Globalisation like gravity, you have no choice: FM

Amid mounting concerns about a series of measures by the US to firewall its domestic economy, Finance Minister Pranab Mukherjee today urged G-20 countries to collectively fight against protectionism and encourage trade liberalisation. He said international economic cooperation is necessary in today’s rapidly globalised world and that the G-20 has proved an effective platform for such collaboration.

“Governments will have to build domestic political support for international policy coordination, wherein some national policies might have to be calibrated to ensure a more optimised global outcome,” Mukherjee said at a seminar organised by Icrier.

Elaborating on the subject, the finance minister said, “The immediate spheres of such coordination are macroeconomic policies and exit strategies, pace of regulatory reforms to ensure financial stability without affecting prospects of growth, reform in the governance of international financial institutions to reflect current economic realities, keeping international trade open and avoiding protectionism, and coordination on climate change and energy issues.”

The G-20 is group of 20 developing and developed countries, including India. It has assumed growing importance than the narrower G-8, consisting of developed countries, in taking global policy decisions related to international trade and commerce.

The US has recently resorted to a series of protectionist measures that could have an adverse impact on India’s economic interests. While Washington has legislated a hike in visa fees for H-1B and L1 categories, the state of Ohio banned outsourcing of jobs, stirring strong reactions from Indian industry.

India has already raised its concerns about such policy measures. Earlier this week, commerce and industry minister Anand Sharma said New Delhi would raise the issue during the upcoming trade policy forum meeting scheduled next week with US counterpart Ron Kirk.

Mukherjee also said while the G-20 forum has successfully prevented an acceleration of the financial crisis, “It remains to be seen whether it would be equally effective in resolving contentious issues in normal times.” The minister said the financial crisis clearly proved that no country is insulated from the global economy, and that the crisis is proving to be much deeper and broader than expected.

“Everything is so intricately intertwined, that events in one country have a ripple effect across the world. Yet, an alternative to global integration is neither feasible nor desirable. Globalisation is a bit like gravity. You may or may not like it, but you have no choice in the matter. It is also a bit like the wind and the waves,” he said.

Mukherjee also urged innovative thinking and policy actions in the world of finance and globalisation. He said the financial crisis has uncovered the weakness of existing global financial and economic institutions, and the limitations of existing macroeconomic policy tools. The meeting of finance ministers of the G-20 countries is slated for next month, followed by the fifth G-20 summit of heads of states on November 11 and 12 in the South Korean capital, Seoul.