Decoding the 'Small Model' Approach
When the World Bank talks about a 'small model' strategy, it's largely referring to the concept of 'small AI'. Unlike the massive, data-hungry artificial intelligence models being developed in Silicon Valley, small AI focuses on specialised tools designed
for specific, local tasks. Imagine an app that helps a farmer in rural India analyse soil quality in their local language, running on a basic smartphone with a weak internet connection. That's the essence of this approach. It’s not about building giant, all-knowing AI, but about deploying compact, efficient, and affordable digital solutions that can solve real-world problems for communities and small businesses, even in areas with limited infrastructure. This is a key pillar of the World Bank's first-ever global digital strategy, which aims to expand connectivity, improve digital services, and create the foundations for countries to benefit from artificial intelligence.
A New Partnership Framework for India
This collaborative philosophy is the cornerstone of the new Country Partnership Framework (CPF) for India, announced in early 2026. Aligned with the Indian government's 'Viksit Bharat' vision to become a developed nation by 2047, the framework represents a strategic shift in how the World Bank engages with the country. The central goal is to accelerate private sector-led job creation. With nearly 12 million young people entering India's workforce annually, the strategy acknowledges that public funds alone cannot create enough opportunities. The plan is to use the World Bank's financial instruments and expertise to de-risk investments and attract private capital into key sectors, effectively using public money to unlock much larger private investment.
The Government's Role: The Great Enabler
Under this model, the government's primary role is not to be the sole provider of services or jobs, but to be an enabler of private enterprise. This involves creating a stable and predictable business environment through clear laws and regulations. The government's function is to build the foundational 'digital public infrastructure'—like digital identification and payment systems—that allows the private sector to innovate and deliver services more efficiently. Furthermore, public funds are strategically deployed to invest in critical infrastructure, both physical and human, such as upgrading skills, which makes it easier and more attractive for private companies to invest, expand, and, most importantly, hire.
The Private Sector: The Engine of Growth
The private sector is positioned as the main engine for job creation and economic expansion. The World Bank Group's strategy is to mobilise between $8 billion and $10 billion in annual financing over the next five years to support this. The focus is on five priority sectors with high potential for job growth: infrastructure and energy, agribusiness, healthcare, tourism, and value-added manufacturing. For example, a recent World Bank financing package for India's national solar rooftop program is designed to not only bring clean energy to millions but also to create 1.7 million jobs and mobilise $4.2 billion in private financing from commercial lenders. This demonstrates the model in action: public-sector loans and grants are used to catalyse a much larger wave of private investment.
Navigating the Potential Hurdles
Despite the optimism, this heavy reliance on Public-Private Partnerships (PPPs) is not without its critics. Historically, some NGOs and researchers have raised concerns about World Bank-backed PPPs. Past criticisms suggest that such projects can sometimes be more expensive than purely public options and may lack transparency. Other critiques point to instances where privatisation has led to job cuts or price hikes for essential services. An independent evaluation of past PPPs noted that data on the positive impact on the poor was often scarce. For the new strategy to succeed, both the government and the World Bank will need to ensure that these partnerships are structured with robust oversight, clear public benefit goals, and mechanisms to protect citizens' interests, ensuring that growth is not just rapid but also inclusive and sustainable.
