By Arun Kumar, IANS,
Washington: India Sunday made a forceful plea for giving the World Bank Group a new sense of purpose and direction with enhanced governance and strength to play a lead role in eradicating poverty and fostering development globally.
By giving the group “a new sense of purpose and direction with enhanced governance and strength, we will ensure that the vision of its founding fathers is fulfilled”, Ashok Chawla, secretary in the department of economic affairs, told the Development Committee of the Group.
The committee’s decisions will ensure that the group “continues to play a lead role in eradicating poverty and fostering development globally, that its storehouse of knowledge and resources is put to best use”, Chawla said as the committee met as part of the regular spring gathering of the IMF and the World Bank.
Noting that the bank’s entire effort to eliminate poverty is played out in developing and transition countries (DTCs), Chawla said the changing dynamism of the global economy and the evolving weights of developing economies need to be reflected in the governance structure of the World Bank.
“DTCs are partners who need to have adequate voice in the way this institution is run,” he said expressing happiness that the bank’s new shareholding pattern will ensure that there is a shift of at least 3 percent in vote share to DTCs now.
However, it was not a perfect set of arrangements, he said suggesting that for the future, economic weight must be based on a blend that gives more weight to GDP-PPP (gross domestic product-purchasing power parity), which captures the dynamism of economic growth and the real economy much better.
Accepting the package as a compromise to reach the immediate goal of at least a 3 percent shift he said: “As we go ahead towards the next shareholding review by 2015…we need an outcome which would deliver our objective of equitable voting power between DTCs and developed countries.”
Noting that financial and economic crisis has severely affected economic growth in developing and developed countries, Chawla expressed happiness over an emerging consensus for a capital increase for the International Bank for Reconstruction and Development (IBRD).
However, voicing deep disappointment at the response to International Finance Corporation’s (IFC) capital needs, he said the “case for enhancing IFC’s financial capacity is as strong if not stronger than for IBRD”.
While India supported the increase in Basic Votes to 5.55 percent in IFC, it will only go along with the consensus for a $200 million by way of share realignment.
Noting that members were willing for a subscriber contribution for $300 million, he said “By denying this to IFC, we have not let it benefit from the goodwill of those shareholders who are willing to let it grow.”
Turning to the post-crisis directions of the World Bank Group, Chawla was happy to note that “support for emerging economies and middle income countries has been recognised as a requirement for ensuring multi-polar growth and for creating new markets and investment opportunities.”
Noting that the recent financial crisis originated in the developed world but also had great adverse fallout in the developing countries, he said:
“Much work needs to be done in the developed countries to address the cause of the financial crisis.”
“A more comprehensive and stricter regulatory environment has to emerge, and greater financial discipline on banks and financial institutions needs to be imposed.”
(Arun Kumar can be contacted at [email protected])