ONE-ON-ONE - India shining among developing countries, says World Bank MD

Sri Mulyani Indrawati MD & COO, WORLD BANK Sidhartha & Surojit Gupta

TNN





World Bank managing director and chief operating officer Sri Mulyani Indrawati is bullish about India's growth prospects and tells TOI in an interview that New Delhi must use the narrow window of opportunity provided by slowing commodity prices to push through more reforms. Excerpts:How do you see the progress in terms of policies in India?
This is a very rare and good opportunity for India. It is getting advantage of low commodity prices, especially oil, that will provide space for the budget in terms of subsidies. The government commitment and announcement on fuel subsidy reform is very encouraging.
India has the opportunity to use this narrow window to push for further reforms.The more attention on improving the business climate to be able to attract more foreign direct investment for small and medium enterprises is going to be critical because the growth of India cannot rely only on government spending. GST reform is not only going to be critical from the government budget point of view but, most importantly , for creating a level playing field and the mobility of merchandise and people that will create a huge potential for India. That is going to be the reform which needs to be prioritised.
Do you think the slowdown in China provides an opportunity to India to benefit in some ways?
If you look at the global level, there is plenty of money because of the policies being pursued by advanced countries. That money is flowing to many emerging countries.Now, there is normalisation of monetary policy which will reverse this money back to the US. India is being seen as discriminating from other emerging countries puts it at an advantage not only in preventing the money outflow but to redirecting this flow to India. You are not going to see interest rates jump to high levels if you talk of normalisation of monetary policy. Search for meaningful return is still going to be there.
For India, given the size of the market and the level of growth, you definitely are shining, compared to other developing countries. The question is whether that capital is going to India? That will require experience of in vestors to see: is it really easy to do business here? Is it going to be too complicated?
That is why focus on doing business is going to be very critical. It more on that theme rather than comparison with China. China has its own FDI and composition in terms of their growth. They are going to make an adjustment on their growth model, more domestic resource as well as on consumption rather than investment driven growth. But I see huge potential for India to tap into this capital flow.
How do you see the developments in China?
The World Bank produced this study -China 2030 -two years ago. It has shown that for China to sustain their performance in the economy they definitely need to adjust their growth model and strategy . This is part of that process of adjustment. The level of growth is definitely going to be lower than the double digits they have had and so we are talking of 7% or even 6%, something which is being seen as a path of adjustment.
There is criticism over lower budgetary spend on social sectors. Do agencies like World Bank now have a greater role to play?
The function and responsibility of making sure social spending like health, education or even basic services is usually delegated at the lower level. I know that within India now decentralisation will delegate more function to the lower level. When you delegate more function to the lower level, it will also come with resources and resources will be provided at the local level. The capacity of local governments to provide basic services is going to be very critical and this is the area which the Bank is definitely supporting strongly .The programme on sanitation is huge. We stand ready to support the government, especially in areas which are dealing with the social spending and inclusiveness.