When the powerful Group of 20 countries meets next week at the French Riviera city of Cannes, the shadow of euro zone crisis will pale the global economic revival agenda that was set forth in Seoul last year.
This will be the first summit level meeting of G20 leaders after the euro zone crisis broke out.
Addressing mediapersons at a curtain raise conference today, Montek Singh Ahluwalia, deputy chairman, Planning Commission, who is also the G20 sherpa, said, “The issues connected to bringing robustness to global economy were on the agenda and a framework for strong and sustainable growth was an exercise that was being done by the G20 countries, which was supposed to lead to something called mutual assessment process (MAP). All that got overtaken by the euro zone crisis and obviously resolving the crisis became the essential first step.”
Ahluwalia said the fact that there was a crisis meant that G20 was struggling with shifting set of circumstances. The Cannes summit would be an occasion for G20 to express some views on the importance of steps announced at the Euro summit earlier this week.
“MAP will come forth with a set of what we regard as policy priority for Germany, Italy, France and Spain, which would create global conditions for revival of growth,” said Ahluwalia. He said short-term growth prospects in the global economy are not very good. Growth rates have been revised downwards.
“We will get from the International Monetary Fund (IMF) their assessment of what would have been business as usual and what will happen if more supportive policy decisions are taken,” he said.
In the Seoul summit, G20 leaders had put development on the agenda and a couple of things were done in pursuit of that. A high-level panel was set up to look at work programme of multilevel development banks and see to that was contributing adequately to development priorities.
This time, French president Nicolas Sarkozy, who is hosting the summit, has invited Microsoft chief Bill Gates to give a report on ways of addressing development challenges and that report will also be looked at by the group.
On the euro zone package, he said, India welcomed the realism that is built into the parameters laid down for Greece. “If debt reduction is not enough, Greece will need EU-IMF relief package that will also be supported.”
The euro zone problem was also a global problem with a spillover effect and, therefore, it was important that international community provided the support needed. “We would support IMF providing resource support to Europe. This will raise an issue if IMF resources are not enough as how to get other resources. But there are well established ways of doing that like the new arrangements to borrow. We will support any reasonable multilateral effort to provide Europe support needed for stabilising,” he said.
In his view, India is on the right path from the point of view of the global economy. “We are not running a surplus. We do not have a fixed exchange rate and the fact that the current account deficit is high, shows that we are contributing to the global demand. We should reduce fiscal deficit because globally that is needed all the time.”
