G-20 meets today
On board PM’s special aircraft
In a bid to tide over the fallout of the global financial crisis, India has said that it would welcome greater developmental assistance from the World Bank.
“The World Bank can step up lending to India from the present level of $3 billion a year for central and state projects and programmes”, said finance minister P.Chidambaram.
The finance minister is part of the team led by Prime Minister Manmohan Singh to Washington to participate in the G-20 Summit there. The theme of the summit is “Financial Markets and World Economy”. Discussions are expected to centre on how to avert further deepening of global financial crisis and prevent the world economy from getting into a recessionary spiral.
Chidambaram said a new order on “global oversight” needs to emerge and this can happen through greater inclusivity of the international financial system.
He said only a handful of economies are driving global growth, India and China being two such countries, and added there were other economies which had the potential to drive world growth and they need to be enabled to do so.
He said larger resources need to be transferred to poorer countries, where developmental prospects have been hit by the global turmoil. This could be done through the existing multilateral institutions, or else, an ad hoc arrangement can be worked out for transferring the resources to the developing countries.
Given that India enters an electoral year and whether politics would determine the response of the government, he said, resolution of the crisis will take well beyond elections. Thus the government would not adopt an “election constricted” view, but medium to a long-term point of view.
The focus of the Indian delegation at the summit would be on three issues; greater inclusivity in the international financial system; ensuring that growth prospects of developing countries are not affected and the need to avoid protectionist tendencies by many economies.
“This is not a time to adopt protectionist policies”, he clarified.
Infact, Chidambaram stressed that there was a need for greater flow of goods and services and larger capital flows between countries. Admitting that growth and development of the Indian economy has been indirectly hit, he said the impact has largely been by way of slower growth, lower exports and trickling currency flows. “But we are confident that given the underlying strengths of Indian economy, we can weather the crisis and still return a decent growth rate in 2008-09”.
The finance minister said the issue of effective surveillance mechanism for global economies would be discussed. If such a system had been in place, it would have identified the huge risks that were being taken by some international financial entities.
There was thus need for adopting global prudential norms and convergence of accounting standards which was highlighted at the G-20 finance ministers meet at Sao Paulo in Brazil held recently.
However, global regulator was not the answer to these problems nor did a feasible option, said the finance minister.
In reply to a question, Chidambaram said he did not think that creating another Bretton Woods-type institution would be a practical answer. What was needed is improving global governance and global oversight of these institutions, he said.