAD should be doing much more. By covering all eligible recipient countries only in a cycle of about 8 years, IFAD cannot expect to be a significant partner in the development dialogue. We hope the Seventh replenishment will bring a major increase in IFAD's resource level; but we believe that even with the existing resources IFAD can prudently undertake a much larger volume of work. Resources available with IFAD need to be invested in development projects in poor countries and not left in low return securities.

May I also suggest that IFAD should avail of the investment and business opportunities presented by developing countries? By out-sourcing selected administrative functions using IT enabled services, by investing its funds in secure instruments and by utilizing the services of developing country experts, there will be significant efficiency gains for IFAD. Furthermore, IFAD can productively deploy a larger amount of its financial resources in the emerging capital markets in Asia and other developing countries.

Finally, Mr. Chairman, we look forward to a productive year ahead and a successful Replenishment, and on behalf of my Government, I assure our full cooperation and support to the aspirations and activities of IFAD.

Thank you.