‘South Asian countries should set up a ‘Bank of South Asia’ to fund development projects’

Political scientist Eric Toussaint says developing countries should formulate economic models suited to their needs. He shares his thoughts with G. Mahadevan.

South Asian countries led by India should consider creating a ‘Bank of South Asia’ to finance development projects in the region and provide an alternative to the economic model forced upon many countries by the World Bank and the International Monetary Fund, political scientist and president of the Belgium-based Committee for the Abolition of Third World Debt Eric Toussaint said.

He was talking to The Hindu on the sidelines of a seminar on the ‘Impact of globalisation on the rural poor’ organised recently at Shantigram, an NGO based at Chapath, Vizhinjam.

India should take the lead from countries such as Brazil, Venezuela, Argentina, Bolivia, Ecuador, Uruguay and Paraguay that have come together to set up a ‘Bank of the South’ so that they can have models of economic development suitable for themselves. These countries are now considering depositing a part of their foreign exchange reserves in such a Bank, which in turn will finance development in these countries.

With its 1,000 million-plus ‘market’ of people, India does not need loans from the World Bank. Neither does the country need to be so integrated to a world market that a problem with mortgage rates in the US should cause the Sensex in Mumbai to crash. India is often presented as an economic miracle. But this is really not the case. Large numbers of people in the country live below the poverty line. There are many employed people who do not get minimum wages, Dr. Toussaint pointed out.

The ‘development’ effected in some sectors is showcased as signs of development. In the call centre industry, for instance, the very existence of a call centre is dependent on decisions taken outside the country. “The decision to close down a call centre may be taken in New York, London or Paris,” Dr. Toussaint explained. Moreover, he argued, if people in another country — say Taiwan — learn better English, India will lose its call centres to that country. The present situation has come about because India abandoned the model of development, the model of self-sustenance, put forward by Mahatma Gandhi.

In order to be able to resist the neo-liberal policies of the “Washington Consensus,” developing countries should prioritise their budgetary spending. Countries such as Ecuador and Venezuela, which have now hiked public funding in the education sector, are concentrating on creating jobs in emerging sectors and are focussing on achieving food sovereignty, said Dr. Toussaint, who is an adviser to the governments of these and other Latin American countries. India should take a leaf out of this book and strengthen their health system, bolster the public education network and work towards food sovereignty. The government should invest massively in generating industrial projects. A large-scale housing scheme for the homeless itself would trigger massive employment, he pointed out.

Governments should also support farmers to continue with food production. In India farmers are selling their land to real estate developers because it is very lucrative and agriculture is not. Governments have to convince farmers to remain in the business of food production.

A fellow of the International Institute of Research and Education, Amsterdam, Dr. Toussaint believes that rich Indians should spend their time and energy trying to create jobs inside the country. “I come from Belgium and in my city there are iron and steel companies. Most of them are today owned by Lakshmi Mittal. I have nothing against Mittal, but he is not creating jobs in India,” he said.

The government of Kerala has taken loans from the World Bank for water supply projects. It would have been much better if the loan had come from the ‘Bank of South Asia.’ “That way you would not have to implement the World Bank’s economic policies,” he added.

Source: The Hindu http://www.hindu.com/