Washington, Nov 15 (UNI) Prime Minister Manmohan Singh today sought a sort of international guarantee to protect growth in developing economies like India, ensuring the achievement of Millennium Development Goals.
Speaking at the G-20 Summit here, he highlighted the negative impact of the current financial crisis on India. ''After growing at close to nine per cent per year for four years, our growth rate is expected to slow down to between seven per cent to 7.5 per cent in the current financial year. The pace of growth next year will depend, in part, upon how long the global recession lasts and how quickly global capital flows return to normal.'' Dr Singh, however, said much of his nation's growth was internally driven and he expected that ''we can maintain a strong pace of growth in the coming years, but many developing countries will be hit harder.'' Referring to the global nature of the crisis, Dr Singh called for a global response, stressing the need to distinguish between the immediate priority, which must be to bring the crisis under control as quickly as possible with as little adverse effect on developing countries, and the medium term objective of reforming the global financial architecture to prevent similar crises in future.
As the immediate priority, he pointed out that the countries had taken a number of important steps to inject liquidity into their financial system, recapitalise banks and other systemically important institutions. These measures had had some effect, but the crisis was far from over.
''Credit channels remain clogged and the signs of distress in the real economy suggest that additional measures are needed,'' Dr Singh said calling for ''a coordinated fiscal stimulus by countries that are in a position to do so would help to mitigate the severity and duration of the recession. It would also send a strong signal to investors around the world.'' He wanted the international community to consider special initiatives to counter the shrinkage of capital flows to developing countries that is almost certain to occur over the next two years.
In this context, he welcomed the International Monetary Fund (IMF) initiative to establish a new liquidity facility.
Dr Singh also suggested establishment of short term swap arrangements as an alternative to the IMF as a source of quick disbursing liquidity.
The Prime Minister said the international lending bodies, including the World Bank, and national governments should consider measures such as providing additional credit for infrastructure projects, promote new instruments for infrastructure financing and providing capital and liquidity support to banking institutions to lend to under construction infrastructure projects.
He said the World Bank and the Regional Development banks should aim at making an additional 50 billion dollar per year in support of infrastructure development in the public and private sectors.
Dr Singh said industrialised countries could also help to revive trade flows in developing countries by expanding the scale of export credit finance available to these countries.
Dr Singh emphasised the importance of broad-based multilateral approaches to reform the global financial architecture. The IMF is the logical body to perform the task of multilateral surveillance of macro-economic imbalances and their relationship to financial stability.
UNI XC GL RAI2231