'Rural economy is key to growth'

Q&A/ LIQUN JIN

The Asian Development Bank (ADB), in which the Indian government is one of the 67 stakeholders, is looking at increasing its support to India financially.

Last year's assistance of $2.2 billion will be increased marginally to $2.45 billion this year and will be hiked further next year. More importantly, its support programme now focuses on "inclusive growth," says the bank's Vice-President, Liqun Jin.

How do you propose to add to what is already being done by the bank in India?

We are in the process of preparing the country strategy and programme for India for 2008-2010. Our programme is closely aligned with the government's five-year Plan.

For instance, our programme will focus on infrastructure sector. (For that, the bank has proposed a swap arrangement "" it will give a basket of dollars to the government and get a basket of rupees, which will be invested in infrastructure. In 10 years, the baskets will be switched again. Thus, no party will have any forex risk).

How will the lending programme be different now?

We focus more on achieving results on the ground, so we are shifting from the mentality of looking at the size of lending programmes, though size is important.

You have also spoken about inclusive growth. Is this part of a larger reorientation of ADB?

It is not a changing of the charter of the bank. It is improvement in terms of management. We do not think it is a healthy kind of management when you only look at approvals.

So if we build a road, we don't just look at how soon we build a road. We want to see how much benefit it has brought to people along the road in the local community.Growth must bring benefits to people.

Can you give me an example of a project you would take up under the new approach, which you would not have taken two years ago?

If you take power plants, the project may not look different but its design will show the difference. We will look at the end result of the power plant "" for example, whether this project will help us bring electricity to rural people in the area, instead of simply looking at meeting the needs of big companies and the urban people. In our new strategy, rural economy is the key.

You have earlier spoken about how developing countries should adopt a strategic infrastructure development programme rather than have a piecemeal approach. Any insights for India?

India is a large economy. It must have diversified sources of growth. The infotech industry's development will not solve all the problems of the country. It will not provide lots of jobs. It is important for India to develop a solid base in manufacturing.

Building basic infrastructure is the key to revive manufacturing. I would like to say that the key is to have a balanced development programme for different kind of infrastructure facilities. You cannot allow one sector to go ahead way above the others.

Is that what is happening in India? Some sectors are getting ahead of others?

I am not saying it is happening. I think it is important to watch (out for). Given the experience of so many countries, we have seen that each and every government institution will push very hard for their own sector.

The government should look at the overall picture. It should also be based on the market because you cannot depend on the government to work out a perfect development programme.