Context: Recently, the World Bank has clarified that the USD 1 billion loan that it has provided to India in May 2020 to deal with Covid-19 comes with a condition of universal eligibility in procurements.
Background

• In April 2020 the World Bank’s Board of Executive Directors had approved a fast-track $1 billion India COVID-19 Emergency Response and Health Systems Preparedness Project to help India prevent, detect, and respond to the COVID-19 pandemic and strengthen its public health preparedness.
• It is the largest ever health sector support from the Bank to India.

Key Points

India COVID-19 Emergency Response and Health System Strengthening Project:

• It is a joint initiative of the Government of India and the World Bank.
• The World Bank has the $1 billion loan disbursed by the International Bank for Reconstruction and Development (IBRD).
• The Railway Ministry is one of the implementing agencies of the project.

What does the condition of “universal eligibility” mean?

• This would mean that all preferential market access policies, including Public Procurement (Preference to Make in India) Order, Micro Small & Medium Enterprises (MSME) Policy, certain benefits to start-ups, shall not be applicable on purchases made while implementing the national project.
• The contractors must agree to comply with the relevant provisions of the World Bank’s anti-corruption guidelines and prohibited policies of the Asian Infrastructure Investment Bank (AIIB).
• Apart from making way for universal eligibility in the supply system, the World Bank would have the right to review the procurement documents, inspect/audit all accounts, records and other files relating to the project.
• Compliance to these conditions has been made mandatory for the funding.

Clarification

• The World Bank would have the right to review the procurement documents, inspect all accounts, records and other files relating to the project. Compliance to these conditions has been made mandatory for the funding.
• Following the clarification the Indian Government has also asked all its production units and other major establishments to remove preferential references in tenders and ensure that contractors explicitly agreed to comply with the relevant provisions of the World Bank’s guidelines.

Impact

• This would mean that all preferential market access policies, shall not be applicable on purchases made while implementing the national project.
• The preferential market access policies includes Public Procurement (Preference to Make in India) Order, Micro Small & Medium Enterprises (MSME) Policy, certain benefits to start-ups.
• It will be a setback to the Make in India and Atmanirbhar initiative.

About World Bank Group

• With 189 member countries, the World Bank Group is a unique global partnership which consists of five development institutions.