My Recent Trip to India

Last week, I had the pleasure of visiting India for meetings with the government, private sector, and the G20 finance ministers and central bank governors. I urged more policy actions to increase global growth and break the impasse on the developing country debt overhang. I also co-chaired the Global Sovereign Debt Roundtable with Kristalina Georgieva, Managing Director of the IMF, and Nirmala Sitharaman, Minister of Finance and Corporate Affairs of India.

I began my trip in New Delhi, where I had a productive meeting with World Bank Group staff based in India on our 97 active projects across agriculture, transport, health, and energy, and encouraged focus and scalability for greater impact. I also thanked staff for their hard work throughout the COVID-19 pandemic and recovery.?

I sat down with the Economic Times and CNBC-TV18 to discuss the crisis facing development, including—among other challenges—rising fertilizer and food prices. I expressed concern about high absorption of capital in advanced economies undercutting global growth, a problem that may continue with the reversal of the peace dividend. I urged more action on debt and climate costs, and encouraged central banks to look at growth-oriented tools to combat inflation—such as improved regulatory policies and reduced bond holdings—in addition to setting interest rates.

It has been encouraging to see India recover strongly from the COVID-19 pandemic, and I noted that the current stability of the rupee could provide an important underpinning for faster growth.

I welcomed India’s “Amrit Kaal” budget, which targets 8 percent growth, and urged more enabling of the private sector and higher female labor force participation, both of which are critical for growth. I also highlighted the importance of land reform and credit availability.?

In meetings with Prime Minister Modi and Minister Sitharaman, I commended India for maintaining solid growth during the global slowdown and encouraged further progress to improve the business enabling environment and advance its energy transition. We discussed steps to encourage private sector investment and small business growth, and the need for faster action to address the debt vulnerabilities of developing countries. We discussed the World Bank Group’s strong partnership with India, and ways to improve the impact.

I also encouraged expanded capital markets and more pathways to delist companies as steps that could help attract large new inflows of foreign direct investment. I also highlighted the role and cost of various subsidies and pathways to better target the support for small farmers and vulnerable sectors.

I concluded my visit to New Delhi with an informative breakfast with Indian financial services and power sector leaders. We discussed ways to attract private sector financing and increase female labor force participation, welcoming the progress made by one breakfast participant, the Federal Bank, where more than forty percent of employees are women.

Next stop was Bengaluru for the G20 Finance Ministers and Central Bank Governors’ meetings, which provided an opportunity to discuss the critical economic and fiscal issues facing the developing world as well as our support programs in Ukraine and Türkiye.

While global growth is bottoming out, I worry that the crisis is intensifying for many developing countries. Poorer countries face shortages of capital, energy, and fertilizer. They are also facing even heavier debt burdens as interest rates rise.

At the World Bank, we have observed devastating reversals in development indicators. Hundreds of millions of people live without electricity, clean drinking water, and infrastructure. These reversals span education, health, nutrition, poverty, median income, and climate adaptation.

Compounding these reversals, many countries are now facing a multi-year period of slow growth driven by weak investment. Most available global capital has been absorbed by a narrow group of borrowers that already have extremely high government debt levels yet face both demographic declines and the reversal of the peace dividend, as I previously mentioned, of the 1990s.

As I highlighted to the G20 ministers gathered in Bengaluru, restoring growth—including growth in median income—is absolutely critical to our mission of poverty alleviation, shared prosperity, and sustainability. I would invite you to read my three interventions at the G20 Finance and Central Bank Governors’ Meeting, in which I expanded on some of the most pressing issues faced by developing countries:

• Session 1: International Financial Architecture
• Session 2: Financial Sector and Inclusion
• Session 3: Global Economy and Health

Throughout these meetings, I emphasized the importance of restoring countries to growth with numerous global leaders, including Agustín Carstens, General Manager of the BIS, and Klaas Knot, Chair of the Financial Stability Board, among other colleagues and friends. I was pleased to hold bilateral discussions in which I further emphasized this point with Vice President Nadia?Calvi?o of Spain, Minister Mohamed bin Hadi Al Hussaini of the United Arab Emirates, Minister Giancarlo Georgetti of Italy, and Minister Mohammed Al-Jadaan of Saudi Arabia.

In particular, I would like to thank Minister Sitharaman and IMF Managing Director Georgieva for joining me in co-hosting the G20's Global Sovereign Debt Roundtable. I was heartened by the sincere interest of participants in accelerating debt restructurings, early information sharing, and working toward productive solutions to reducing developing countries' debt burdens. I emphasized that resolving the sovereign debt problem is vital for development and it is in all our interest to achieve a faster debt restructuring process. I also confirmed that the World Bank is committed to providing net positive flows in a way that maximizes concessionality in the restructuring process, with the ultimate goal for countries to achieve debt sustainability.?

Next week, I will travel to Panama and the Dominican Republic, with a focus on encouraging a business-enabling environment that attracts more investment capital.

My thanks to all our World Bank Group staff in India, including those with IFC, for helping to make my trip successful and productive.

– David