New Dehli, India
Saturday, August 20, 2005 PROCEEDINGS MR. CARTER: Good evening. I am Michael Carter. I am the Country Director for India at the World Bank, and I am delighted to welcome you at this press conference. And I am delighted to introduce Dr. Paul Wolfowitz, the President of the World Bank. As you know, the purpose of this press conference is to wrap up Dr. Wolfowitz's visit to India, his first as President of the World Bank. We will start with a short introduction by the President and then we'll open it up for questions. When we have questions, I would ask you to identify yourself by your name and your organization, and we're going to limit it to one question, so if anybody asks a multiple question, I am going to disallow the whole thing, just to let you know how it will work. MR. WOLFOWITZ: The other possibility is if you ask several questions, I get to pick which one I answer. MR. CARTER: That's right, too--or another one. [Laughter.] MR. CARTER: Good. Over to you. MR. WOLFOWITZ: And why don't we--is my mike on; can you hear me--mike on, okay--could we start with a moment of silence for people to turn off their cell phones? Why don't we do it now, at the beginning, instead of later. There we go. Thank you. Let me just say that I am really delighted to be in India and delighted to be able to have made my first official visit to this great country so early in my tenure as President of the World Bank. India is incredibly important in the process of development, not only, although perhaps most importantly, because there are so many people here and whose futures depend on India's success, but I think India also presents a model to the world that it is possible to combine successful development and democracy and an open society. And I think that is extremely important for many countries besides India. I also feel that India's success is helping to lift up this whole region, and of course, it is a region with enormous numbers of people and enormous influence on the rest of the world. So I have been delighted to be able to come here. I have had a wonderful reception. I had an extremely impressive demonstration down in Andhra Pradesh the first day I got here of the very extensive organization of self-help groups among poor women, among the most marginalized groups of the population. It was extraordinary when I had the first encounter in a small village in a house of small farmers who had previously been migrant laborers but who had used the resources of the self-help group to be able to provide their own livelihoods. I thought, well, this is an interesting pilot program, and by the end of the day, I realized this is no pilot program--this is six or eight million people whose lives have been transformed, and not just in a material way but in almost a spiritual way that the women who spoke to us from all over the state in our last meeting in Hyderabad were talking about how it had given them a new kind of confidence, it had taken them out of the mental anguish that they had suffered from marginalization. And you could tell from the way they spoke that they had developed extraordinary leadership skills. I'm going to come back to that in a moment, because empowering women is one of the emphases of World Bank programs here, but I had really excellent meetings yesterday with Government officials, including the Prime Minister and President, who were most generous with their time, but also the Finance Minister and the Deputy Chairman of the Planning Commission, and it is an impressive group of Government officials that you have here. We also met with a group of state officials and some members of the Planning Commission to talk about India's efforts in tsunami reconstruction. It is a subject of enormous interest to the whole world, because the tsunami was a disaster that captured the world's attention, but India is unique in really handling India's problems largely on its own, although with some substantial help from the World Bank--in fact, the World Bank is contributing over half a billion dollars, $528.5 million, to be precise, to India's tsunami reconstruction efforts, and I was very pleased to hear about that success and hope that perhaps there is a way that India's success can be transferred to some of the other countries in the region that are suffering so very badly. If I had to generalize about what we would like to do here in India as the World Bank, it is really two things. It is to help India sustain its impressive economic growth, because without growth, it is not possible to reduce poverty--indeed, India's economic growth has helped tens of millions of people to lift themselves out of poverty over the last 20 years, but there are still hundreds of millions living in extreme poverty, and I think arguably, more people in poverty in this country than any in the world. So there is a lot of work still to be done, and it's not going to get done unless that growth can be sustained. But the second major theme of the things that we have been working on is to help your Government at both the state and federal level, and your people, to see that the benefits of that growth are distributed more rapidly to the poorest people of the country and that the problems of poverty are addressed more quickly if possible. And for that reason, we have tended to emphasize programs in the area of education, programs in the area of empowering self-help groups like the one we saw in Andhra Pradesh, and we discussed with the Government while I was here the--I think it's called the Bharat Nirman project--program--to promote rural development, which is where the majority of India's poor live and where it was pointed out to me, the challenge of sustaining growth is in improving productivity in the rural areas in agriculture. And the World Bank last year increased our commitments to India from $1.4 billion the year before to $2.9 billion in this past year, and we are committed to sustaining that level--at least, we are prepared to sustain that level--of $3 billion a year over the next three years. Of that $9 billion over the next three years, $3 billion or $1 billion a year, we would be prepared to commit to the Rural Development Program of Bharat Nirman. I think I might just conclude with going back to what I said earlier. I think India's success is most important to India's billion people and especially India's 200 or 300 million poor people, but it is really important to the whole world, both because of the weight that India carries in the world and also, I think, because India's success inspires others that success is possible. As President of the World Bank, I'd like to say that we are very proud if we have played even a small role in that success. We feel that we have been a good partner to India, and we look forward to continuing that partnership. I'm happy to take some questions. MR. CARTER: Okay. Questions? Yes? QUESTION: I am [inaudible] of India. MR. WOLFOWITZ: Could you be quiet over there, please? QUESTION: The left parties supporting the Indian Government today called a press conference and talked about how the World Bank has been pressuring various companies--for example, Delhi’s Water Supply Board directly asked the Government to withdraw a loan essentially that they have asked from the World Bank. Does it actually bother the World Bank and the Government is sometimes held ransom to the left-leaning party? MR. WOLFOWITZ: I think development is the most important issue for the future of this country, and it is therefore going to be a political issue. Fortunately, this is a democracy where people debate these issues, and I think you have democratic processes for resolving them. I think there is a certain amount of misinformation about the World Bank's role. I met today with some representatives of citizens' groups who are concerned about that water issue that you mentioned, and they left a memorandum with me which I need to study further, but I noticed that, for example, there is some project called the Sonya Vihar [phonetic] plant, and it was described as a World Bank project. It is not a World Bank project at all. I think--look, at the end of the day, I think democratic politics is about reaching compromise. People express their opinions loudly and vocally, but I think there is a considerable degree of consensus on the need for this country to continue moving forward and for the poor people of the country to benefit from that growth. MR. CARTER: Thanks. Yes? QUESTION: India has sought over $1 billion for this Bharat Nirman project, so will you be considering hiking the annual loan disbursement from $3 billion to $4 billion? MR. WOLFOWITZ: You know, they say "never say never." Our current plan is over the next three years would be $3 billion a year, and it takes a lot of work to get to that level, and doing any one of these projects the right way involves a lot of technical expertise applied to designing it, to putting in the right kinds of environmental safeguards, to making sure that you have procurement processes that guard against corruption or misuse of funds. We are a big institution, but we are not as big as people sometimes think, and I don't know if we can scale up as rapidly as you are suggesting. Getting to this $3 billion a year level is a considerable increase for us, and I first want to make sure that we are doing that right. But in principle, we want to do as much as we can to meet India's needs, and if there are requests from your Government that go beyond what is currently contemplated, we'll certainly look at whether we can meet them. MR. CARTER: Yes? QUESTION: What is your position on the left-run states of India, like West Bengal? MR. WOLFOWITZ: I look forward to visiting there. This is a huge country, and I realize--I mean, Andhra Pradesh if it were a country would probably, I guess, be among the ten largest countries in the world, and it is just a State. In the United States, we think Texas is big--it is tiny compared to your states. So I am very well aware that visiting Andhra Pradesh and visiting Delhi is just part of the picture of India. You make reference to the political makeup of that Government in West Bengal. You know, what strikes me about this era of the early 21st century is I think people are a little more pragmatic and a little less ideological. We are looking for what works, and different things work in different countries. I don't think you'd find anything in Karl Marx that would describe the Marxist state to your northeast. Your democracy is very different from British or American democracy. So I think pragmatism needs to be the name of the game, and relieving poverty has got to be the goal, and I look forward to finding out how they do it in West Bengal. MR. CARTER: Yes? QUESTION: [Inaudible.] MR. WOLFOWITZ: Why don't you stand up? It's a little easier for me to hear? Yes, thank you. QUESTION: [Inaudible.] So, do you have any concrete plans to step up assistance, and what kind of assistance [inaudible]? MR. WOLFOWITZ: Well, we did talk with the Finance Minister and with other officials about this concept of gap financing, where there might be viable private sector infrastructure investments that would require some public investment at the front end in order to, in effect, get them off the ground. Certainly it's a concept that in principle makes sense to me and I think makes sense to my staff. There is a saying, "The devil is in the details." We have to look at the details of individual projects to see how that works. But given the magnitude of India's infrastructure needs, I think it is certainly a good idea to look at areas where the private sector can contribute resources to meeting those needs; but I think it is also important to recognize that there are important areas where it has to be a public sector investment principally, and I think that's where we come back to Bharat Nirman and the rural infrastructure development, which I think is a case where good public sector investment--we have seen this in other countries--that provides roads and electricity and irrigation is the platform, if you like, on which the private sector, which is the agricultural sector and the enterprises that arise around the agricultural sectors, can flourish. MR. CARTER: Any more questions? Yes? QUESTION: How do you see the growth prospects of India. You see the economy as looking good, but how do you see the prospects the next few years? Do you think it will be sustained, or that the investments are proper to sustain it? MR. WOLFOWITZ: You know, someone once said "It is dangerous to make predictions, especially about the future," and what I think one can say, and obviously one can say it, and it is very heartening, that the last 15 years have been phenomenal, and it demonstrated that India can do it. And you have the most precious resource of all, which is enormously talented human beings. That is much more valuable than oil or gold or anything. And I think what the reforms that have been instituted in this country have given people in various--not just private individuals but groups like the ones I visited on Thursday in Andhra Pradesh--the opportunity to really realize the fruits of their talents and their energy and their labors. And that produces growth. I have an intuition--not an economist's analysis--that says that it is actually possible to do a couple percentage points better, and I hope you'll get to that level. It is also possible if you don't continue with sound fiscal policy and sound monetary policy and creating a good climate for especially small enterprises, but even larger ones, that it is going to take some effort to sustain the high 6 or 7 percent that you have been achieving so far. But it seems to me that the last 15 years are a demonstration of how important it is to keep that effort up, and the Government officials with whom I met certainly had the commitment and the wisdom and the proven track record to be able to do it. MR. CARTER: Yes? QUESTION: [Inaudible.] My question is, Mr. Wolfowitz, some of your recent past has been about Iraq, and from India you go on to Bangladesh where, as you know, a few days ago, there was a series of bomb blasts. Now, the World Bank, come hell or high water, has continued with aid to Bangladesh, despite a lot of other countries linking terrorism and democracy and aid. Do you have a point of view--do you have a view on the blasts, and if you can tell us a little bit about what you're going to do there? MR. WOLFOWITZ: Well, I don't know about this specific--you call them "blasts"--it seems to me they are acts of terrorism. I don't know who is behind those specific ones. There is no question that it is a lot harder to do development when people are blowing up school children or chopping off heads, and those people are clearly enemies of progress everywhere in the world. I am going to Bangladesh to learn about that country. It clearly has some huge challenges in the development area. I have a sort of feeling that it would benefit from a spirit of some political compromise, because I think that whatever divides the different parties there is from this outsider's perspective much less important than the prospect of helping the tends of millions of poor people in that country to improve their lives. But I am merely going there to learn, so it would be presumptuous if I offered too many opinions certainly before I get there. MR. CARTER: Good. We'll take one last question. Here we go. QUESTION: In the past, the Bank has funded projects in energy, and there is a great deal of demand for energy security in India, and there is also a great demand, a need, for securing nuclear energy in India. Will the Bank consider funding nuclear projects? MR. WOLFOWITZ: Not if my Country Director here has anything to say about it. But we were asked by the G-8 countries that met in Gleneagles in July--and your Prime Minister participated as I did in one of their sessions--we were asked by the leaders of those eight countries, I guess correctly called the world's leading industrialized countries--but it was Prime Minister Manmohan Singh's point--I think he was the one who pointed out, or maybe it was President Mbeki--that they had to invite these other five countries in order to be able to say that three-quarters of the world's economy was represented at Gleneagles. The World Bank was specifically asked to try to help construct a framework for facilitating investments and technology transfer that would provide for both more efficient energy resources for development and cleaner energy resources for development. Now, "cleaner" depends on what you are looking at. If the goal is reducing carbon emissions, then nuclear is clearly one of the ways to go, and I think it has to be looked at. But nuclear brings its own environmental problems and its own environmental issues, and I don't know whether we are ready to take that one on yet. If I could just conclude again on, first of all, those of you--and it is most of you here--who are Indians should feel very proud of what your country and your people are accomplishing, and I mean that most sincerely, and feel very strongly that the World Bank--we may have made a mistake here or there; I am not saying our record is perfect--but I think we have been good partners to you, and I hope we will continue--I am committed that we will continue to be good partners. And I have to say that sometimes--you are the media--I think the media play a very important role in development, among other things, because I think government accountability and transparency are keys to preventing corruption, which my predecessor Jim Wolfensohn correctly described as a cancer that threatens development. So I hope you keep up a vigorous spirit of criticism. But it is also important to get out the good news, and I was really struck after the day in Andhra Pradesh--and I know it's not perfect, and I just had an interesting meeting with some NGOs who told me some of the imperfections of the self-help groups--but I have to tell you it is a colossal story that I have never read about in the international media, and I'm going to do my best to have it read about, because I think, with its imperfections, it is something that the whole world should know about and can learn from. I look forward to coming back here and learning some more. Thank you very much. MR. CARTER: Thank you. [END OF PRESS CONFERENCE.]
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