Commentary/Rajiv Shukla
India is no longer the flavour of the month at the World Bank
Both the International Monetary Fund
and the World Bank
have now decided to closely monitor the state of our economy and,
if needed, review their policy towards India.
It is learnt the IMF is concerned about our GDP figures and
is seriously considering dropping India from the priority list
of 24 countries. The advantage of figuring in this list is two-fold.
The obvious one is that in a given situation, the IMF is more
likely to grant financial aid to these countries. Moreover, these
24 nations are allowed to have their representatives in the form
of executive directors in the IMF.
Our man in the IMF, M R Sivaraman, has woken up to the potential
crisis, and is busy trying to convince the funding agency that
the GDP figures have been wrongly calculated. But he appears
to be making no headway as the statistics have been provided by
the Government of India.
Now, we are faced with a situation where the IMF may replace India
on their priority list with a country like Indonesia, Malaysia
or South Korea, which has a higher GDP. I would blame Sivaraman
for having allowed things to have come to such a pass. He has
failed to project the political significance of India in the global
context to the IMF authorities. He appears to be more concerned
about saving his seat than actually promoting Indian interests.
In contrast, Surendra Singh, the Indian executive director in the
World Bank -- who also represents Bangladesh, Bhutan and Sri Lanka
-- has done a better job. Thanks to his efforts, the World Bank
does not doubt the importance of India, either politically or
economically. But this has not stopped the body from dispatching
a high level delegation to assess the economic condition of the
country under the United Front regime.
The delegation, comprising six board members of the World Bank
and accompanied by Surendra Singh, was in India last month. It
is supposed to submit a report on the present status of the Indian
economy to the World Bank top-brass by the end of February. Until
now, the World Bank has adopted a very sympathetic attitude towards
India. But this report could well change all that.
For no one can deny the fact that the Indian economy has taken
a nose-dive in the last six months. While there is no point in
heaping the blame on either P Chidambaram or his predecessor,
Manmohan Singh, someone must take responsibility for the decline.
The situation today is quite alarming. We are in the middle of
an economic recession, most industries and business establishments
seem to be facing a cash crunch, the capital market is down, and
the stock market scenario depressing, to say the least.
With no signs of any improvement, all attention is now focused
on the Union Budget. If Prime Minister H D Deve Gowda and his
men fail to effect a turnaround in March, it could lead to further
instability -- on both the political and economic fronts.
If the Budget fails to give a fillip to the country's financial
affairs, the Congress will surely withdraw support to the United
Front. This will invite a political crisis, which will hardly
help India's cause vis-a-vis the IMF and the World bank.
So, if a financial crisis is to be averted, some very careful
political decisions are to be taken immediately by the UF government.
Tell us what you think of this column
|