Prime Minister Manmohan Singh is expected to put pressure on the developed countries taking part at the G-20 Summit at Pittsburgh to delay implementing their plan to phase out the fiscal stimulus measures they had introduced in the last few months in the wake of the global meltdown.
In the last G-20 Summit at London held in April, the developed countries had favoured the introduction of “exit” strategies for phasing out stimulus measures, since in their view the global economy was showing signs of recovery.
India, however, is likely to point out at the Pittsburgh Summit that the time is not yet ripe for such “exit” strategies, according to senior government officials accompanying the prime minister on his visit to Pittsburgh. The argument is that although the global economy and financial markets have shown a distinct improvement since the London Summit, they are still not out of the woods.
Manmohan Singh, along with his entourage of senior officials, including the National Security Advisor M K Narayanan, arrived in Frankfurt here on Wednesday evening on his way to Pittsburgh, where the two-day G-20 Summit is scheduled to start from Thursday. Planning Commission Deputy Chairman Montek Singh Ahluwalia (who is the Sherpa or the PM’s special representative for the summit-level talks), Finance Secretary Ashok Chawla and Foreign Secretary Nirupama Rao are already in Pittsburgh, holding preparatory consultations for the Summit.
Apart from seeking a delayed phase-out of stimulus measures, India will also expect the G-20 Summit to send out a strong message against protectionism in all its forms, whether trade in goods, services, investment or financial flows. Government officials accompanying the Prime Minister said China was expected to join India in its demand for steps to end protectionism. The draft communiqué for the Summit, now under preparation, is likely to make a mention of this, the officials said.
India’s expectation from the Pittsburgh summit gains significance in the background of rising protectionism in trade in goods and services across the globe, the escalating trade war between two of the world’s largest trading nations, the US and China, and the failure of the World Trade Organisation to effectively resume the Doha round of multilateral trade talks last week in Geneva.
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Earlier in a statement, issued prior to his departure for Pittsburgh on Wednesday, Singh had said the Summit would also be an opportunity for India to convey its interest in seeing early stabilisation of the banking and financial sectors in advanced economies, as this directly affected the country’s exports, capital flows and investment.
The prime minister’s statement was also significant, as it made no mention of the nature of initiatives India expected on climate change. The statement, however, noted that the key issues the Pittsburgh Summit would focus on included a framework for sustainable and balanced growth, strengthening the international financial regulatory system, governance of the International Monetary Fund and development banks, an open global economy and climate change. Officials accompanying the PM said India would try its best to stick to its stand on climate change and it was not likely to make any compromises on that front.
The prime minister said India also expected the Pittsburgh Summit to endorse an increase in the capital base of multilateral development banks to finance the massive infrastructure needs of emerging markets, strengthening of the newly set up Financial Stability Board and continued governance reforms of international financial institutions to give greater voice and representation to under-represented countries.
It was necessary for India to engage in the management of the world economy because we have a lot at stake, and a lot to contribute, the PM’s statement said. Even though India’s economic growth slowed to 6.7 per cent in 2008-09, the country remained an attractive investment destination, as its growth was primarily driven by domestic demand, its savings rate was robust and the external sector had shown resilience with capital flows picking up once again, the statement added.
A G-20 Primer
What is G-20?
It is an informal forum that promotes open and constructive discussion among developed and emerging-market economies.
It was created in 1999 in response both to the financial crises of the late 1990s and to a growing recognition that emerging-market economies were not adequately included in the core of global economic discussion and governance. Its members are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, the United States and the European Union. The World Bank and the International Monetary Fund also take part in the G-20 deliberations. The G-20 countries account for 90 per cent of the global GDP, 85 per cent of global trade and two-thirds of the world’s population.
When was the last G-20 Summit held?
The last G-20 Summit was held in London in April 2009. It had endorsed ambitious stimulus and growth measures to counter the global downturn, a strong regulatory package, reforms of the international financial institutions and strengthening of the financial stability board and a reaffirmation of commitment against protectionism. In particular, it pledged to mobilise $ 1.1 trillion of resources for international financial institutions, largely to sustain growth in emerging markets.
What is the significance of the Pittsburgh Summit?
This is the third Summit of the G-20 leaders in less than a year. The last two were held in London (April 2009) and Washington (November 2008), which was held soon after the global economy plunged into a crisis. The frequency of these meetings reflects the seriousness the G-20 countries attach to the recovery of the global economy and the financial system. Now, the G-20 leaders are expanding their brief by including other issues such as trade and climate change. The next summit of G-20 will be held in S Korea