The world banks on India: Zoellick

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NEW DELHI: Robert Zoellick has seen a lot change over the course of a long career, first in the US government, now as the World Bank president.But perhaps the most startling change is in the way the world views India.

‘‘The outside world’s image of India now is of cutting-edge competitive companies that are going to take jobs away from the developed world. I get more and more voices coming from Europe and North America saying, ‘Why should we give money to India when they’re going to be a threat to our businesses?’ I have to constantly explain the huge income diversity of India and the fact that a lot of development work still needs to be done,’’ he chuckles.

In an exclusive interview to TOI, Zoellick also dwelt on how the growing strength of India-US ties has proved helpful to him. “I’m eventually going to have to go to the US Congress to seek its support for an increase in the World Bank’s capital. I spoke to the Confederation of Indian Industry and said, ‘Maybe you can help me because I know there’s a strong India Caucus in Washington. Together we can make a case that an increase in the Bank’s capital would help India’s development’.”

Wrapping up a four-day visit to the country, Zoellick praised India’s “strong crisis management” and said it was playing an important role in leading a global recovery. “We all look to India now as a rising global economic power and in our interconnected world it has played a helpful role over the tough moments of the past year,” he said.
But he brushed aside a suggestion that the strong showing of the Indian and Chinese economies — at a time when the US and other developed countries are still struggling — might decisively shift the balance of power and make this the Asian Century.

‘‘Two centuries ago, India and China probably accounted for 20-25% of the world’s GDP each. For a variety of reasons, their share dropped dramatically thereafter. It’s natural that their share will increase again. But I personally think that the US retains a huge amount of dynamism and it’s not going away anywhere. When I visit India and China, I find a lot of people wanting to deepen their ties with the US. There has been a greater distribution of growth and opportunity in recent times, which is great. But I don’t see it as the Asian Century or the American Century or the European Century. I see it as the challenge of how to get the globalization process to work more effectively for everyone.”

Speaking specifically about the Bank’s role in India, Zoellick said he favoured a shift in strategy to get “more bang for the buck”. “Our current portfolio of commitments is $22 billion. That includes $3.4 billion a year from the International Finance Corporation (the Bank’s private sector arm). India is the primary country for IFC, we have more investments here than anywhere else. I’d like to do more. But if you look at our investment profile here, it tends to be a series of individual projects. We’re talking to the government to see whether it would be interested in consolidating, maybe doing fewer projects but trying to use the money to help support public policy and institutional development.”

“In a country of India’s size, if you want to have an effect on public policy, you probably need about a billion dollars to play in the game,” he added. “We’re lending about a billion to help clean up the Ganga — a fascinating project, because of the river’s cultural importance. In agriculture, we’ll do some $5 billion in 2009-12. On the national highways project, we’ll probably start with a billion and move up. But even with the sums we’d like to do, it’s still modest compared to India’s needs. So I was asking your government, ‘how can we use our resources to have a greater effect in priority areas’? And I want to make sure we’re aligned to the government’s priorities.”
Zoellick added that the Bank had a role to play in providing not just financial resources but also leveraging its knowledge of global best practices. “I had a meeting with Kamal Nath and some private entrepreneurs. And we discussed how the Bank could apply its learnings from around the world to help make India’s bidding process for road
projects more transparent and competitive, while ensuring quality and engaging local communities.”

If the Bank were to focus on poorer states, we asked, wasn’t there a chance that it would actually be lending money to the worst-governed regions? And wouldn’t that negate its intent of maximising effectiveness of lending? “We’d like to focus on states where there’s interest in building capability and institutional capacity, even if they’re poor for historical reasons. Also, if you look at China, we don’t do many large projects there but lots of pilot projects which serve as models,” he responded.

So, does he think disbursing intellectual capital is as important as disbursing financial capital? “One of our problems is that we’re called a bank,’’ he replied. “We don’t just put out money. We work most effectively when we combine knowledge, experience and learnings from around the world. We’re trying to use money in the most effective way possible. But we also try to build markets and institutional capacity. It could be a local currency bond market or carbon market or microfinance development market. But we’re constantly asking ourselves, ‘how can we have more effect’?”

“It’s not a one-way street, either,” he concluded. “Today, toll roads are fairly common in India, but would be a revolutionary concept in many US states. You have some of the world’s finest minds, impressive companies and dynamic entrepreneurs. There are still huge challenges, but India has made impressive progress in developing programs that reach poor people. I believe the world has a lot to learn from India.”
The world banks on India: Zoellick - India - The Times of India