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June 26, 1998


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US clears $ 543.2 m World Bank aid to AP

The United States, which has denied India World Bank loans totalling about $ 1.5 billion after India conducted nuclear tests, has allowed a credit of $ 543.2 million for Andhra Pradesh.

According to official sources, the US does not want to harm the interests of the poor in India and Pakistan. The Andhra Pradesh project contains measures intended to benefit this segment of society.

On Thursday, the World Bank executive board approved the loan, which would provide $ 830 million for health, education, nutrition and rural development in the poorest areas, while supporting ongoing reforms in the state's public expenditure, redirecting it to provide basic human needs.

With a population of 73 million, Andhra Pradesh is one of India's largest poor states. About 30 per cent of its people live below the poverty line. Many of the state's social indicators are below the national average.

The state's infant mortality rate is 73 per thousand live births while malnutrition among children below six years of age is estimated at about 30 per cent. The literacy rate is only 44 per cent, significantly lower than the national average. At 33 per cent, the female literacy rate is one of the country's lowest.

Specifically, the project will address primary education to help ensure that more children, especially from socially disadvantaged groups, complete a five-year primary education cycle in districts with a low level of literacy.

The goal is to increase the school enrolment rate of five to nine-year-old children to 90 per cent, to lower the overall drop-out rate from about 50 per cent to ten per cent, and raise achievement levels.

The project will benefit eight million children aged six to 11, especially girls from scheduled castes and scheduled tribes.

The project intends to upgrade primary health centres, provide training to health workers in Andhra Pradesh's poorest districts, and help integrate primary health centres with the first referral health system across the state, thereby benefiting the state's entire population.

The project will also support the state's communication campaigns on AIDS, tuberculosis, malaria, cataract blindness, leprosy, and maternal and child health, and nutrition.

It will support immunisation and nutritional services for pre-school children, pregnant and nursing women, and adolescent girls from deprived households, with a special focus on the poor and disadvantaged groups.

The project will provide services to more than 2.1 million people and cover about 25,000 ICDS centres mainly located in rural areas where more than 40 per cent of the population live below the poverty line.

World Bank president James Wolfenson has praised Chief Minister N Chandrababu Naidu. Under his leadership, India has demonstrated a strong commitment to reforms and has taken important steps to address pressing fiscal and sector difficulties, says World Bank country director, India, Edwin Lim.

As in most Indian states, development expenditure in Andhra Pradesh has been crowded out in the last 15 years by costly and poorly targeted subsidies, a rapidly-expanding civil service, and interest payments, says the World Bank.

Therefore, public spending on health, nutrition and education and the development and maintenance of essential irrigation and rural road networks has been falling far short of the state's needs. This was a major reason for the lower level of social development in the state, the high incidence of poverty and relatively slow rate of economic growth, it said.

Against this background, the project will provide resources to meet priority needs in human development and rural development, which will directly benefit the poor, it said.

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