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Bimal Jalan asks First World to step up aid for Third World

C K Arora in Washington

Reserve Bank of India Governor Bimal Jalan has urged industrialised nations to raise their share of foreign aid and help countries in the Third World to deal with the problem of their acute poverty.

Addressing the development committee of the World Bank, he said, ''Concessional assistance to developing countries was steadily declining. Aid flows now are a third below the 1990 level in real terms and the prospects of increase do not appear bright.''

He further said, ''Unfortunately and paradoxically, the decline in aid-flows in recent years has coincided with exceptional improvement in reforms and policy environment, particularly in countries of south Asia.''

He said one of the World Bank's reports had indicated that aid was most effective towards reducing poverty in countries with sound economic management and that reallocation of aid to countries with good policies and a large number of poor people could substantially reduce the number of poor.

Jalan said the 1990s had witnessed developments that signalled the need for a sea change in the manner in which the development community must collectively respond.

''Globalisation, declining official assistance and greater participation by civil society and the private sector have ushered in an era of fresh challenges and opportunities,'' he added.

The Comprehensive Development Framework, proposed by World Bank President James D Wolfensohn, offered a bold vision to bring about a holistic approach which sought to balance attention to macro-economic issues with increased concern to social issues.

Jalan said that proposed pilot programmes under CDF should be closely monitored and, on the basis of those experiences, we should not repeat the mistake of trying to find a ''one size fit all'' universal model for development.

The RBI chief reminded the World Bank of its long-term development goals and poverty alleviation. ''We strongly urge that in defining its role for the future, the framework of assistance should be confined to the bank's mandate,'' he added.

Dealing with the bank's role in the event of future crises, he said, ''We believe that the bank should stay within its traditional mandate, and would caution against fast-disbursing emergency loans as were provided in 1998. We also suggest that firm and transparent criteria be established to incorporate selectivity in future crisis intervention,'' Jalan added.

The RBI governor also pleaded for raising the resources of the International Development Association, the concessionary lending agency of the World Bank.

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