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World Bank Group: Institutions, Functions, Headquarter, President, India-World Bank And Questions For UPSC
The World Bank is an International Financial Institution to provide financial aid to developing countries. It was established through the 1944 Bretton Woods Conference in December 1945. The conference is also known as the United Nations Monetary and Financial Conferences. The World Bank and IMF both were created at the same time through the same conference in 1944.
The purpose of its creation is to provide grants and loans to the governments of Low income countries for developmental purposes to harness capital projects. Topics like International Organisations are often asked in the Economy Section of General Studies in papers like UPSC. So in this Article you will get to learn about various aspects of the World Bank right from its Origin to present scenario.
Institutions of The World Bank Group
The World Bank was formed in the Bretton Woods conference in 1944. It is a group of Five International organisations in the partnership of 189 countries. These all work collectively towards development and eradicating poverty in member countries. The World Bank is a collective name of two main institutions: The International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). These 5 developmental organisations under the World Banks are Following:
- IBRD : the International Bank for Reconstruction and Development was established in 1944 to provide loans, Grants and Credits for capital development. Among its 189 member countries India is also a member of this group.
- IDA : The International Development Association was established in 1960, and provides low or no interest loans to poor countries. Among its 174 member countries, India is also a member of this group.
- IFC : The International Finance Corporation was established in 1956 with a purpose of providing advisory and asset management services to foster private sector investment in LDC. India is also a member of IFC..
- MIGA : The Multilateral Guarantee Agency was established in 1988 to offer political risk insurance and credit enhancement guarantees. India is also a member of this group.
- ICSID : The International Centre for the Settlement of Investment Disputes was established in 1966 and plays the key role of a Dispute settlement institution. India is not a member of this group.
Administrative Structure Of World Bank Group
The administrative structure of World Bank Group comprises 1 President, 29 Vice Presidents and 25 Executive Directors. The President of the World Bank is traditionally a person who belongs to America. Among its member Nations, the U.S.A, Japan, China, Germany and the U.K. enjoys the most voting power whereas India comes on 7th position in terms of voting powers in IBRD & IDA and at 6th and 9th position in IFC and MIGA.
World Bank Group Headquarters: Washington DC, United States of America.
World Bank President : David Malpass from 2019 to Present.
Chief Economist : Carmen Reinhart
MD and CEO of World Bank Group: Anshula Kant (Roorkee) from 2019 to Present.
World Bank Motto : Working For A World Free Of Poverty.
The World bank group financed its first loan to France in 1947 and since the 1970s it has started to provide financial aid to developing countries.
Functions of World Bank Group
Following are the functions of the World Bank Group.
- The main function of the WBG is to provide long term financial assistance to developmental projects like irrigation, agriculture, water supply, health and education.
- It stands for war devastating countries as the key source of financial aid for reconstruction activities.
- It also provides economic, monetary and technical advice to its member countries.
India And World Bank Group
Considering the relations of India and the World Bank Group then it has been one of the 44 signatories to the agreement of formation of IBRD or World Bank and IMF in the Bretton Woods Conference. India became a member of IFC, IDA and MIGA in 1956, 1960 and 1994 respectively. Here let's have a look at the India-World Bank Relations below.
- The First Lending by IBRD to India was done in 1949 to Indian Railways.
- In the 1960s after the United States, the World Bank Group emerged as the largest source of official long term finance.
- In 1961 IDA lended money to India for a Road construction project.
- During the 1960s and 1970s with three-fourth of WB lendings through IDA, India was the largest recipient of IDA funds.
- In 1980 when China joined the WB, the economic conditions of African countries along with India started to worsen with a sharp decline in IDA funds.
- After the 1991 macro-economic crisis, the lending portfolio changed sharply. After that India became one of the last important WB borrowers to partake of structural adjustment lending, which supported policy reforms in finance, taxation, and the investment and trade regime.
- Currently India comes under the category of Blend Country which means it is in transitional phase from lower middle-income to middle-income and now creditworthy for lending from both IDA and IBRD.
- Between 2015 to 2018 India became the largest client of IBRD with lending of $10.2 billion.
- The World Bank Group has also approved a $25-30 billion commitment plan for India for the period 2019-22.
Questions On World Bank
Who provides funds to the World Bank?
The member countries with capital subscriptions provide funds to the World Bank. Country with the highest share of funds enjoys the power of Vote. Currently the U.S. enjoys 15.78 % of the votes followed by Japan, China, Germany, UK and France.
How many countries are members of the World Banks?
Total 189 countries are members of the World Bank.
Which institute of the world bank is to cover political risks such as World War?
The Multilateral Guarantee Agency (MIGA) covers political risks at the time of crisis.
Which institute of the World Bank provides Low or No-Interest loans to low income countries?
The International Development Association provides Low or No-Interest loans to low-income countries.
How can a country become a member of the World Bank Group?
To become a member of the WBG a country must first join the International Monetary Fund as per the IBRD articles of Agreement. Memberships of IDA and MIGA are subject to the membership of IBRD.
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