More ideas and information, rather than dollars – this was the message of India’s Prime Minister Narendra Modi to World Bank Group President Jim Kong Kim when he met him earlier this week.
In wide-ranging talks, Mr Modi conveyed to Dr Jim that the World Bank should be India’s information bank, and not just a repository of funds. “We want ideas from the World Bank not only on mass production but also on production by masses, which will benefit our workforce,” he told the World Bank chief July 23.
Dr Jim, who was on a three day visit to India between July 21-24, said India could jump 50 position in the bank’s Ease of Doing Business survey if all states followed the Gujarat model of development, which was marked by prompt clearances and time-bound implementation of projects. India is currently ranked 134 in the survey.
At the much-awaited meeting, the two discussed a slew of issues regarding India’s commitment to economic growth and eradication of extreme poverty. They also discussed the need to work on a scale that inspires people and positively transforms their lives.
Dr Jim also met Finance Minister Arun Jaitley on July 23 was impressed by the government’s commitment to economic growth and reform. “From my discussions with Prime Minister Modi and minister Jaitley, it is clear that they are committed to increasing India’s economic growth…I was extremely impressed with his (Modi’s) sense of urgency…his intention is to grow the economy quickly,” Dr Jim said after his 50-minutes meeting with Mr Modi.
The finance minister renewed India’s pitch for reforming the World Bank in a manner that reflects new economic realities. He also spoke of the role India can play in reducing world poverty.
“I had a productive meeting with the Finance Minister. We reaffirmed the importance of our relationship. India has been largest borrower historically from the World Bank group and I also emphasized that our twin goals at the World Bank to end extreme poverty and increase shared prosperity,” Mr Jim said after his meeting.
Before his visit to India, the World Bank announced that its private sector arm, the International Finance Corporation (IFC), had successfully mobilised its $1 billion offshore rupee bond programme, aimed at strengthening India’s capital markets and attracting foreign investments.
This meeting is the first between India and the World Bank Group after the BRICS Summit in Fortaleza where, on July 15, the group decided to mobilize resources for infrastructure and sustainable development projects in their countries and in other emerging and developing economies through the establishment of the New Development Bank.
The new bank will have an initial authorised capital of $100 billion, with an equity base of 50 billion USD.
One of the major reasons for the establishment for the new bank were allegations that the West-dominated World Bank and the International Monetary Fund was based on asymmetries and relied on restrictive and prescriptive criterial while lending to developing countries.
Some experts believe that the domination of the Bretton Wood twins –- IMF and World Bank –- has been declining for some time now. While still immensely powerful, the establishment of regional banks like the Development Bank of Latin America, the Chinag Mai Initiative, Bank of the -South, and now the BRICS-led New Development Bank have emerged due to dissatisfaction with the US-Europe led IMF and World Bank.
Earlier, Jim sought to pacify claims that the NDB would challenge the World Bank. “Any estimate of the infrastructure needs in the developing countries start at about $1 trillion a year,” adding, “so we welcome any new organisations. We think the need for new investment in infrastructure is massive.”
Given the role and scope of the World Bank and the International Monetary Fund, they are expected to continue to play an active player in economies like India, say some experts.
According to World Bank, India is home to the largest operations of the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), and the International Finance Corporation (IFC).
The World Bank and the International Monetary Fund between July 2013 and June 2014 amounted to $6.4 billion. This included $2 billion from IBRD, $3.1 billion from IDA, and $100 million from the Clean Technology Fund that the World Bank Group administers. During that period, the World Bank Group’s private sector arm, IFC, committed $1.2 billion in India.
Before the BRICS summit, the World Bank president had lauded Modi by stating that the business friendly leader can propel India to 10% plus growth rate.
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