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G. Srinivasan

Mr Nicholas Stern

BANGALORE, May 22

INDIA'S economic reform progress during the last 10 years has been `pretty good' but further reforms need to be put in place to ensure higher economic growth rate to make a dent in poverty and a distinct improvement in development and the quality of life for its people, according to the World Bank's Senior Vice-President and Chief Economist, Mr Nicholas Stern.

In an interview to Business Line here in the midst of his busy schedule in chairing sessions and coordinating the Bank's first annual development economics conference ever held outside Washington, Mr Stern said that "without further reforms in the power sector, irrigation, labour laws, the way bureaucracy functions, public finances, the growth rate will slow down. But if the reforms are pushed ahead, there is reason to expect that growth rate will rise."

Asked whether the Prime Minster, Mr Atal Bihari Vajpayee's, vision of putting into the league of developed countries feasible, Mr Stern said that "I have not been very close to the criteria the OECD uses but going by the record of India in reforms in the past and the way if it could keep going on the path of reform, some point of time, it will join OECD but I don't know when?"

To a query as to whether the World Bank has come a long way from its policy-based lending and attaching conditionalities for its assistance, Mr Stern said, "you should never tell any country that you have to do this. The job of the World Bank is to support reforms that are likely to lead to poverty reduction. We have to try to understand better over time what it is that leads to positive developments in poverty reduction and we will go beyond."

Stating that the Bank still have to decide "whether we support or not" case for assistance that come to it, Mr Stern, however, said the bunch of policy you put together depends on that country and its circumstances. There is no one size fits all paradigms that the Bank believes should be prescribed for all and the experience of development financing over the past forty years had borne this out amply, he added.

To a question about contradictory postures of experts and economists on the merit and demerit of Washington Consensus in the course of the deliberations of the Conference here, Mr Stern said, "economists can disagree". But, he said, people recognise the importance of basic sensible macro economic policy, openness to trade, investing more in education and health and "the label Washington Consensus is pretty useless and I try avoid using it myself".

He said the discussions during the two-days of the Conference have been positive, lively and thoughtful. He said the controversy over state-vs-market is futile because markets need state and the state needs markets.

He said development experience convinced him about country ownership and development effectiveness. Ownership meant that the programme is embraced and shaped by the country itself and reform programmes forced from outside with weak societal commitment would fail.

Mr Stern made a fervent appeal to advanced countries to deliver on the promises in cutting down farm subsidies, reducing tariff peaks in products of comparative advantages to developing countries such as textiles, clothing and footwear.

He said that the forthcoming G-8 Summit and Cancun Ministerial of the World Trade Organisation (WTO) would be crucial in terms of building confidence of the developing countries.

He urged the rich world to "finance the cost of change and try to break the logjam" in agricultural negotiations so that the developing countries would regain confidence in trade negotiations.

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