Chennai, May 23 (IANS): There is a need for stronger political leadership globally and better capitalised multilateral institutions for widespread legitimacy, RBI Governor Raghuram Rajan said on Friday.

"We need strong political global leadership so that collectively we come out with better policies than what we have now," the central bank chief said while delivering the R.Venkataraman endowment lecture on "India and the International Financial System" at Madras School of Economics.

According to him, there is a need for policies on a collective basis to be come out of the current crisis that the world is facing.

The Reserve Bank of India (RBI) governor said industrialised countries can look at developing green technologies while developing countries can focus on infrastructure development.

Funding on government-to-government basis or from multilateral agencies are the need of the emerging nations as the market finance for infrastructure development is risky, he said, adding financial institutions like the World Bank, Asian Development Bank and others are to be better capitalised so that they can provide capital for core sector projects in the emerging markets.

He said developed countries have a legitimate role to recapitalise these institutions while India does not want to subject to conditions laid down by funding agencies but the credit should be on the strength of its policy.

He said globally there is demand for growth and policies should aim at collective growth, and not tailored to shift growth from one place to another.

According to him, India has built different layers of defence like having foreign exchange reserves, and focusing on growth against volatility in capital flows.