S.P. MANDALI’S

R. A PODAR COLLEGE OF COMMERCE AND ECONOMICS

MATUNGA, MUMBAI-400 019.

A PROJECT REPORT ON

IFC AND INDIA – ITS ROLE

SUBMITTED BY

Hitesh Lalji Solanki

Roll No-112

M.COM (SEM. III): International Marketing

SUBMITTED TO

UNIVERSITY OF MUMBAI

2014-2015

PROJECT GUIDE

Prof. Mrs. Tejashree patankar

1

S.P. MANDALI’S

R. A PODAR COLLEGE OF COMMERCE AND ECONOMICS

MATUNGA, MUMBAI-400 019.

CERTIFICATE

This is to certify that Mr.Hitesh lalji solanki of M.Com (Business Management) Semester

III (2014-2015) has successfully completed the project on international marketing under

the guidance of Prof. Mrs. Tejashree patankar

Project Guide/Internal Examiner External Examiner

Prof. Dr. ( M rs.) Tejashree patankar Prof.________________________

Dr. (Mrs.) Vinita Pimpale Dr. (Mrs.) ShobanaVasudevan

Course Co-ordinator Principal

Date- 8th Oct 2014 Seal of the college

2

ACKNOWLEDGEMENT

I acknowledge the valuable assistance provided by S. P Mandali’s R. A.

Podar College of Commerce & Economics, for two year degree course in

M.Com.

I specially thank the Principal Dr. (Mrs.) Shobana Vasudevan for allowing

us to use the facilities such as Library, Computer Laboratory, internet etc.

I thank my guide Prof. Ms. Tejashree patankar who has given her valuable

time, knowledge and guidance to complete the project successfully in time.

I sincerely thank the M.Com Co-ordinator for guiding us in the right

direction to prepare the project.

My family and peers were great source of inspiration throughout my project,

their support is deeply acknowledged.

Signature of the Student

3

DECLARATION

I, Hitesh Lalji Solanki of R. A. PODAR COLLEGE OF

COMMERCE & ECONOMICS of M.Com SEMESTER III, hereby

declare that I have completed the project STUDY ON IFC AND INDIA

ITS ROLE in the academic year 2014-2015 for the subject

INTERNATIONALMARKETING the information submitted is true and

original to the best of my knowledge.

Signature of the Student

4

INDEX

Sr.no TOPICPage

No.

1 Introduction of IFC 6

2 History of IFC 7

3 Indian Economy 14

4 IFC In india 18

5 Strategic approach 19

6 Impact of IFC 23

7 Conclusion 31

8 Bibliography 31

9

10

11

12

13

5

International financial corporation

IFC, a member of the World Bank Group, is the largest global development

institution focused exclusively on the private sector in developing countries. Established in

1956, IFC is owned by 184 member countries, a group that collectively determines our

policies. Our work in more than a 100 developing countries allows companies and financial

institutions in emerging markets to create jobs, generate tax revenues, improve corporate

governance and environmental performance, and contribute to their local communities.

About IFC

IFC, a member of the World Bank Group, is the largest global development institution

focused exclusively on the private sector in developing countries. Established in 1956, IFC is

owned by 184 member countries, a group that collectively determines our policies. Working

with private enterprises in more than 100 countries, we use our capital, expertise, and

influence to help eliminate extreme poverty and promote shared prosperity. IFC leverages the

power of the private sector to create jobs and tackle the world’s most pressing development

challenges. IFC’s vision is that people should have the opportunity to escape poverty and

improve their lives. IFC’s vision is that people should have the opportunity to escape poverty

and improve their lives.

Strategic Priorities:

Strengthening the focus on frontier markets

Addressing climate change and ensuring environmental and social sustainability

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Addressing constraints to private sector growth in infrastructure, health, education,

and the food-supply chain

Developing local financial markets

Building long-term client relationships in emerging markets

Goals and Values of IFC

As a member of the World Bank Group, IFC has two overarching goals:

End extreme poverty by 2030

Boost shared prosperity—in every developing country

Promote food security

Enhance economic development and inclusion in the agriculture sector

Make environmental and social sustainability a business driver

Create jobs at farm and non-farm levels 

History of IFC

Six Decades of Creating Opportunity

A daring new idea when created in the 1950s, IFC is the largest organization of its kind in the

world. A sense of innovation and the strength of our core corporate values--excellence,

commitment, integrity, teamwork, and diversity--have driven this growth over the years.

Holding a $49.6 billion portfolio touching almost every major industry, we now reach

millions of people in more than 100 countries, creating jobs, raising living standards, and

building a better future to support the World Bank Group's two goals: ending extreme

poverty and boosting shared prosperity.

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1940 ROOT

1944 Bretton Woods Conference

Delegates from 44 countries meet at Bretton Woods Conference, creating the World Bank

and International Monetary Fund to transfer financial resources to member governments--but

no separate entity for private sector development.

1946  World Bank Opens

The World Bank begins operations with 32 shareholding countries, $7.7 billion in capital, and

headquarters in Washington, D.C. IFC has not yet been created.

1947 Garner Arrives

The driving force behind the future IFC, New York financier Robert L. Garner, joins the

World Bank as one of its first senior executives. He brings a keen sense of the role private

business can play in international development, a topic few others considered at the time.

1950’S CREATION

1950 The Idea of IFC

Garner and colleagues suggest creating a new institution to stimulate private investment in

the Bank's borrowing countries. "It was my firm conviction that the most promising future for

the less developed countries was the establishing of good private industry," Garner said

1951 Growing Support

The U.S. government calls for "an International Finance Corporation" tied to the World

Bank. It would finance private enterprises in developing countries but:

Take no government guarantees

Always work alongside other private investors

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Never manage its investees

1956 IFC Created

IFC opens under Garner's leadership with 12 full-time staff but just $100 million in

authorized capital, a low amount that prevents it from making major investments.

Shareholders only allow it to make loans, not the equity investments that Garner desired, and

that in time would become the key to its profitability.

1960-1970S GROWTH

1960 IDA Created

World Bank shareholding governments create the International Development Association

(IDA), a new concessional funding arm for the world's poorest countries. In time, IDA

countries will become IFC's main focus.

1961 New Powers

Upon retirement, Robert L. Garner sees a key part of his historic vision become reality: IFC

is authorized to make equity investments. The first one follows the next year (a stake in

Spanish auto parts manufacturer FEMSA).

1965 First Syndication

IFC mobilizes $600,000 from Deutsche Bank and others for Brazilian pulp and paper

company Champion Cellulose. The transaction provides early support for Champion, a rising

player that in 2001 is sold for $9.1 billion to the world's largest paper company, International

Paper of the U.S. The project also launches IFC's syndications program.

1969 A Call for Growth

accepting an independent commission's report, World Bank President Robert S. McNamara

agrees that a larger, more development-oriented IFC could play a powerful role. To guide the

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thinking behind IFC's growth, he recruits IMF official Moeen Qureshi, a future prime

minister of Pakistan.

1971 Financial Markets

At a time when few development thinkers are focused on the role of financial institutions,

IFC breaks the mold, creating a Capital Markets Department to strengthen local banks, stock

markets, and other intermediaries. In time this function will become IFC's largest area of

emphasis.

1972 – 1977 First Field Offices

Decentralization begins with small one-man offices in Jakarta and Nairobi, followed by

establishment of the first regional mission for East Asia, based in Manila. By 2008, more than

50 percent of IFC staff will be based outside of Washington, DC.

1980’s-1990’s A New Era

1981 Emerging Markets

IFC coins the phrase "emerging markets." Investment Officer Antoine van Agtmael devises

the term as a way to change the financial world's perception of developing countries. It sticks,

defining a new asset class. Worth almost nothing at first, the total capitalization of emerging

market stock markets will reach $5 trillion within 25 years of IFC's origination of the phrase

1982 First Advisory Facility

IFC creates its first multi donor advisory services initiative, the Caribbean Project

Development Facility. The first of many such initiatives within IFC, the initiative was

credited with creating 17,500 jobs before closing in the 1990s

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1984 Financial Autonomy 

Long reliant on World Bank support, IFC becomes financially independent, gaining approval

to issue its own bonds in international capital markets.

1989 AAA Credit Rating

IFC receives the highest possible endorsement of financial health from private rating

agencies. It becomes the key to a large-scale, multicurrency borrowing program that by 2009

will exceed $9 billion a year.

1991 Capital Increase

Shareholders give IFC a record $1.2 billion capital increase, leading to increased work in

privatization, infrastructure finance, capital market development, support of small and

medium enterprises, and renewed collaboration with the World Bank.

1994 Information Disclosure

IFC enacts its first policy on public disclosure of information, greatly increasing its openness

and transparency by increasing the amount of project information it releases on projects

before board approval. As part of the policy, IFC "recognizes and endorses the fundamental

importance of accountability and transparency in the development process."

1999 Increased Accountability

As part of an increasing commitment to openness and accountability, Meg Taylor is

appointed Compliance Advisor/Ombudsman for IFC and MIGA. The post is the first of its

kind in a multilateral development institution.

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21’st century todays IFC

2001 Sustainability Initiatives

Under Executive Vice President Peter Woicke's leadership, IFC begins mainstreaming

sustainability concerns into all its investment operations.

2003 Equator Principles

Meeting at IFC, 10 top international banks adopt the Equator Principles, applying new

environmental and social development standards to their project finance lending based on

IFC's own standards. By 2009, 68 participating banks had adopted the Equator Principles,

representing 90 percent of all global project financing.

2007 IDA Focus

IFC's investment in IDA countries grows by 75 percent in one year, part of a new focus on

the world's poorest countries and other frontier regions left out of the emerging market

investment boom. Soon, more than half of IFC investment projects will be in IDA countries.

2007 Decentralization

With most clients now coming from emerging markets, IFC plans moves to increase client

service and responsiveness by streamlining business procedures and decentralizing staff and

decision making. By 2009, IFC will be present in more than 80 countries and have more than

half of its staff in the field-a dramatic turnaround from previous years.

2008 Expanded Reach

for the year, IFC clients provide 2.1 million jobs, serve 5.5 million patients, and help educate

1.2 million students. This comes as IFC's new financing reaches $16.2 billion, a 34 percent

increase over the previous year. This includes $11.4 billion for IFC's own account and $4.8

billion mobilized for clients.

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2009 Crisis Response

Amid a severe global economic downturn, IFC and its many partners launch crisis response

initiatives in trade finance, microfinance, infrastructure, advisory services, and distressed

assets. The moves show IFC's growing leadership, helping clients weather the storm and

preserve jobs during the crisis.

Organization

IFC coordinates its activities with the other institutions of the World Bank Group but is

legally and financially independent.

Ownership & Governance

IFC's 184 member countries, through a Board of Governors and a Board of Directors, guide

IFC's programs and activities. Each country appoints one governor and one alternate.

G-20 Recognition

Recognizing IFC's leadership in the field, the G-20 makes us its global partner in SME

development. At its Seoul summit, the G-20 receives our knowledge-sharing report on access

to finance, and ask IFC to lead implementation of the SME Finance Challenge, a new

campaign to scale up successful models of support to SMEs, a key driver of job creation and

growth

Financial performance

The IFC prepares consolidated financial statements in accordance with United States GAAP

which are audited by KPMG. It reported income before grants to IDA members of $2.18

billion in fiscal year 2011, up from $1.95 billion in fiscal 2010 and $299 million in fiscal

2009. The increase in income before grants is ascribed to higher earnings from the IFC's

investments and also from higher service fees. The IFC reported a partial offset from lower

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liquid asset trading income, higher administrative costs, and higher advisory service

expenses. The IFC made $600 million in grants to IDA countries in fiscal 2011, up from $200

million in fiscal 2010 and $450 million in fiscal 2009. The IFC reported a net income of

$1.58 billion in fiscal year 2011

Indian Economy For those not familiar with the Indian economy. In the post-independence era 1947 – 91,

India was a mixed economy with a high degree of state intervention – including

nationalization and price controls. The economic performance was mixed, but generally

disappointing. Since 1991, the economy has pursued a general approach of free market

liberalization and greater investment in infrastructure. This helped the Indian economy to

achieve a rapid rate of economic growth and economic development. The economy has

become more open, with significant growth in exports and imports. The economic growth has

led to a boom in investment, real estate and a growth of the financial sector. Too many, India

is the second China and the economy has the potential to become one of the largest in the

world.

However, at the present time, the Indian economy faces several challenges.

In the past couple of years, there has been a fall in the rate of growth causing concern

that the period of high growth is coming to an end. (growth fell to a low of 4.4% in

2013 – bear in mind, India’s rising population mean GDP per capita is less impressive

than just real GDP growth)

India has struggled to keep inflation low. In 2013, inflation was nudging near 10%,

hurting the living standards of the poor who are particularly vulnerable to the price of

food. High inflation is also harming confidence for investment.

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Current account deficit. India’s growth has been at the cost of a persistent current

account deficit (which reached over 6% of GDP in 2012). India needs to import crude

oil, machinery and many other raw commodities. Its export sector has struggled to

match the growth of imports.

Rupee devaluation. The large current account deficit has caused the Rupee to fall,

despite very low interest rates in US and Europe.

Inequality / poverty. Parts of the Indian economy have made rapid growth, but it has

proved difficult for the fruits of economic growth to filter through to all areas of the

economy, especially isolated rural areas where there is poor infrastructure.

Government budget deficit. Despite years of economic growth, the government has

found it difficult to balance the budget. The budget deficit is 4.8% of GDP in the year

2012–13. Public sector debt is 68.05% of GDP, one of highest for a developing

economy. Tax collection is still limited by tax evasion and corruption (tax collection

only accounts for 9% of GDP – one of lowest in the world). The government is

committed to reducing the budget deficit, but this may be at cost of social welfare

programmers.

More detail on the Indian economy

Economic growth

Indian economic growth is predicted to be around 5% by March 2014. From European

standards, this sounds very impressive. But, is much lower than the rate of nearly 10%

achieved in much of the recent decade. Growth of 5% reflects the fact there is much spare

capacity and scope for improvement. Without a high rate of growth, the concern is that it will

lead to unemployment and discourage future investment. Politicians have been predicting

upturns in the rate of economic growth for a long time, hoping it would come in the next

15

quarter. Unfortunately, this has raised and then broken expectations. However, growth did

finally picked up to 4.8% in Q3 2013. (Higher than previous quarter of 4.4%)

Inflation

Inflation is a real problem for the Indian economy. It has proved stubbornly high. Inflation

reached 11.24% in November 2013 – the highest for years. Inflation did fall back to 9.92% in

Dec, but there is concern about the stubbornness of high inflation, despite the relatively

sluggish growth. The chief of the Reserve Bank of India, Raghu ram Rajang has made control

of inflation his highest priority and has increased interest rates twice since his appointment in

September. Rajan argues that price stability is key to India’s long term prosperity. However,

the concern is that inflationary pressures tend to be due to supply side factors (e.g. rising

vegetable prices) and the use of monetary policy may be limited in solving this. For Rajan to

tackle cost push inflationary pressures using interest rates may damage prospects for growth

without tackling the underlying inflationary causes. To tackle supply constraints which are

behind the cost-push inflation will prove much more difficult.

The Central Bank repo rate is 7.75% (Central Bank of India)

Current account deficit

One benefit of the slowdown in economic growth has been the improvement in the current

account deficit. Reaching a deficit of over 6.7% in last quarter’s 2012, the deficit has fallen to

1.2% in Q3 2013. This is an important improvement, and means less foreign currency needs

to be attracted to finance the deficit. However, the Economist notes that 75% of the

deficit reduction is artificially related to reducing imports of gold through government

restrictions. Therefore, there is still an underlying trade deficit, India will need to work on

through increasing exports and competitiveness. This may require further devaluation in the

Indian Rupee, which will increase the cost of living for many.

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Indian Rupee

Since the beginning of 2012, there has been a significant fall in the Indian Rupee against the

US dollar. From 1 Indian Rupee = 0.023 US dollars (2012), the Rupee has fallen to 1 Indian

Rupee = 0.0016 US dollars (2014). This is a reflection of the large current account deficit and

uncertainties about the Indian economy. The concern is that a recovering American economy

could see US rates and the US dollar increase, putting more pressure on the Indian Rupee.

To some extent, the devaluation in the Rupee has been necessary to improve India’s

Competitiveness. But, there is a danger that a rapid fall can cause a loss of confidence and

increase import prices.

Open economy

One of the success stories of the Indian economy has been the improvement in trade in recent

years. India has liberalized trade and seen its exports of both visible and invisibles grow.

However, the downside of a more open economy is that the Indian economy is now more

vulnerable to a downturn in the world economy. This can be offset by a diversification in

trade away from Europe and the US.

Other indicators

Unemployment in India is only 8.5% (2012 est.)

There are still levels of extreme poverty. 21.9% of the population are considered to be

living in poverty during 2011–12 (Tendulkar Methodology)

Agriculture produces 17.4% of economic output but, over 51% of the population work

in agriculture

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India Statistics

GDP PPP $4.716 trillion (2012 est.) 4th world

GDP PPP per capita $3,800 (2012 est.) 168th

IFC in India

Since 1956, IFC has invested in 346 companies in India, providing over $10.3 billion in

financing for its own account and $2.9 billion in mobilization from external resources.

As of June 30, 2014, IFC's committed portfolio in India stood at $4.7 billion, making India

IFC's largest portfolio exposure. The most acute needs for energy, water, roads, phone

connections, healthcare, education, sanitation, waste management, access to financial

services, are among those who live in low-income, rural and semi-urban parts of the country.

To grow opportunities for the underserved, IFC concentrates on low-income, rural, and

fragile regions while

building infrastructure and assisting public-private-partnerships;

facilitating renewable energy generation; promoting cleaner production, energy and

water efficiency;

supporting agriculture for improved food security;

creating growth opportunities for small businesses;

reforming investment climate;

developing public-private partnerships;

encouraging low-income housing; and

making affordable healthcare efficient and accessible.

Through these strategic interventions in the region, IFC aims to bring economic opportunities

to underserved communities where needs are greatest, particularly in the low income states of

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India; help address climate change impacts; and encourage global and regional integration

including promoting trade and investments within and from South Asia

Inclusive Growth

India has seen strong economic growth in recent years, and it now faces the challenge of

using this growth to address widespread poverty. IFC is using a combination of investments

and advisory services to support private sector development in the country, with an emphasis

on making growth more inclusive.

On a visit to India this week, IFC Executive Vice President and CEO Lars Thunell was struck

by the country's stark economic contrasts. "While India has made impressive progress, IFC

seeks to help the country reach more of its neediest people and regions with the benefits of

growth," Thunell said.

A Strategic Approach

IFC's work in India focuses in several key areas:

Improving rural productivity though agribusiness and supply-chain linkage programs

Facilitating access to finance in underserved rural and urban markets

Promoting private investment in infrastructure, including through advice on specific public-

private partnerships Supporting private sector solutions for climate change Our focus on

agribusiness has led to recent investments in small companies, like ABC Coffee and Suguna

Poultry, that are leaders in their field. IFC Advisory Services works closely with the World

Bank to assess India's investment climate and advise government agencies on competition

policy. Our advisory portfolio includes about 40 projects in such areas as micro, small, and

medium enterprises; grassroots and rural businesses; infrastructure; the environment; access

19

to finance; and the investment climate. With IFC's support, the Self Employed Women's

Association in Gujarat has been able to extend its services to women in rural areas. These

include a managers' school, which has trained 80,000 people in technical and management

skills, and the SEWA Trade Facilitation Centre, which has provided market access and secure

livelihoods for its 15,000 members. IFC is also helping SEWA restructure its financial and

accounting systems.

IFC has also provided more than 3,000 small farmers in Jharkhand with capacity-building

services and better income opportunities through a project with Usha Martin, an IFC portfolio

client. Another major initiative is the Cairn linkages program in Rajasthan, which focuses on

local supplier development, child and maternal health care, and a dairy development project.

Reaching Needy Markets

IFC considers microfinance a key part of including more people and needy regions in India's

growth. We have reinforced this focus by supporting important market players with a variety

of financial instruments. Through collective investment vehicles, such as Lock Capital, IFC

has supported the emergence and growth of microfinance institutions. Similarly, IFC's

investment in Aavishkaar Goodwill will facilitate the launch of up to 60 new microfinance

organizations across India and the expansion of up to 10 fast-growing microfinance

institutions across the country. Last year, we also invested in Financial Information Network

& Operations Private Ltd, a startup provider of technology services. Known as FINO, the

company offers end-to-end IT solutions that can help banks address a large unmet demand for

financial services. FINO's technology will enable India's microfinance institutions to

automate government payments, banking, and other financial services for customers in rural

areas. It will help also micro insurance provider’s process claims at lower cost and improve

the flow of information to the insurer from the field. FINO's "smart card"–based platform will

20

help make social security and pension payments more efficient, reducing the cost of

transactions and ensuring that end-users receive payments on time.

"Unique partnerships and innovation are giving India an opportunity to bridge the gap

between large financial services providers and many underserved people. FINO is an

important example of what can be done, and IFC is pleased to work with clients who support

our objective of making development as inclusive as possible," Thunell said. IFC and FINO

will run pilot projects with leading microfinance institutions, banks, and government

organizations to develop, customize, test, and expand the adoption of IT technologies in

India's underserved markets. The two organizations will set up training, conferences, and

workshops for microfinance institutions. Training in local dialects will emphasize the benefits

of banking in rural areas and for people not currently being reached by financial services.

Partnership Overview

India has been a member of IFC since 1956. Through the Export-Import Bank of India, it

partners with IFC in providing technical assistance and advisory services to the

Private sector in the developing world. India is one of IFC’s partners in the countries of the

former Soviet Union where work concentrates on attracting private direct investment;

supporting the creation and growth of the private sector, especially small and medium

enterprises; and improving the business-enabling environment in the region.

India has been a member of IFC since 1956. ThroughThe Export-Import Bank of India, it

partners with IFC in Providing technical assistance and advisory services to the Private sector

in the developing world. India is one of IFC’s partners in the countries of the former Soviet

Union where work concentrates on attracting private direct investment; Supporting the

creation and growth of the private sector, especially small and medium enterprises; and

improving the business-enabling environment in the Region.

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Credit line for Indian small scale business

The International Finance Corporation (IFC) is supplying a US$150m credit line to Indian

lender YES Bank. The money will go to supporting small businesses, particularly those

owned by women. The loans will be directed to companies in low-income states, including

the North East of India.  

The US$150m investment is sourced from three pools of capital, including the IFC itself, a

People’s Bank of China portfolio managed by the IFC and a syndicated loan from partner

banks AKA Frankfurt, Bank Muscat, Doha Bank and Intesa Sanpaolo. The IFC’s direct

contribution to the YES Bank on-lending project was US$60m, with the syndicated loans

comprising US$45m and the IFC’s co-lending portfolio funded by the People’s Bank of

China offering another US$45m.

The YES Bank loan is the first IFC deal to be financed through the managed co-

lending programmed, where partner banks provide the capital, but the investment is selected

and implemented by the IFC.

IFC invested in bandhan finance service limited

IFC proposes to invest in Bandhan Financial Services Limited (“Bandhan” or the

“Company”), the fourth largest microfinance institution (“MFI”) in India. Bandhan operates

in 18 Indian states in the northern and eastern parts of the country, including some of the

poorest states, where population density is high and microfinance penetration is low. The

Company focuses primarily on providing microloans to women micro-entrepreneurs in rural

and urban areas. Bandhan today has about 3.0 million borrowers and a loan portfolio of about

US$520 million equivalent. The proposed project intends to help Bandhan increase its

outreach in the states where it operates as well as expand its operations in other states, where

22

access to finance is most scarce; diversify its product base; and establish international best

practice in its operations and governance.

Impact of the project

The proposed project is expected to have a high developmental impact by: (I) increasing

access to finance in some of the poorest states in the northern and eastern parts of India; (ii)

promoting a more balanced growth of microfinance in India. Most of the MFIs operating in

India are concentrated in southern India. Bandhan's operations are largely in the northern and

eastern part where microfinance penetration is very low and very few MFIs of significant size

are located; (iii) contributing to employment creation and poverty reduction in each of the

states where Bandhan operates; and (iv) providing capacity building support in areas such as

governance, product development and environmental and social standards so as to establish

best practice. 

Impact of IFC on India

Increase productivity

Facilitating access to market

Enabling access to finance

Promoting sustainability

Increase productivity

South Asia has millions of high potential farmers. However, many rely on traditional farming

methods which may not always be the most productive. IFC identifies larger firms and

through their extension services, trains farmers to adopt farming techniques that lead to

higher productivity.

23

Increasing Sugarcane Productivity

Sugarcane farmers in India’s low-income state of Uttar Pradesh are seeing an increase in

sugarcane productivity as a result of IFC’s agribusiness advisory project Meth Sona, or sweet

Gold. In India, over 50 million farmers depend on sugarcane cultivation for their livelihood.

But while some states in India have yields of more than 100 tons per hectare, farmers in Uttar

Pradesh produce only around 50-55 tons per hectare resulting in lower incomes from

sugarcane cultivation. IFC is working with DSCL to create a model for replication for the

sugar sector in Uttar Pradesh. The project supports IFC’s South Asia strategy of inclusive

economic growth by promoting economic activities at the base of the pyramid. It also

strengthens IFC’s footprint in one of India’s low income states.

Impact

In the second year of the project itself, trained farmers recorded a productivity increase of 86

percent from baseline levels, while farmers in control groups, who did not receive any

training, recorded an increase of only 19 percent. The program reached over 17,000 farmers

translating into improved quality of life for nearly 85,000people taking the average family

size as five. Based on the success of this initiative, IFC has now scaled up the project to work

with four sugar companies and increase the productivity of farmers in their supply chains.

Facilitate to access market

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IFC’s contribution to the challenge of agricultural development in rural areas focuses on

strengthening the supply chain between farmers and markets in terms of knowledge,

technology, and finance. It is expanding its work with new clients in agricultural products

such as fruits, vegetables, and dairy. For maximum impact, IFC identifies larger local firms

that have an interest in efficient and productive supply chains in agribusiness, and works with

them to deliver

Reach, inclusion, and impact. Modern grain silos in Punjab that are helping address grain

wastage and enhance food security in India.

In 2009, the Indian state of Punjab asked IFC to advise on public private partnership (PPP)

basis to develop state-of-the-art, long-term storage grain silos to store 7.1 million tons of

wheat for below poverty line families. The pilot project was implemented in April 2011.

Following competitive bidding, the government selected LT Foods Limited, a mid-size grain

trading company, to build and operate a 50,000 metric ton storage facility. The new silos

ensure that,

Annually 500,000 of India’s poorest will receive better nutrition and adequate grains.

This pilot had a positive effect for linkages in the supply chain and can be replicated

throughout

India and in other markets. The project was named the “Best Pathfinder Project” at the

Partnership Awards 2012 in London. The project was also featured in Euro money’s

Project Finance Yearbook and was ranked first in East Asia, Pacific and South Asia region by

“Emerging Partnerships”, IFC’s global publication of top 40 PPPs in emerging markets.IFC’s

experience with the Punjab Grain Silos project was featured as a case study in Economist

Intelligence Unit’s recent report titled ‘ healthy Future for All: Improving Food Quality for

Asia.’

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Impact

Case Study | India Building on the pilot’s success, the government of India is planning a roll-

out program across 10 states to create 2 million metric tons of capacity on PPP basis. IFC is

assisting the Food Corporation of India in this strategic initiative which is at the core of

India’s food security. As part of the national level initiative, IFC expects to facilitate more

than 40

PPP contracts for setting up silo facilities, mobilize $400 million in private investment, help

provide more nutritious wheat for 20 million of India’s poorest, implement better

procurement practices and reduce waiting time for 266,000 farmers.

Enabling Access to Finance

A major problem is that only a limited number of farmers in South Asia have been able to

afford the improved seeds, fertilizers, micronutrients, and equipment they need to get ahead.

IFC works with banks and microfinance institutions to increase access to finance for small

agribusinesses

And farmers. IFC works with financial institutions to develop affordable and flexible

financial services that can help address environmental and market volatility to drive

productivity and increase access to markets. IFC has helped SANASA Insurance expand

access to insurance for small farmers by offering protection against weather-related risks and

natural disasters. The project will also raise awareness among farmers on the availability and

benefits of these index-based insurance products.

Improving banking service for farmers

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IFC is helping Andhra Pradesh State Cooperative Bank design and offer new products for

small farmers in Andhra Pradesh, India’s fourth largest state. The state cooperative bank

serves 4.3 million small and marginal farmers through a network of district cooperative

central banks and primary agricultural cooperative credit societies. With IFC’s support, the

state cooperative bank is designing new credit and non-credit products, including loans,

savings, insurance, remittances, and other offerings for farmers. IFC is assisting the bank by

developing a robust risk management system to promote responsible finance and check over

indebtedness, which is leading to stronger Business operations. The project also includes

training on responsible finance for bank staff and member institutions of the bank. As a part

of this project, the state cooperative bank and IFC are working with Rabo Bank International

Advisory Services, which has expertise in the cooperative and financial sector.

Impact

The project aims to increase access to agri-finance for farmers in Andhra Pradesh. It

Will also expand financial offerings by developing at least three new financial products,

That meet customer’s needs. Finally, the project will advise the state cooperative bank

On how to improve overall strategy, governance, human resource management, risk

Management, and operations to ensure sustainability and engage in responsible finance

practices both in terms of staff training and financial awareness for its customers.

Promoting sustainability

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In all of IFC’s work in agribusiness, sustainability is a business driver for the clients and

partners. IFC has worked on developing and supporting the implementation of innovative

Projects to deal with the challenges of reducing water tables and other environmental

Vulnerabilities in South Asia. The focus is specifically around tackling water scarcity and

Climate change impacts while also supporting companies to meet market challenges by

adopting higher food standards.

Addressing Water Security in Agriculture

By 2025, two-thirds of the world’s population will live in water-stressed conditions. Water

footprint assessments help companies reduce water-related risks, improve water efficiency,

and mitigate social and environmental impact. IFC worked with Jain Irrigation Systems to

conduct a water footprint assessment. This was the first time that a business conducted such

an assessment in a developing country, paving the way for similar assessments for IFC clients

in other

Water-scarce countries. Jain Irrigation Systems, an India based IFC client is the world’s

largest Manufacturer of drip irrigation systems and operates in an area where water

Scarcity is a major issue. It is also the world’s largest producer of mango pulp, puree, and

concentrate, and the second largest producer of dehydrated onions. The assessment focused

on water consumption in the production of dehydrated onions and the manufacturing of its

micro-irrigation systems. The assessment revealed that onions grown under drip irrigation

have 42 percent smaller water footprint than those grown using traditional irrigation methods.

IFC partnered with Tata Steel, Tata Power, Tata Motors, and Tata Chemicals to conduct

water footprint assessments and develop a sustainability framework for these Tata group of

companies. IFC used Water Footprint Network’s globally acknowledged water footprint

methodology.

Building Climate Resilient Communities

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Nepal produces only 0.025 percent of global greenhouse-gas emissions but its 20 million

farmers, of whom 96 percent are smallholders, are likely to face increased climate variability

and significant water- related stresses. A climate risk assessment carried out at the

community level identified water and food security as the most critical risks. Nepal’s

agriculture sector

Contributes 35 percent of its gross domestic product and employs 66 percent of the

population. However, high dependence on rain, poor farming practices, and limited access to

finance constrains productivity. IFC, in partnership with the World Bank and the Asian

Development

Bank, has designed a project to address key climate-induced risks and other productivity

constraints faced by farmers and to provide potential solutions. The project will work with

agribusiness lead firms to promote improved agricultural and water management practices. It

will introduce new technologies to help small farmers who produce rice, maize, and

sugarcane adapt to climate change. The project will promote improved seed varieties and

modern agriculture and water practices. These inputs will improve farmers’ climate change

resilience and productivity. The project will also work with a financial institution to increase

lending farmers and other value chain members.

Promoting Water-Efficient Agricultural Production

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India is a leading exporter and a primary producer of basmati rice, with over 43 million

hectares under rice cultivation. The sector provides livelihood opportunities for small

landholders. Agriculture in India accounts for 85 percent consumption of the country’s water

resources. Of this, rice is a major water consumer.

Rough estimates of water usage in the sector are pegged at 3,000-5,000 liters per kilogram.

Groundwater extraction for irrigation is leading to alarming depletion rates that places future

agricultural production in states like Haryana at a higher risk. In this scenario, there is a

strong case for efficient in the use of existing water resources. IFC is working with private

sector rice companies to introduce water use-efficiency practices and technologies in their

basmati rice supply chain in the state of Haryana, India. Technologies like direct seeded rice,

which do not have to be transplanted, have demonstrated substantial water saving potential by

eliminating the need for standing water for seed germination. Mechanized operations are also

time and labor-efficient when compared to traditional practices. Similarly, laser leveling

technology to prepare land to near-flatness has reduced water use and has led to higher yields.

This project has helped IFC develop innovative delivery models by creating rural

entrepreneurs who provide farmers access to technologies on a custom-hire basis. These rural

entrepreneurs advise farmers on good agriculture and water management practices, and help

overcome financial and knowledge barriers to technology uptake.

Impact

The program has currently reached over 1,100 farmers in water stressed areas of Haryana

with estimated water savings of 6.3 million cubic meters. Planned interventions over the next

four years will benefit more farmers in the state.

Data collection

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Data has been collected from secondary sources i.e. websites and magazines

Conclusion

The sustainability agenda and its Sustainability Framework have become important

Differentiators for IFC in the marketplace and a pillar of IFC’s corporate strategy. Continued

Successful implementation of this framework is therefore a corporate priority. IFC expects

Continued significant interest in this review from external stakeholders and commits to

engage in a constructive and collaborative dialog to fully understand the implications of the

proposed changes to the Sustainability Framework. IFC is mindful that the proposed changes

may have cost and resource implications for our clients, in particular smaller ones.

Bibliography

www.ifc.org

www.mapsofindia.com/india-economy.html

http://metasearch.com/www2search.cgi?p=indian+economy&l=20&s=o

http://www.ibef.org/

http://ifcext.ifc.org/ifcext/pressroom/ifcpressroom.nsf/

1f70cd9a07d692d685256ee1001cdd37/e4c604a245a5ff8285256962005f05ba

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