THE WORLD BANK no longer considers India to be the premier example of massive poverty, and the Indian government's reaction is a classic example of mixed emotions. The bank's reappraisal is justified recognition of India's progress in recent years. But it is recognition of the more expensive sort, since it means that the World Bank is going to cut back India's share of the subsidized loans. A. W. Clausen, the new president of the bank, visited there last month to deliver the message that India is now capable of paying commercial rates for credit.
The World Bank--whose shareholders are governments and whose mission is development--is moving through a fundamental change in its view of the world. Until now, the bank has addressed its work essentially in terms of the disparity between the world's rich industrial North and the impoverished South. Mr. Clausen holds that the North- South distinction has ceased to be useful. Instead, he describes a world in which many kinds and degrees of economic power have emerged, each with its own responsibilities. He speaks of Asia's rising standards of living, its great gains in food production and its wealth of trained manpower. The most severe concentration of poverty now--and the only part of the world where a large number of countries have actually suffered declining incomes--is in Africa south of the Sahara. There, the bank urges a doubling of aid.
Mr. Clausen foresees a decade in which trade expands much more rapidly than the world's output, he said last month in a speech to a Japanese audience. It means that the newly industrializing economies will supply an increasing share of manufactured goods that the industrial countries of North America and Western Europe use. Those countries are going to have to make their livings in high technology. Both labor and capital are going to be much more mobile, according to this perspective, with millions more people migrating across national boundaries to find new jobs. A rising proportion of the credit to support this growth, he believes, will come from private lenders.
The bank's essential job, as Mr. Clausen sees it, is to be a catalyst for this flow of private capital for development. He recently said, in a line doubtless aimed at the Reagan administration, that the World Bank "is not in the business of redistributing wealth from one set of countries to another set of countries. It is not the Robin Hood of the international financial set, nor the United Way of the development community."
That's a reasonable position, as long as everybody keeps a couple of qualifications in mind. The flow of private bank loans to developing countries has been heavily concentrated on a short list of nations-- beginning with Brazil, Mexico and Venzuela--that have strong credit. Further, there's a good deal of anxiety, in this country and Europe, about the scale of the commercial banks' loans to the Third World. Private lending is not likely to keep expanding at the past decade's rate.
Mr. Clausen is trying to warn the borrowers that the traditional kinds of aid are going to be in short supply as long as the economies of the rich countries remain under strain. Simultaneously, he wants to reassure the lenders that their money is being stretched to the limit. That's what led to his expensive compliment to India.