Global financial institutions need to contribute more to developing countries: FM

February 6th, 2009 - 5:49 pm ICT by ANI  

New Delhi, Feb 6 (ANI): Finance and External Affairs Minister Pranab Mukherjee today urged global financial institutions to put in more resources into the rural economies of developing countries for the economic uplift of the poorest sections the world over.
Addressing a summit on Financial Crisis, Global Economic Governance and Development here, Mukherjee said, “The global financial institutions need to put more resources for the developing countries in the rural economy, build social infrastructure to strengthen local communities. The resources must be put in institutional capacity building and skilled development. It should be a veritable martial plan for the economic uplift of the poorest sections of the societies world over.”
He further added that structure of global economic governance also needed to be changed with developing economies having a greater say in it.
“Structure of the global economic governance would need to be changed profoundly with major developing economies having a say in it. Failures to create a new architecture would lead countries towards competitive monetary policies and new investment barriers, increasing the potential of global market fragmentation,” said Mukherjee.
According to World Bank, economies of developing countries would be growing up to five per cent in 2009, while industrialised countries will shrink due to the global financial crisis.
The Gross Domestic Product (GDP) for developing countries is expected to grow on average three to five per cent this year, but will fall around one per cent in industrialised countries.
Terming the present economic crisis as ”watershed moment in the history of modern world”, Mukherjee said the Indian economy would expand around seven per cent in the year to March, due to declining exports and moderating domestic consumption, compared with nine per cent or higher in the last three years.
“After an average nine per cent growth in the last five years, we expect the economy to grow around seven per cent in the current fiscal despite the global economic downturn. As the next years” outlook is more downcast, the government has taken a number of measures to inject liquidity, bring down the cost of borrowing and stimulate demand through fiscal measures when necessary. The government will take further steps to ensure that labour intensive sectors are less adversely affected,” he said.
India has already announced two fiscal stimulus packages to spur demand in its economy, which is experiencing a slowdown amid the worldwide downturn and high borrowing costs at home.
The central bank has already cut its key short-term lending rated by 350 basis points in the last five months to an 8-1/2 year low of 5.5 per cent. (ANI)

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