World Bank Group president Robert B Zoellick said in New Delhi on Friday that the high inflation in India has been caused more by bottlenecks on the supply side than by strong demand.
“As opposed to necessarily tightening monetary policy, I think the focus has to be on the increased production and productivity of agricultural products and thereby making the markets work more effectively,” Zoellick said at a joint press conference with finance minister Pranab Mukherjee.
Describing India as a global player and rising economic power, he said the high-level of growth in the country is helping the international economy recover from the crippling effects of recent financial turmoil.
“World Bank’s efforts are to bring the best development practices from around the globe to India and to share India’s experience and expertise with others. Infrastructure and agriculture are the key areas, which will help in solving the increasing food prices,” said Zoellick.
Mukherjee said India wants to reach a double-digit growth with moderate inflation and fiscal prudent policies.
“We want to reach double-digit growth, at a modest rate of inflation without indulging in fiscal profligacy, and with prudent fiscal management,” he said.
“I’m not fully satisfied with the rate of utilisation, but there is a steady progress in some of the projects and some are implemented at ground level. We are monitoring the rate of utilisation, and we can utilise the World Bank’s fund effectively,” Mukherjee said.
In response to the World Bank’s projection that India’s growth would be faster than that of China, Mukherjee said, “India is trying to achieve high growth rate, but I’m not going to compete with anybody.”