Change is the great constant of the world economy. India was still a colony when the allied powers shaped the international architecture at the end of World War Two. Today, India is a rising economic power that is contributing to world growth in new and powerful ways.
With India’s strong human capital and cutting-edge innovation, it is clear the knowledge and technology content — the real competitive smart-edge of India’s exports — is going to rise.Economic reforms in India and China, and the export-driven growth strategies of East Asia all contributed in the last 20 years to a world market economy that surged from about 1 billion to 4 or 5 billion people. This shift offers enormous opportunities. But it has also shaken an international economic system forged in the middle of the 20th Century.
The international architecture needs to accommodate India and other powers whose growth rates far exceed those of developed countries. We must recognise this reality and anticipate the future — shape it or be shaped by it.
India is already an indispensable part of the global conversation. Its voice at the G-20 table is an important force for designing a future global architecture, not least because it has well-managed the impact of the economic crisis and is helping support the world’s recovery.
Shifting influence is also reflected in the numbers. As India’s $1.2 trillion economy returns to growth rates of eight to nine per cent, we can expect it to grow not only as a market but as a supplier of a range of services and increasingly knowledge-intensive goods.
With India’s strong human capital and cutting-edge innovation, it is clear the knowledge and technology content — the real competitive smart-edge of India’s exports — is going to rise. India’s increasing globalisation will be driven by the country becoming a source for some of these specialised products. As it further integrates with global production chains, it will do so not by making more of the same, but by making products of new value.
Of course, India still faces enormous challenges as a developing country yet if it can remove bottlenecks that slow its economy, then India is well positioned to become one of the new poles of global growth.
India will need innovative financing to move on its massive infrastructure agenda. I hope the World Bank Group can help to attract global partnerships for knowledge and funding. Access to finance is another area where changes will mean a difference to the lives of millions of citizens, that difference being a share in the opportunity of India’s growth.
There are also huge technology advances that India can put to work to make government more efficient, to make service delivery easier to monitor and track, and public financial flows more visible. Half a billion Indians now have cell phones.
This translates into a powerful information flow to — and critically from — some of the remotest and poorest areas.
A sustainable globalisation means an India that shares some of its remarkable achievements more widely. Call it South-South cooperation or good global citizenship, India has much to offer the world: lessons from its model of economic development; cooperation between private and public sectors to generate microeconomic efficiency and macroeconomic stability; working on global financial regulation as part of the G-20 task forces; and considering ways forward on migration and cross-border labour mobility.
Everyone cites India’s Green Revolution. But I’m even more intrigued by what is known as SRI, or system of rice intensification, and I know this is also an area of interest for PM Manmohan Singh. Using smart water management and planting practices, farmers in Tamil Nadu have increased rice yields between 30 and 80 per cent, reduced water use by 30 per cent, and now require significantly less fertilizer. This emerging technology not only addresses food security but also the water scarcity challenge that climate change is making all the more dangerous. These are all lessons for our world.
India’s status as a rising economic power is closely connected with how it can create opportunity and inclusion. It’s not an option to exclude hundreds of millions of Indians from the country’s growing prosperity. One in three of the world’s poor are in India and the country has one of the highest malnutrition rates in the world, with 44 per cent of children born underweight. Actions to address poverty widely — and education, health, rural roads and livelihoods more specifically —have a renewed urgency.
The World Bank Group can support India through assistance with urban development, transport and power infrastructure; elementary and secondary education; and agricultural and rural development. India is now the biggest client for IFC, the group’s private sector arm, with $1 billion a year invested over the last three years. IFC is improving access to infrastructure and finance, and addressing climate change as central to its work. Working together, India and the World Bank Group can become even stronger partners as India rises both at home and abroad.