'Rising food, commodity prices continue to be cause of serious concern': Chidambaram
Asserting that rising food and commodity prices continue to be a cause of serious concern, Finance Minister P. Chidambaram has said that these have adversely affected growth and social stability, as well as health, nutrition, and education in the poorest countries.
Chidambaram said robust agricultural growth remains fundamental to the creation of jobs and poverty reduction.
"However, agricultural growth faces hurdles that can be removed only with investments, more innovation, better technological inputs and improved extension services. The World Bank Group has an important role in leading this initiative," said Chidambaram.
"Three more actions are also important: First, constraints on "farm to market" need to be addressed quickly. Secondly, diversion of food grains for alternative uses needs to be curtailed. And, thirdly, concerted action needs to be taken against excessive 'financialisation of commodity prices'," he added.
In his statement at the Development Committee Meeting of the World Bank in Tokyo, the Finance Minister said investment in infrastructure in developing economies is critical for creating growth and jobs, and for rebalancing global demand.
"Flow of long term finances is extremely important for this. Even in normal times, there is a large role for the Multilateral Development Banks (MDBs) in making long term development finance available to emerging and other developing economies. During the present crisis, when capital flows have got disrupted and the risk appetite for long term financing is low, the role of MDBs in infrastructure financing has become extremely crucial," he added.
Chidambaram said the changing "geography of poverty" today makes middle-income countries (MICs) home to nearly three quarters of the global poor.
"Infrastructure deficit in MICs is also quite large. The Development Committee's call, in the Spring Meetings of 2012, for the WBG to develop more innovative and stronger partnerships with middle-income countries would require a decisive shift in the way the Bank would engage with the MICs to effectively address challenges of rapid urbanization, infrastructure development and poverty reduction," he added.
Chidambaram further said: "While appreciating that subscription, as approved in the 2010 capital package, is due to be completed only by 2015, we are still concerned about the declining capacity of the Bank to respond adequately to the crisis. The noticeable deterioration in the capital adequacy of the Bank is indicative of the vulnerability of the Bank. Considering the pre-eminent position of the World Bank in the arena of development finance, it would be a tragedy if the Bank is handicapped in meeting the requirements of the member countries when they need it the most."
"We do not doubt that the Bank must have taken stock of the situation and decided on an appropriate course of action. We would appreciate if that is shared with us. All options must be considered. We must eschew the temptation to succumb to pre-determined positions," he added.
The Finance Minister also said that International Finance Corporation has done signal work in the developing countries in offering products and services that are innovative and useful, and added that it has played a significant counter-cyclical role in very difficult circumstances.
"We welcome the World Development Report 2013 on Jobs. It is well-researched and analytical. It is a comprehensive report on an important issue that is at the heart of policy discourse in many countries today. The companion document on "Creating Jobs Good for Development: Policy Directions from the 2013 World Development Report on Jobs" has powerful insights for public policy," said Chidambaram.
"It is good that the WDR is not prescriptive and it provides space for governments to chart their own course, according to their best judgment and in the context of their own development framework. We feel that the Bank can be very helpful in providing data and diagnostics," he added.
Chidambaram said 'the recent earthquake and tsunami disaster in Japan saddened us all'.
"But, I believe, Japan has shown the way, both in disaster prevention, and in disaster response and recovery. The Sendai Report identifies disaster risk management as a defining characteristic of resilient societies, and advocates its mainstreaming into all aspects of development," said Chidambaram.
"We expect the Bank will advance the process of integrating disaster risk management in development plans so that countries prone to such risks are better prepared and equipped to tackle them," he added.