World Bank needs to change with global economy: Modi
12 Mar 2016
Prime Minister Narendra Modi has called for more changes in the structure and functioning of global institutions like the International Monetary Fund (IMF) and the World Bank so as to reflect the changing global economy.
Address at a joint conference organised by the finance ministry and the IMF on `Advancing Asia: Investing for the Future,' the prime minister said while the long-pending quota revisions agreed in 2010 have finally come into effect, the IMF will be able to build on this success.
''Reform of global institutions has to be an on-going process. It must reflect changes in the global economy, and the rising share of emerging economies. Even now, IMF quotas do not reflect the global economic realities. Change in quotas is not an issue of increasing the 'power' of certain countries. It is an issue of fairness and legitimacy. The belief that quotas can be changed, is essential for the fairness of the system. For poor nations to respect the legitimacy of such institutions, they must be able to aspire and to hope. I am, therefore, very happy that the IMF has decided to finalize the next round of quota changes by October 2017.''
Modi thanked IMF managing director Christine Lagarde for putting her weight behind quota reforms. The quotas of emerging countries will now better reflect their weight in the world economy. This will give them more say in collective decisions in the IMF, he pointed out.
India has always had great faith in multi-lateralism, he said, adding that as the world becomes more complex, the role of multilateral institutions will also increase.
India was represented at the Bretton Woods Conference in 1944, which gave birth to the IMF, and is taking as much interest in the Asian Infrastructure Investment Bank and the New Development Bank, he said.
He also announced a partnership with Bangladesh, Bhutan, Maldives, Nepal, Sri Lanka, India and the IMF to set up the South Asia Regional Training and Technical Assistance Centre with help from the IMF which will help in building capacity for policy making.
Emphasising that the 21st century is, and will be, the Asian Century, he said, three out of every five people in the world live in Asia. Its share in global output and trade is now close to one-third. Its share in global foreign direct investment is about 40 per cent. It is also one of the world's most dynamic regions, he added.
And, despite the recent slowdown, it is still growing at a rate three times greater than that of the advanced countries. It is, therefore, the ray of hope for global economic recovery, he said.
On the theme of the conference, 'Investing for the Future', he said, ''Asian families tend naturally to save more than people in other parts of the world. Thus they invest for the future. Economists have commented on the savings ethic of Asian countries. Asians tend to save to buy a house, rather than borrow to buy a house.
''Many Asian countries have relied more on developmental financial institutions and banks than on capital markets. This provides an alternative model for the financial sector.
''Social stability built on strong family values is another feature of Asia's development. Asians tend to leave things behind for the next generation.
On gender equality, Modi said India and almost all Asian nations, including Sri Lanka, Bangladesh, Pakistan, Indonesia, Thailand, Korea, Myanmar, and the Philippines: all of these countries have had women as national leaders.
''Today, four large states of India – West Bengal, Tamil Nadu, Gujarat and Rajasthan – are headed by democratically elected women. The Speaker of the Lower House of Parliament in India is also a woman.''
India, he said, ''has had a lasting influence on the continent's culture. It also demonstrated clearly that the sense of nationhood, could be broad and inclusive. It need not be defined by narrow linguistic or religious identities. The Sanskrit saying ''Vasudhaiva Kutumbakam'' – the world is one family - refers to this sense of the oneness of all identities.''
India has dispelled the myth that democracy and rapid economic growth cannot go together. India's growth rate of over seven per cent is being achieved in a country that is also a vibrant democracy.
''India has also shown that a large, diverse country can be managed in a way that can promote economic growth and maintain social stability. One way in which we are doing this is through cooperative and competitive federalism. The states and the centre come together to pursue common objectives. States which pursue good policies and deliver essential services for the poor, induce others to follow.
''Our rapid economic growth is also very distinct in Asia. We have never tried to gain in trade at the expense of our partners. We do not follow ''beggar thy neighbour'' macro-economic policies. We have never undervalued our exchange rate. We add to world and Asian demand by running current account deficits. We are therefore good Asian and good global economic citizens, and a source of demand to our trading partners.
We all want Asia to succeed. I firmly believe that India can contribute to Asian prosperity and development by being economically strong, he added.