Commentary/Rajiv Shukla

India is no longer the flavour of the month at the World Bank

Both the International Monetary Fund and the World Bank have now decided to closely monitor the state of our economy and, if needed, review their policy towards India.

It is learnt the IMF is concerned about our GDP figures and is seriously considering dropping India from the priority list of 24 countries. The advantage of figuring in this list is two-fold. The obvious one is that in a given situation, the IMF is more likely to grant financial aid to these countries. Moreover, these 24 nations are allowed to have their representatives in the form of executive directors in the IMF.

Our man in the IMF, M R Sivaraman, has woken up to the potential crisis, and is busy trying to convince the funding agency that the GDP figures have been wrongly calculated. But he appears to be making no headway as the statistics have been provided by the Government of India.

Now, we are faced with a situation where the IMF may replace India on their priority list with a country like Indonesia, Malaysia or South Korea, which has a higher GDP. I would blame Sivaraman for having allowed things to have come to such a pass. He has failed to project the political significance of India in the global context to the IMF authorities. He appears to be more concerned about saving his seat than actually promoting Indian interests.

In contrast, Surendra Singh, the Indian executive director in the World Bank -- who also represents Bangladesh, Bhutan and Sri Lanka -- has done a better job. Thanks to his efforts, the World Bank does not doubt the importance of India, either politically or economically. But this has not stopped the body from dispatching a high level delegation to assess the economic condition of the country under the United Front regime.

The delegation, comprising six board members of the World Bank and accompanied by Surendra Singh, was in India last month. It is supposed to submit a report on the present status of the Indian economy to the World Bank top-brass by the end of February. Until now, the World Bank has adopted a very sympathetic attitude towards India. But this report could well change all that.

For no one can deny the fact that the Indian economy has taken a nose-dive in the last six months. While there is no point in heaping the blame on either P Chidambaram or his predecessor, Manmohan Singh, someone must take responsibility for the decline.

The situation today is quite alarming. We are in the middle of an economic recession, most industries and business establishments seem to be facing a cash crunch, the capital market is down, and the stock market scenario depressing, to say the least.

With no signs of any improvement, all attention is now focused on the Union Budget. If Prime Minister H D Deve Gowda and his men fail to effect a turnaround in March, it could lead to further instability -- on both the political and economic fronts.

If the Budget fails to give a fillip to the country's financial affairs, the Congress will surely withdraw support to the United Front. This will invite a political crisis, which will hardly help India's cause vis-a-vis the IMF and the World bank.

So, if a financial crisis is to be averted, some very careful political decisions are to be taken immediately by the UF government.

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