MR. ZOELLICK: [In progress] ….and I would like to thank the Minister in particular for our discussions, a wonderful lunch, and for his friendship.
I also want to thank the Government of India and the people of this vibrant country for the hospitality extended to me and my colleagues during my visit. It's also been a privilege to meet the Prime Minister as well as the Minister for the Environment and the Minister for Home Affairs.
My primary purpose has been to listen and to learn. And I've been fortunate to gain an insight into the challenges and opportunities that face India today through my talks with a broad cross-section of people- from farmers to members of Enterprising Women's Groups, to biologists, to helping those that are involved with the economic sector, policymakers, scholars, as well as entrepreneurs and private sector representatives, both here in Delhi but also on a visit I had to Bihar. And we're interested as well as trying to continue our work in the urban sector. I had an opportunity to meet some of our colleagues from Mumbai as well.
I was very heartened by the progress that I was able to see in Bihar. The World Bank Group seeks to focus on low-income states. Last year I had the opportunity to visit Rajasthan. I am struck by the size and the complexity of the challenges as well as the opportunities that face India. I'm equally struck by the ideas, the energy, and the determination of the people that I've met.
There are development lessons to learn and to be shared with India as it strives to achieve its goal of inclusive growth, of ensuring that the country's poor are not left on the sidelines and unable to share the benefits of the country's strong growth success.
There also are lessons to be learned and shared from India's moves to deliver better infrastructure, stronger social services, and to promote sustainable development.
Also, there’s lessons from the business sector as Indian companies develop new business models that can be useful for developing countries around the world.
At the World Bank Group, we are trying to work to help India on its path to overcome obstacles to improved agricultural productivity and production, and this will be a very key priority over the next few years.
In my discussions with the Finance Minister, we agreed that the Bank's funding and technical resources would also be put to use to help build infrastructure, overcome bottlenecks that are needed to sustain high growth, and ensure that development programs remain socially inclusive and environmentally sustainable. The aim is to be inclusive, not intrusive on the environment.
We also recognize that the people of India need to know both the quality and the efficiency of spending.
Now, you've just witnessed two concrete areas of our support. More than a million people in India [who] live in coastal areas should be able to benefit from the project to reduce the risks of cyclones. This project marks the first Disaster Risk Mitigation Initiative to be implemented in India. And we've committed $1.5 billion in funding to support the Prime Minister's Rural Roads Initiatives. This is very significant. It's the largest rural roads project ever approved by the World Bank.
India has shown the world its ability to recover from the global crisis. With its seat at the G-20 table, India too has influence around the world. Over the past few days, I have been listening and sharing ideas about moving the G-20 agenda forward.
We stand ready to be a partner to help India by sharing our development knowledge and expertise and experience, but also to share India's development expertise and the lessons that it has learned with other countries. That in itself makes India a true global player.
So I am very appreciative of the Minister and his team. They're excellent partners. We've learned a lot, and as I leave India, I leave with an even stronger sense about the possibilities we can help follow India's design to be a growing and important part of the international economy as well as to try to help all its people. So thank you, Minister.
MODERATOR: Now I request one of the panel speakers to [inaudible].
MR MUKHERJEE: Mr. Zoellick, President of the World Bank, distinguished members of the World Bank team, my colleagues in the Ministry of Finance, friends in the media, ladies and gentlemen.
I had a very cordial and fruitful meeting with the President [of the] World Bank and his team today. I expressed gratitude to the President for his consistent support to India and for the proactive role played by him in ensuring a greater flow of funds to India from the World Bank Group.
We discussed about the global economy and India's increasing role in the global economy and in G-20. We shared many common views on how the global economic landscape is shaping. We discussed about raising commodity prices worldwide, continuance of low growth and unemployment in advanced economies, inflationary conditions in emerging markets, and global imbalances.
India sees an enhanced role for the World Bank Group in recycling global savings for investment in developing countries as one of the approaches for resolving global imbalance.
We had detailed discussions on India's economy and its developmental challenges. I informed the President that India has recovered quickly from the crisis; however, inflation and rising food and commodity prices are our major challenges. We need a stable global environment to ensure that our developmental paths are not disrupted.
To sustain high growth, we declared large investments in infrastructure for which we have a target of investing US$1 trillion in the 12th Plan. Half of the investment will need to come from the private sector. Our focus is on inclusive growth, empowering people through entitlement backed by legal rights. Systems like the UID, best or model technology will help us to attain this goal. We are also investing in skill [inaudible)] for creating a pool of 500 million skilled workforce by 2022.
The partnership between India and the World Bank is longstanding and of mutual benefit. The Bank has a rich knowledge base and advantages of the global reach. Even though the overall commitment by [the] Bank, about US$33.2 billion, is small compared to the whole size of our planned investments, we benefit from the ability of the Bank to bring best practices from across the world to our development process. We have talked about developing a finance-plus approach and increasing (word inaudible) of country systems for the Bank's operations in India. We will work with the Bank to expand the quality of its operations as well as the resources it brings to India and to target them to priority sectors such as infrastructure, rural livelihoods, agriculture, water management, urban development.
The two agreements which were signed today reflect the roles that the World Bank can play in the above regard. We have asked IFC to expand its operation in India and use its international links to bring in greater private sector investments into the infrastructure projects.
We would also like the advisory services to low-income states be expanded. We discussed our partnership with the Bank and the IFC in taking India's development experience and expertise as well as innovative business models to other parts of the developing world through new models of South-South cooperation.
MODERATOR: Thank you. Now we will have the formal session of questions. So I would request that any journalist who wants to ask a question raise his hand, introduce himself and his organization. They have agreed to take three questions each. So first I invite questions for the President of the World Bank.
QUESTION: [Inaudible] newspaper - a question to President Zoellick. The International Monetary Fund has been at the forefront of supporting or bailing out weak economies in the crisis. In that backdrop, I would like to have your views on what changed role do you think World Bank can play in the coming days in supporting such weak economies in terms of your developmental aid – as well as your sector specific focus?
MR. ZOELLICK: Well, first, since the full force of the crisis began in the summer of 2008, the World Bank Group has committed over $150 billion to support developing countries, and we've disbursed approximately $93 billion. That's actually more than the IMF has disbursed.
So, as for the premise of your question, the World Bank has actually provided some very quick financial support, and as an example, in the last fiscal year we increased our support for India from about $2 to $3 billion a year to over $11 billion. So that shows the critical role that we and the regional development banks could play in providing financial support to India and other developing countries so as to not only help their populations but also help the global recovery.
Your question also asked about the next steps. We're at a stage in the global economy where we're seeing a multi-speed recovery. Some of the developing economies, including India, have returned to very strong growth, and they're at a different point in the cycle than some of the developed economies. So I suspect the role of the World Bank Group will also change, and the Minister and I just talked about some of these ideas.
I expect that we'll play a heavy role in infrastructure, where we will be able to create jobs today while building future productivity and growth. Agriculture is a very important item in terms of overcoming poverty, but also dealing with some of the prospects for increasing global food prices, creating opportunities for the private sector, and financial inclusion.
So, what I found through the discussion today is that the agenda that we have set for our general direction globally is very nicely aligned with the Indian priorities.
The one other topic that both the Minister and the Prime Minister raised with me, which is one that I am hearing with increasing frequency around the world, is the focus on work skill development - moving from basic education to work skills to help people prepare for the labor force.
So the nature of the World Bank's role is really more on the microeconomic and structural side to create the future basis of growth, and we're very pleased with our partnership with India and other countries because our purpose is to help serve their strategies.
QUESTION: This is [inaudible] from CNBC [inaudible] News Channel. My question is for Mr. Zoellick. With high inflation, what is the World Bank prescription for high growth?
MR. ZOELLICK: Well, I think what--this relates somewhat to my answer to the prior question. You're seeing some of the developing economies that have recovered more quickly facing inflationary questions, and therefore, they are going to need to take policies that withdraw some of the stimulus, and depending on the economy, work on the supply-side bottlenecks.
My own sense in the case of the Indian economy is that some of the inflationary pressures are more likely a function of some of the bottlenecks on the supply side than they are from the demand side. And that's a nice fit for the work that the Bank does because we can help expand the possibilities for growth by focusing on structural needs, whether it be infrastructure, skills in the workforce, other challenges, for example, on the agricultural side.
So I think in other parts of the world, you'll find in the developed countries in particular that they are less likely to face inflationary pressures. But this is one of the topics that central banks around the world are very sensitive to because, even as they try to foster recovery, they are expanding liquidity in a large fashion so they have to be alert - at what point do they withdraw some of the monetary stimulus?
QUESTION: [Inaudible] My question is for the World Bank President. What do you think has been the most remarkable change in the relationship between the World Bank and the Indian Government over the years?
MR. ZOELLICK: That's an interesting question. Maybe that's one for the Minister as opposed to me.
MR. ZOELLICK: I think what I have observed in the three years that I've been in office is that the nature of the relationship evolves as India evolves. And what I've tried to encourage with all our country partners is to recognize that they're a client and we try to understand the client's needs and the client's interest and how to better serve the client.
Now, as my comments in the opening statement suggested, we're also moving to a new multi-polarity in the world economy. And that means that at the same time we might be able to bring some experience from the rest of the world to India, we're also learning from India in being able to transfer its experience globally. So India is known around the world, for example, with the green and white revolutions in agriculture. So those are experiences that we're able to share, for example, in Sub-Saharan Africa. At the same time, one of the challenges will be how can India increase its agricultural productivity.
So we're into a system where it's no longer a North-South transfer, but it's South-South. There's also lessons that the North can learn from the South. There's been some very interesting innovations in public-private partnerships in infrastructure that I think could be useful for developed countries.
So we need to continue to change at the Bank to meet the interests of India. India has had an extremely successful growth process, but at the same time, we and the Indian Government recognize there are huge challenges. There's too many people suffering from malnutrition. There's the focus on poor states. So I visited Bihar and Rajasthan in part because, in addition to the meetings in Delhi, I want to get a better sense about some of the low-income states.
One other area that I think is changing, in addition to the inclusive growth, is the sustainability of growth. So I very much enjoyed the working relationship we developed with Minister Ramesh in the Environmental Ministry - and these are topics that range from tiger preservation and biodiversity to cleaning the Ganga River to coastal zone protection. And so our relationship with India reflects some of the range of issues and complexity of India's economic development, and at the same time, we try to learn lessons that we can apply elsewhere.
And here I also want to stress the private sector. The Indian private sector has been extremely innovative, and we're seeing models that are more applicable in Africa and other developing countries come out of India than sometimes from the developed world. This is true in the hospital healthcare-based industry. It's true in the telecommunications industry. So as part of our discussions, we also try to make sure we've got good ties with the Indian private sector because at the same time India is our largest client for IFC, our private sector arm, with about $3.6 billion of investment, we can learn from Indian companies and apply those lessons elsewhere.
MODERATOR: Now I would like to invite questions for our honorable Finance Minister.
QUESTION: [Inaudible] we are at this moment waiting (inaudible) interest rates to tame inflation (inaudible)
MR MUKHERJEE: The Bank of India always keeps the situation under review, and whenever the appropriate adjustment of the crucial rates is called for in the larger interests of the economy, including the price stabilization, the Reserve Bank takes the appropriate policy in consultation with the government. Thank you.
MODERATOR: [Inaudible] I would request you (inaudible) your questions (inaudible) to India World Bank [inaudible]. You have the [inaudible] now.
QUESTION: Thank you very much. My question is both for Finance Minister--
MR MUKHERJEE: Not both. Only one.
QUESTION: My question is to you, sir. Was there any discussion on further support by the World Bank to Indian public sector banks? And did the latest report of the World Bank just yesterday seems to have predicted that India will grow faster than China next year, also come up during the discussion and in comments that the [inaudible) you may want to offer on that. Thank you.
MR MUKHERJEE: We had a very wide range of discussions. As you know, as for the structures of identifying the projects from where we require the World Bank support, there is regular institutional mechanism. So in that--through that mechanisms - we proposed the projects for the consideration and appraisal of the World Bank and they extend their support.
In the overall discussions, as both President and myself indicated in our observations, we covered a large number of areas at the macro level. And in my own observations I have stated one--rather deliberately used one phrase - that we have graduated our relationship from finance plus. We are appreciative of the efforts President World Bank himself has done to overcome the single borrowing limit for India. India today, as President himself has stated in his observations, currently we are having $33 billion plus for different projects.
So, particularly in the areas of social structure--social sector investments in agriculture, rural development, livelihood visions [ph], to tackle the problems of the urban area, then the whole host range of it.
In response to second question about--I do not know, but the fact of the matter is that every country is trying hard to, in its own way, to overcome the crisis and to reach the desired level of growth. Nothing wrong in it. India is trying. I'm not going to compete with anybody, but I want to reach the double-digit growth at the same time having modest rate of inflation without indulging in fiscal profligacy that meets with prudent fiscal management, and these are no doubt competing and sometimes contradictory objectives. But that is the job of the Finance Minister and the government as a whole. Thank you.
QUESTION: [Inaudible], so what is the rate or percentage of utilization of the aid that you get from the World Bank, and are you satisfied with it?
MINISTER: I'm not satisfied in the sense--I would rather qualify it - I am not fully satisfied. But surely myself and my colleagues are trying to see that the rate of utilization is very high, and there has been steady progress in the rate of utilizations.
Some of the--many of these projects are being implemented at the ground level, and there also we are encouraging the implementing agencies to see that we can effectively utilize the assistance which we are receiving from the World Bank, and the progress is satisfactory.
MODERATOR: Thank you very much.
MINISTER: Thank you.