Global meltdown impact on India indirect, says Chidamabaram

November 14th, 2008 - 1:39 pm ICT by ANI  

Manmohan Singh

Frankfurt (Germany ) Nov.14 (ANI): Indian Prime Minister Dr. Manmohan Singh will leave today for Washington after spending the night in Frankfurt, where he was received by a German protocol officer and Indian embassy officials.
Earlier, interacting with the Indian media accompanying the Prime Minister to the day-long G-20 Summit, Finance Minister P.Chidamabaram said that India would indirectly feel the impact of the global meltdown. He also said that Dr. Singh’’s visit to the American capital would focus on the need for greater inclusivity, ensure that the development prospect of developing countries does”nt suffer and the need to avoid protectionist tendencies.
Chidambaram also informed that India has been able to get some of its recommendations for stopping the global meltdown incorporated in a G-20 Finance Ministers”communique.
“We were able to get in many more ideas into the communique. We will work to finalise the statement that the leaders will put out. But the key point is, we must agree to a new order of global oversight. And this can come only by, as the Prime Minister said, greater inclusivity in the international financial system,” he said.
He further went on to say that in many ways, the IMF (inclusivity) and the G-7 is too narrow and too small.
“A more inclusive system can provide better surveillance and serve as an early warning mechanism,” he said.
When asked whether India was talking of a new mechanism for fund flows, Chidambaram said: “That depends upon where the resources would be found. If the resources can be found and channelised through the existing multinational institutions.
That would be good. If you find resources that cannot be channelised through the multinational institutions then we have to find another mechanism through which these resources can be channelised to the developing countries.”
Responding to a question of whether a global regulator was being put in place, he said: “See, the regulation in the present context is a function which national regulators will loath to give up. That is why regulation must be national. If we can agree upon common prudential and regulatory standards, and then ask national regulators to apply those standards, there can be some kind of a global oversight, where the national regulators are doing their job. I don”t think regulation can be raised to a global regulator. That’’s too ambitious, and perhaps not possible in today’’s circumstances.”
When asked whether China and other countries could be convince to move their reserves from US to developing countries, the Finance Minister said: “I don”t know where China keeps it reserves. I don”t even know where India keeps its reserve. It’’s a closely guarded secret. It’’s for the countries to decide where their reserve should be kept. We cannot tell another country how to handle its reserves.”
When asked whether the G-20 agenda would include reform of the International Monetary Fund (IMF), he said:”Because you are extremely specific, I want to be as extremely non-specific as possible. We can”t talk about individual countries. IMF has just done one set of reforms, under which we got a higher voting right. Whether IMF is ready for another major reform of the voting rights, I don”t know, I doubt it. But surely, IMF must begin to discuss within itself governance reform.” He also said that there was a need for an effective surveillance mechanism, and its absence in the present economic scenario,these financial entities, some of which have collapsed, took an unacceptable risk.
“That was what led to the crisis in United States, which is there at the centre of the crisis,” he added. As far as India was concerned the impact of the global meltdown has been indirect, he said.
“There will be impact to some extent on our growth, our exports and it will also impact the currency flows, as it has already. But we are confident that given the underlying strengths of Indian economy, we can weather the crisis and still return a decent growth in 2008-09, even the IMF’’s last week’’s assessment places India’’s growth rate in the current fiscal at 7.8 percent,” he said.(ANI)

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