New Delhi: Asserting that the IMF-World Bank model had failed, Chairman of the newly created National Commission for Promotion of Enterprises in the Unorganised/Informal Sector Arjun Sengupta today (Sep 27, 2004) said the Government had to act as a "catalyst" and sequence WTO-linked changes to suit the needs of the domestic industry.

"We have to learn from the failure of IMF and World Bank model that there is no one answer to all problems. Problems are specific and answers must also be specific. One size does not fit all," Sengupta told in New Delhi.

Rejecting withdrawal of State theory, he said, "The so-called WB and IMF models also no longer say that State has to be withdrawn. Government has a role in the economic development process. It will have to share risk so that others may chip in to help the vulnerable and weaker sections."

He said, "The Government need not give money as the banks will do it if they know that the Government was going to either stand guarantee or share the risk," Sengupta, a former Member of the Planning Commission, who also served as the economic advisor to Indira Gandhi, said.

Observing that all economic development processes were essentially "political", he said, "State has a role because if you increase poverty, the political system becomes unstable. Reduction of poverty improves stability which allows higher rate of investment."

"For us, reducing poverty itself is development," he noted.