LAGARDE - INDIAN INDUSTRY NEEDS TO RAISE ITS VOICE

Described by many as the most powerful woman in the world, Christine
Lagarde, 56, is the managing director of the International Monetary
Fund. On her first visit to India as the IMF boss, Lagarde is unique,
the labour and anti trust lawyer of repute became the first woman
minister of economic affairs and finance in a G8 country. After the
Dominique Strauss Kahn fiasco at the Fund, she was inducted for a five
year term to head the IMF last year. The first thing that strikes you
about Madame Lagarde is her striking poise and easy demeanour. She
puts you at ease immediately, her smiling visage mirroring her
composure. Not shaken by the Strauss Kahn scandal, neither stirred by
the Euro Zone jitters, Lagarde speaks with utter candor, “I think the
crisis in Europe is being cauterized in many different ways. The
European Central Bank has played a critical role by applying salve to
a market which was risked with credit crunch. The canvas sadly was
large – Greece, Ireland, Portugal, Italy and Spain – but rational
adjustment policies working towards fiscal consolidation and
structural reforms will only strengthen their national economies.”
Lagarde a former French synchronized swimming champ and a purveyor of
yoga believes that this process of strengthening their governance with
a higher degree of fiscal discipline and heavier sanctions is now
paying off in spades.

The equanimity that comes from one who understands the nuances of the
convergence of legalese and cutting edge financial world is visible.
What is Lagarde’s prescription for India? She is positive on the
country’s future. She feels, “India has resisted the economic crisis
of 2008, it has not only staved off the problems, but it has done much
better than others. Seven per cent is not too slow or low by any
stretch of imagination. Yes, reforms have to be implemented and
sustained. “What then is the overriding priority, Legarde says, “There
is a huge headroom for growth, look at the possibilities that
innovation, entrepreneurship and creativity have thrown up. What India
needs is greater capital investment in infrastructure and in
particular in the power sector. I strongly encourage Indian industry
and private sector which is at the cutting edge of change to raise its
voice and make a case for wider and deeper reform from the government.
This collective can do wonders for the economy.”

Lagarde is a woman of powerful opinions, she has never backed down
from challenges – first as chairperson of US based law firm Baker &
McKenzie, then as France’s finance minister and now in her present
avatar as IMF boss. She walked into a man’s world, a cosy club, a
private male preserve at the IMF and she has cut through the clutter
and jargon at a very difficult time to establish herself by finding
her métier. She told Mail Today, “I came to an institution which
wanted to restore its pride and motivation to being the best. We
didn’t want to be distracted by trifles or scandals. The men and women
at IMF recovered quickly to get on with our lives and work. They are
an outstanding group of people. And you can see how they have turned
it around.”

Heading an organization which has 187 nations as its members can be
cumbersome. Lagarde brings a sense of purpose and persuasion to her
job. Throw in some hard nosed pragmatism and what Forbes magazine
called lack of pretension and you have a winning combination which
rules. Pertinently, the Bretton Woods sisters – IMF and World Bank –
have lately had their hands full by playing nursemaid to crises in the
developed world. Over the last four years or so, from fires in the US
to the recent wars in Euro Zone, capitalism has faced repeated stress
tests. Almost simultaneously, the balance of economic power has
shifted from the west to the east with new locomotives like China and
India driving growth imperatives and paradigms.

Lagarde is extremely sanguine about this saying that the wheel has
perhaps come full circle. She said, “Almost 40 years ago, advanced
economies like UK and Italy were imperiled. The IMF is agnostic, it
is an institution for the entire membership, not just for X or Y
nation. Yes, I agree that volumes of lending are much lower for say
Asia Pacific, Indian sub continent or Latin America than they were
earlier, but to place things in perspective, the IMF new loan for
Greece represents only 3/11th of the total program financing.” Is the
Euro Zone mess a continuum of the earlier malady which surfaced in the
US. Where crony capitalism debilitated the financial system. Lagarde
is very clear in her prognosis, “WE are talking of the same
development, it is an afflication that did not go away, an extension
of profligacy and abuse. The origin was in the financial sector which
caused enormous pain, followed by sovereign debt, which was placed at
risk. The two were co related and resulted in the system getting
caught in a bind. Banks went south, sovereigns entered the equation
because they had to recapitalize banks and all this weakened the
mainframe. Greed tripped up a lot of people.”

Lagarde was critical of greed which according to her is the bedrock of
the financial crises. She said, “Excess in everything was at the core
of the problem. Greed was overpowering, financial instruments that
were overly sophisticated and inefficient supervision cascaded the
world in an economic abyss.” When asked whether capitalism can
survive, Legarde responded – it has evolved… even as it lurches from
crises to crises and it will survive and grow.”

Ironic that this charming sister is out to better a world dealt
bodyblows by the likes of Lehman Brothers.