Observing that the developing world withstood the economic turmoil of 2008 in a commendable fashion, Finance Minister Pranab Mukherjee on Saturday warned that worrying clouds have developed on the horizon even as countries recover from the crisis.
"The financial crisis in the eurozone, the downgrading of US sovereign debt, the concerns about fiscal sustainability in high-income countries, uneven and sluggish global growth, lower capital flows to developing countries, higher inflation rates in several emerging economies -- particularly for food products -- and lastly, the more frequent recurrence of natural calamities, are all issues that could collectively snowball into a crisis of significant proportions with dire consequences for the poor in all countries," Mukherjee said.
Speaking during the World Bank Development Committee lunch on the current state of the global economy, growth and jobs, the Finance Minister said that developing countries see the World Bank as an important partner to help them meet any foreseen and unforeseen challenges, as well as a strong ally for their long-term development finance needs.
"But we are faced with a situation where IBRD and IFC are unable to fulfill even normal client demand and are forced to be 'selective' as a result of this resource constraint. They have no headroom to expand lending rapidly in case there is a spike in demand resulting from another crisis or calamity. This needs to be addressed immediately," he asserted.
Commenting on the recent World Development Report (WDR), Mukherjee said it would be useful for it to focus on how protectionism hurts jobs globally, in both developing and developed countries.
The report should also cover policies and institutional mechanisms that would encourage women's participation in "good jobs".
"From a developing country perspective, jobs require a massive shift in employment from agriculture to manufacturing. From the demand side, the WDR should examine the role of the private sector, MSMEs, self-employment opportunities and agro-industries in job creation," he said.
"From the supply side, the WDR should come up with the requirement and strategies for quality skill development on a very large scale. The WDR should also focus on managing transition in terms of social protection and reskilling requirements, as even the best of times would leave large numbers of people temporarily unemployed," Mukherjee said.
The Finance Minister said India's demographic dividend is as much of an opportunity as it is a challenge.
Over 70% of Indians will be of working age in 2025.
"In this context, our national strategy focuses on universalising access to secondary education, increasing the percentage of scholars in higher education and providing skill training. The National Policy on Skill development has set a target of imparting skills to 500 million people by 2020. This is a huge task," he said.
India is determined to make all-out efforts for achieving this goal, the Finance Minister said.
"Given our large and youthful population and the looming demographic dividend, we look forward to the findings of this WDR with keen interest," he said.