World Bank will lend India $9bn to aid fight against poverty

The World Bank has agreed to lend $9bn (£5bn) to India over the next three years to help tackle the poverty that millions of its people suffer in rural areas.

India's vast rural population has been largely left behind by the strong growth rates experienced by the country since it started to introduce market-friendly reforms in 1991. Since then, India's economy has expanded by an average of 6 per cent a year, but some 350 million of its 1.1 million people still live on less than $1 a day, the World Bank estimates.

The president of the World Bank, Paul Wolfowitz, who announced the loans package on a visit to the country, said that India needed to maintain that economic momentum in order to lift tens of millions more out of poverty.

"The World Bank is ready to lend up to $3bn over the next three years to support the Bharat Nirman programme, especially to build roads, provide drinking water and establish irrigation facilities in Indian villages."

Under the four-year Bharat Nirman, or Building India, plan, the government aims to provide electricity to all 250 million rural homes, build six million houses and provide safe drinking water to the 74,000 villages that don't have access to it. Each of India's 700,000 villages will have at least one phone by 2009, says the Prime Minister, Manmohan Singh.

Mr Wolfowitz said: "Though it's making rapid strides, India has an unfinished agenda. It is still home to a quarter of the world's poor people, most of whom reside in rural areas. Infrastructure constraints are an impediment to growth."

Indian officials estimate that the country needs to invest $100bn over the next seven years in projects such as power, highways, airports, ports and railways.