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As India grows too rich for the World Bank, other philanthropic sources are needed

According to a presentation by Cornell University Economics Professor Ravi Kanbur, India is only a few years away from becoming ineligible to receive funds from the World Bank’s International Development Association– the bank’s fund for the poorest countries. In essence, India’s per capita income has risen above the maximum threshold to receive money from the IDA. This factor by itself is a great milestone as it shows that India has reached a point in its economic development where it is no longer considered one of the world’s most impoverished countries. Moreover, India will continue to have access to World Bank fund via another facility called the International Bank for Reconstruction and Development, who targets middle income countries. The primary difference between the IDA and IBRD is that the former relies much more heavily on grants and the latter on loans.

However, this transition from a low income country to a middle income one by World Bank definitions also raises some concerns. In particular, Kanbur highlights in his presentation how per capita income has grown unequally across the country and specific regions of the nation continue to live in impoverished conditions. India continues to have the largest number of people living in poverty in the entire world. The current eligibility requirements for the IDA, however, does not allow for such intra-country analysis and so regions/states within the country that still need substantial aid will no longer be able to appeal to the IDA.

This forthcoming transition then begs the question over who will be able to fill the void that will be generated. While alternative international aid facilities are an option, one source of optimism may come from the private sector. Private philanthropy is still a nascent world within India, but recent studies have suggested that it is one with rapid growth. This past Wednesday, the third annual Indian Philanthropy Forum gathered over 200 government representatives, philanthropists, think tanks and social sector experts to discuss how philanthropy can be used to help develop India [Livemint].

In a recent Bain & Company report, India showed substantial growth in private giving, particularly from corporations and foundations. The report did highlight that individual giving still lags behind other countries. Matthew Bishop, New York editor-in-chief of The Economist, stated that India has the fastest growing population of high net worth individuals in Asia, and that it is critical that this new wealth is directed strategically into philanthropic efforts:

“It’s not how much you give away, but how much difference does your giving make in terms of moving the needle and solving the world’s problems,” he said at the forum. “That requires taking risks and being innovative.”

The development of a sophisticated philanthropic community within India is still some years away. However, with the macro shifts in aid and funding that will occur from the World Bank, it cannot come soon enough.


Vinay Ganti

Vinay is in his fourth year of a four year JD/MBA program at the New York University School of Law and the Leonard B. Stern School of Business in New York City. Prior to coming to New York, Vinay graduated from Brown University, worked in technology transfer as a consultant and also founded a financial literacy program for underprivileged youth. Currently, Vinay is an InSITE Fellow for Venture Capital and Innovation. His primary interests are in the social venture capital investing space and its role in transforming micro-businesses into globally competitive SMEs. After school, Vinay wants to create novel ways to provide clean energy & water to the world’s poor.

2 Comments on “As India grows too rich for the World Bank, other philanthropic sources are needed”

  • Santhosh Ramdoss
    Santhosh Ramdoss
    22 March, 2012, 20:13

    This puts in perspective the recent controversy over UK Aid to India. Big bilateral donors will start seeing push back on aid to India, which is perceived no longer as a poor country – which is fundamentally wrong. That being said, getting rich Indians to give more would obviously be a step in the right direction

  • 30 March, 2012, 14:24

    This is a good news for every body, it’s just a great start for the Republic of India in getting more progressive in different factors… You can visit our website to know more about Paul Wilson Aesthetics