 "G20, Narendra Modi, Turkey, BRICS")
Pitching for more coordinated effort by G20 to boost global growth, Finance Minister Arun Jaitley has said that countries must avoid trade protectionist measures and refrain from competitive devaluations of currency as greater focus must be on public investment.
The efficacy of monetary policy instruments has reached its limits and its pass through has not been seamless, he said in an intervention on Monday at the G20 Finance Ministers’ and Central Bank Governors’ meeting here. “The time is ripe for a re-evaluation of the fiscal policy space, with a greater focus placed on public investment,” he said. Stating that declines in both imports and exports were recorded in all G20 economies in 2015, he said there is a need to articulate an effective and tangible policy response to revive the trade engine of the global economy. “Countries must avoid trade protectionist measures, and refrain from competitive devaluations,” he said.
Also, he added, the asymmetry in the global financial safety net has to be taken note of. Jaitley further said: “While advanced economies have access to swap lines in order to smooth currency shocks, emerging market economies, which are highly dependent on reserve currencies both for borrowing and for international transactions, do not have recourse to these.
“Global and regional financial safety net and oversight needs to be augmented, including through new financing mechanisms.”
A balance has to be maintained between addressing domestic priorities of member countries with the international role that each G20 member has to play, he said. “Therefore, we should also consider undertaking an analysis of the possible negative spillovers of policy actions. At the moment, the recent use of negative interest rate policies has been identified as an area of concern by members,” he said.
India and the US also agreed to enhance cooperation on tackling offshore tax evasion through information sharing and joint audits, while intensifying efforts to combat money laundering and terror financing. The US also extended support to National Investment and Infrastructure Fund (NIIF) in a bid to help India raise resources and fund infrastructure growth, said a Joint statement after the meeting.
“We are committed to continued collaboration and sharing of experience in tackling offshore tax evasion and avoidance, including joint tax audits and tax examination abroad. We look forward to the Competent Authorities of the two countries engaging in bilateral dialogue to move forward cooperation in these areas,” it said. The meeting was also attended by Federal Reserve Chair Janet Yellen and Reserve Bank of India Governor Raghuram Rajan among others.
“We have enhanced our cooperation in tackling money laundering and combating the financing of terrorism through increased information sharing and cooperation, including a dialogue held recently in India. We both agree on the importance of fighting illicit finance in all forms as an important means of tackling global terrorism,” it said.
The two countries noted the progress in sharing of financial information between the two countries under the inter-governmental agreement pursuant to Foreign Account Tax Compliance Act (FATCA).
“The two sides will continue to engage in discussions on full reciprocal arrangement on FATCA. We look forward to increased cooperation in sharing of cross-border tax-information,” the joint statement said.
During the meeting, Lew is believed to have appreciated Jaitley’s effort to successfully resolve more than half of the concerns related to tax disputes.
“Over the past year, our tax authorities resolved a significant portion of bilateral tax disputes between the United States and India,” the statement said.
