The International Monetary Fund (IMF) and the World Bank were severely criticised by the former Indian prime minister Inder Kumar Gujral for their failure to diagnose and subsequently treat the South East Asian crisis.
Speaking at the India Economic Summit organised by the World Economic Forum and the Confederation of Indian Industry, Gujral pointed out that the Bretton woods institutons had completely underestimated the extent of the economic crisis, he said: "The World Bank's report in late 1996 even when the crisis had set in stated that Thailand was the most dynamic economy in the world. Look at the situation now, Thailand's economy is set to contract by 8 per cent, Indonesia's to contract by 16 per cent and Malaysia's to contract by another 5 per cent".
He further questioned the definition of globalisation and said that the western concept of high risk or "casino" globalisation was the wrong method as has been demonstrated by the South East Asian crisis. "In fact, even the prescription of the institutions has come under question as it has not solved the problems of these countries mired in economic turmoil", he said.
He also went on to emphasise that the prescriptions given by these institutions to the crisis ridden economies often encroached on the sovereign domain of these countries which triggers off doubts whether these institutions are not honest brokers but they are simply pushing the agenda of the western countries.
He stated that instead of concentrating on GDP growth as an indicator of development, we should look at the overall economy wherein human factors like literacy, health and human rights are also taken into account. He recollected the works of Pakistani economist Mehboob Al Haq and Amartya Sen whose works on development economic have provided a new dimension to measure economic development.
Emphasising that regional cooperation among the South Asian countries could lead to the overall development of this region, he said that the south asian region should expedite the process of moving towards a free trade regime to utilise their surpluses optimally and benefit collectively.
Despite the differences between India and Pakistan on the political front, both the countries have started trading with each other and this is a welcome development, he said.
"Bangladesh has a lot of natural gas which could be used for manufacturing petro-chemical products and further exported to neighbouring countries. Other countries like Sri Lanka and Nepal could exploit the regional markets for trading in rubber and electricity", he pointed out.
