The Indian government has shown resolve in tackling difficult issues and its performance in the ease of doing business has been remarkable, World Bank CEO Kristalina Georgieva said as she dismissed criticism of its rankings. Georgieva told ET that India can improve its ranking further by focusing on select areas where there is scope for improvement. Edited excerpts from an interview with Deepshikha Sikarwar & Vinay Pandey.
How was your meeting with the PM?
Very positive, very constructive meeting. We dedicated a lot of time to the prospect of further improving the ease of doing business. It was a forward-looking meeting and broadly speaking on the work the World Bank does to support India in its development aspirations but also to be the transmission line from India to other developing countries of knowledge accumulated on what works on development for others to benefit.
Just this week, we had African ministers in India to learn about its skills programme and we made a commitment to further build that kind of knowledge exchange. We’re already supporting India in the International Solar Alliance. We’re also looking forward to its experience in digital ID (Aadhaar) — how that can benefit other countries. Of course, the central discussion with the PM was on doing business and appreciation for the work we did in that regard but mostly on what next — how India can further improve in the ranking.
Is India’s target of top 50 in ease of doing business doable?
With hard work and perseverance, yes. What needs to be done is to focus on areas where there is still work to be done. There’re good platforms of collecting feedback from users of regulatory measures or from those impacted by these measures. By concentrating on areas where there is more room for improvement — like construction permits or conflict resolution — and by making sure it’s not the job of one department but of everyone concerned with the regulatory process. What you need to keep in mind that doing business has become quite popular and everybody is striving to do better. So, it is not just good enough to run but you have to run fast.
Are you surprised by the response these rankings have generated in India?
It is a remarkable progress by India. It is remarkable because of the accelerated pace of improvement but more so since it is happening in such a large and complex country. So, there’s reason for India to celebrate but I think it’s also important because success breeds success. It creates a positive environment for institutions to strive to do even better.
There are sections that have questioned the credibility of these rankings…
We take pride in the quality of research methodology and transparency of the data. Everything being surveyed is placed publicly and any researcher anywhere can calculate the ranking. When we engage in ranking, inevitably there are questions about the data, especially when countries not doing well tend to say there may be a problem with the methodology. But time and again, the review of the methodology has led to improvements but not to the questioning of the objectivity of data.
India is looking at bigger role at multilateral institutions. Did that issue come up with the PM and what do you have to offer on that?
Yes, we have discussed with the PM the significance he attaches to multilateral institutions and in particular to the World Bank and his ambition is to see the World Bank play a bigger role, being financially stronger.
There is an ongoing discussion on the capital position of the World Bank. India has been a strong supporter of boosting the financial capability of the World Bank. During the last 10 years of the [global financial] crisis, we’ve done all to help our members but the prolonged nature of the crisis has meant we’ve used a great deal of our firing power.
We’ve a sound programme. However, the world is more shock-prone. So we do have to be in a position of strength. That’s what the PM would like to see. With regard to the voice of India, let me first stress that India has always had a strong presence in the governance of the World Bank, on the board of directors as well as in the discussions among governors. We’re moving forward with a review of our shareholding, applying a dynamic formula.
In the discussions in the preparation and consensus around this formula, India played a constructive role. We were asked by shareholders to presents options in the spring meeting of governors to review and agree upon and in this process, the role of India is going to be significant because it’s such a large and growing economy and it’s also an important partner of the World Bank.
What kind of funding support can India expect over the next two years?
We’ve started discussing the priorities and also the envelope. We’re looking at somewhere between $3.5 billion and $4 billion. That is sizeable but it is entirely on par with the demands and aspirations from India. But let me qualify: we are in an initial stage. The ministry of finance indicated an ambition around that level and I can say this is a realistic number.
India is crucial to World Bank’s development goals. How do you see India progressing?
The progress of India in reduction of extreme poverty is remarkable. We’ve seen the economic development of India being one where attention is paid to people left behind. But most importantly, there’s significant attention to skills. The world is changing rapidly and you need to have an adaptable labour force where people’s skills are not narrow but there is adaptability in how learning is done.
So, what India now does — starting from childhood to skills development to attention to health and to sanitation — all of this is to build a future where majority of Indians can prosper. We also see interesting social protection programmes. If India is to succeed, it’ll have to aggressively address gender equality.
For a society where women are so talented to have only 27% of them in the formal economy — that is not the best place to be. So reaching Millennium Development Goals without eradicating extreme poverty is simply impossible. I’m encouraged that the PM is ambitious on that target. It was set to be 2026 but his projection is to shorten it to 2022. With dedication and determination, it’s possible.
We’ve seen that in other places. So, my belief is that India is reforming. It’s improving as a place for business and it’s improving in attention being paid to long-term fundamentals of a well-performing economy. Take the reform in taxation to help the country unify as one market. I’m a European and we’ve seen in the European Union the benefit of a single market. So hopefully, this initiative of creating a competitive economy would accelerate progress for India and through India progress for the world.
How do you see GST? The local commentary has been critical of the structure?
What we see is that there’s a healthy debate and assessment. The tax reform has been taking place in openness to take corrective action when this is necessary and this is how it has to be for a country this large. Obviously, once you come up with a reform package, you ought to follow the implementation of these and have the feedback loops that allow for adjustments. But overall, the key components for a competitive India are a unified market, infrastructure that connects different parts of India including digital infrastructure and attention to human capital.
These are things that’d take the country forward. If you look at the history of advanced economies that were poor not a long time ago what is it that made the difference? Investments in institutions and rule of law and taxation, investments in infrastructure and in education create a fairer society. This is exactly that kind of comprehensive approach to competitiveness we see in India.
What kind of best practices you discussed with PM that can be used by other countries?
We briefly touched upon three areas – skill development, solar — especially the International Solar Alliance India is marshalling — and ID for development. Our country director for Morocco brought a delegation to familiarise with Aadhaar. These are revolutionary steps in development.
The focus on skills, the fact you have a ministry of skills — this is of interest to many countries. African countries look at India as a lab and knowledge provider. They want to learn what works and they want to learn from India about the difficulties and how they can be overcome.
Can Aadhaar be a template for other nations?
It is something we’re looking carefully. We’ve established a high-level advisory panel to look at various ideas of how that can be done. It can be only spread if countries are willing to adopt it and that is why we’re doing it to make sure there is hands-on knowledge of how it works.
There are different views around the way to go forward — whether or not we should combine unique ID number with digital identity that is a form of identification that also proves nationality as you know Aadhaar doesn’t do that.
So, it is still early days to see whether there would be a pickup exactly of that system. But in any case, it is of great interest to countries to learn from India. Even if they come up with a system of their own, they’re inspired by what you have done which is remarkable, a billion people. Identity is dignity and also a way to make the economy work better.
Lot of what this government is focusing on is also what the World Bank is interested in –skills, sanitation, etc. So how has it been working with this government?
Agreat partner to work with. A country that is serious about reforming and tackling issues that for decades were, if not taboo, kept under the carpet or out of spotlight –for example sanitation or gender equality, women’s safety and security, ability to get more women into the workplace. And that is how you make progress by being brave to tackle these uncomfortable, difficult or complex issues.
Take the [cleaning up of] Ganga– very complex. We have experience in Europe with cleanup of less complex rivers and it takes complex policy and investment . Just phase one of the cleanup of the Rhine took 20 years and $40 billion.
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