India seeks coordinated fiscal stimulus at G20 summit

November 15th, 2008 - 1:22 pm ICT by IANS  

Washington, Nov 15 (IANS) India has expressed the hope that leaders of the world’s 20 biggest economies would agree on a coordinated fiscal stimulus plan to arrest global recession and ask countries to resist rising protectionist pressures.”In our view the most important thing right now is to counter the recessionary tendencies that people are talking about,” Planning Commission Deputy Chairman Montek Singh Ahuwalia, who is playing the key role of Prime Minister Manmohan Singh’s “sherpa” at the summit, said Friday.

The historic summit brings together Group of Seven industrial nations, a dozen emerging markets like India, China, Brazil and South Africa and the European Union, which together account for 90 percent of global economy.

“What we are calling for is a coordinated fiscal stimulus. We have to see what response that elicits tomorrow (Saturday), but it’s certainly our view that if we are facing the most serious crisis in the world economy since the Great Depression, then we need to take a lot of possibly unorthodox and special steps,” he told reporters.

Ahluwalia, who has been involved in parleys with his counterparts on the summit outcome said he hoped Saturday’s summit on the global economy and financial markets would end with a communique that makes a strong statement of support for fiscal stimulus actions that would boost confidence in the global economic situation.

He said recessionary conditions in the US, Europe and other industrial countries were slowing economic growth in India, but its growth for this year would still be impressive compared to many other countries. Second half-growth for India will remain positive, he asserted.

Ahluwalia said the fight against protectionism and world trade talks issue have to be on the agenda of the summit.

“History teaches us that when you face recession, protectionism increases. But relapsing into protectionism particularly in industrial countries would be damaging to economy,” he said seeking agreement on the successful conclusion of Doha round of trade talks.

On the prime minister’s stress on the need to ensure that developing country growth prospects do not suffer, he said: “We have consistently taken the view that the current crisis is unique in one respect that it did not originate in developing countries.

“It started in the United States and then spread to Europe, but the worst affected would be the developing countries. They would not only be hit by recession directly, but because of recessionary trends in advanced countries, the capital flow too would get restricted.”

Regarding Manmohan Singh’s stress on the need for greater inclusivity in the international financial system, his key aide said that there was general recognition that the current situation just doesn’t reflect the contemporary reality.

But how far they would be willing to go or what steps they would agree to take remains uncertain, Ahluwalia said, adding “a clear statement (from the summit leaders) would make it more likely and faster”.

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