Like many others, I was in Davos last week. Over its 38 years, the World Economic Forum has grown from a minuscule group to a gigantic organ. It is not easy to manage and engage scores of prime ministers, presidents, ministers, CEOs, policymakers and others in a meaningful way. Apart from over 100 panel discussions, veteran Davos hands know that its real value is outside these meeting rooms?in corridors and receptions, and the informal atmosphere which fosters new associations and renews old bonds. Only those who are adept at this art of networking, nexus-forging and reaching out to new people and disciplines can benefit from the Davos opportunity.
While registering for the conference, Martin Wolf of Financial Times enquired about the Indian delegation, promptly adding that the phase of marketing India was over, and the world had generally accepted its new position as a significant economic power. However, India?s problems and challenges are far from over. In an interdependent world, we need to make our presence felt and periodically reiterate that we continue to perform well on growth, poverty reduction and human development indices, as well as positively contribute to contemporary concerns on climate change and security of energy, food and water. The sentiment expressed by Larry Summers in a private dinner hosted by me that P Chidambaram represents India?s most acceptable reforms face is widely shared.
The session on ?world economic brainstorming?, which had many economic heavyweights, clearly recognised that the current economic turmoil was an outcome of regulatory failures, systemic underpricing of risks, too much off-balancesheet exposure and inadequate coordination among supervisory entities. Gordon Brown reiterated the need to reform global institutions?IMF, World Bank and United Nations?to address contemporary challenges of managing new power equations, terrorism, peace-keeping, global pandemics, energy security, food distress and climate change.
Failure to do so quickly will make them increasingly irrelevant. Rechristening the World Bank as an institution for Development and Environment might be in order. However, multilateral financial institutions have yet to come to terms with the changing equilibrium of economic power, a significant shift in favour of Asian markets such as China and India, in the context of voting rights, institution head selection and transparency of decision-making processes. Skills and domain knowledge are more relevant than national affiliations to the leadership of global institutions. Besides, what does increasing ownership of the world?s most coveted private banks by governments and institutions in Asia mean for these organisations? In the past, they have habitually sermonised others on prudential norms, risk management, capital adequacy and oversight expertise.
Two other engaging concerns were water and food security. I participated as a panelist in the session on ?Who is managing your water?? It was generally agreed that the world?s supply of fresh water is coming under pressure. Rising water consumption, demand from a growing world population, increased industrial needs and effects of climate change are contributing to growing water crisis. More than 1.5 billion people lack access to clean water. The poor suffer most from water poverty, and two million deaths take place every year from diarroheal diseases alone. Broadly speaking, agriculture uses 70% of the world?s water supply. Therefore, the need for research and adaptation of cropping patterns which are more water economical is central to another Green Revolution. This is all the more so because the International Food Policy Research Institute predicts that humans would draw 50% more water by 2025 for non-agricultural uses.
Management of water has three significant components. First, we need far greater coordination among institutions. Too many people, ranging from the local to provincial, national and international authorities, are trying to manage water. Each lacks accountability.
Second, there are regulatory uncertainties. The absence of contemporary water laws for multiple uses, enforcement agencies and dispute resolution mechanisms, all lead to mismanagement.
Third, there are political ambiguities. We must reconcile egalitarian principles with sustainability. How to price water in a fair manner has multiple responses. For example, how much should we charge farmers, or what kind of differential water tariffs should be applied to the poor in urban conglomerates, especially given the conspicuous consumption of swimming pools at five-star hotels?
Food security was the other big topic. The year 2007 saw a dramatic increase in the prices of corn and wheat. This was both on account of rising demand and switching land use to biofuels with government incentives for renewable energy. Corn and wheat prices have doubled if not tripled. This has serious consequence for many developing countries that are food importers, particularly in Asia and Africa. Keeping food prices affordable as well as managing climate change is a challenge for the world?s scientists, and India must play a leading role.
Davos always highlights the world?s emerging concerns, and offers some globally accepted responses as well. It needs a combination of political will and overall awareness to respond to these themes. However, issues of energy, water and food security will need sustained long-term action. They will remain our abiding concerns well beyond Davos.
The author is a former senior bureaucrat. These are his personal views