FM asks World Bank to align process with other MDBs for benefit of members

New Delhi: Finance Minister Nirmala Sitharaman on Thursday asked the World Bank to align the processes and procedures with other Multilateral Development Banks (MDBs) as it will benefit developing nations.

Participating in the 108th Meeting of the Development Committee Plenary of the World Bank Group (WBG) in Marrakech, Morocco, Sitharaman said it is encouraging to see the progress towards G20 countries' common goal of creating a Better, Bigger and more Effective' World Bank to address the national and global challenges for maximising developmental impact.

"We believe that the direction of the World Bank's evolution will set the template across the MDB ecosystem," she said.

India supports the World Bank's new vision to create a world free of poverty on a liveable planet, its new mission to end extreme poverty and boost shared prosperity on a liveable planet that gives World Bank a formidable mandate to both fight poverty and address global challenges, she said.

The Finance Minister encouraged "the World Bank to take the lead in aligning the processes and procedures, to the extent possible, with other MDBs this will significantly benefit client countries who have to deal with multiple MDBs."

Recognising that further work is needed beyond Marrakech to increase the Bank's capacity to realise enhanced ambition, Sitharaman said, it is important to ensure that the augmented WBG country engagement model is firmly rooted in national development priorities.

Also, while engaging in climate action in line with the principle of common but differentiated responsibilities and respective capabilities, she said, "we encourage the World Bank to be more ambitious in its commitment to adaptation finance."

She also emphasised the need for enabling private capital mobilisation at scale will require an enhanced One World Bank' approach.

"At the same time, we must be realistic in our assessment of the potential of private capital mobilisation, given the global economic outlook," she said.

Appetite for the proposed pilot Global Challenge Programs (GCPs) will depend on strong country demand and ownership, access to new and additional finance, as well as provision of concessional finance, for both Low-Income Countries (LICs) and Middle-Income Countries (MICs), she said.

"We fully agree with the conclusion that significantly more could be done for clients by mobilising new, additional resources for the World Bank especially by maximising IDA replenishment to address the needs of the poorest countries and general capital increase for IBRD," she said.

Acknowledging the importance of enhanced replenishment for the International Development Association (IDA), she said it is the major source of long-term cheap financing for LIC's and also strengthening of IDA.

"The recent reports of the G20 Independent Expert Group on Strengthening MDBs, give an indication of resource requirement and we urge consideration of its recommendations on priority," she said.

She concluded by reiterating that today's challenging times call for a transformational approach to accelerate progress towards the 2030 Sustainable Development Goals (SDGs) in the true spirit of Vasudhaiva Kutumbakam or One Earth, One family, One future'.

Talking about the Indian economy, Sitharaman said, while domestic consumption and investment demand are expected to continue driving growth, global and regional uncertainties and domestic disruptions may keep inflationary pressures elevated in the coming months, warranting greater vigilance by the Government and the RBI.

The Government has already taken pre-emptive measures to restrain food inflation which is likely to subside price pressure in the market soon, she said.

The external sector requires a closer watch to strengthen merchandise export growth in the face of slowing global demand, she said, adding services exports continue to do well and are likely to continue doing so as the preference for remote working remains unabated, typically manifested in the proliferation of Global Capability Centres.

While growth prospects have been strong, and domestic economic activity is maintaining resilience with a healthy balance sheet of the private sector and increased capex spending of the government, crowding in private investment, she said.

Overall inflation is projected to decline to 5.5 percent in 2023-24, while core inflation stayed at a 39-month low of 4.8 percent.

Despite global headwinds, she said, on account of stronger-than-expected growth in the fourth quarter of FY23 driven by robust domestic investment, the IMF, in its World Economic Outlook of July 2023 has revised India's real GDP growth forecast for FY24 to 6.1 percent.

Forecasts by other international organisations are higher, she said, adding, the robustness of domestic investment is the result of the government's continued emphasis on capital expenditure, which is expected to drive growth in the coming years.

In FY24, she said, the union government increased the capital outlay by 33.3 percent, raising the share of capital expenditure in total expenditure from 12.3 per cent in FY18 to 22.4 percent in FY24.

Given the importance of private investment in accelerating economic growth, she said, the Government has been making various attempts to raise investment by the private sector.

The Production-Linked Incentive (PLI) scheme is providing capital expenditure-linked incentives to 14 key sectors.

The PM Gatishakti scheme, coupled with the National Infrastructure Pipeline (NIP), is expected to encourage private-sector participation in creating new infrastructure and help in onboarding major private-sector infrastructure players.

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