Onboard Air India One, Nov 16 : Prime Minister Dr. Manmohan Singh on Sunday called for coordinated fiscal stimulus to deal with present economic crisis.
Addressing a news conference onboard Air India One today, while on his way back from Washington where he attended the G-20 summit, Singh said, all the countries were in complete agreement that there was need for considerable fiscal stimulation.
He also said that international financial institutions should come out with facilities to increase their assistance to developing countries to help them tide over the crisis and added that the international financial institutions must be provided with adequate resources to meet the challenge of the crisis as far as developing countries are concerned.
"There was complete agreement that a considerable fiscal stimulation was called for. In the present time inflation was much less of a danger deflation was the real concern, which the world had to grapple with. Therefore those countries that have the maneuverability should use fiscal stimulus to stimulate demand. It was also agreed that as far as the developing countries are concerned, infrastructure investment and its protection will be a major contributory factor to sustaining growth rates and therefore the International Financial Institutions, both the World Bank and International Monetary Fund (IMF) and the Regional Development Banks must come out with facilities to increase their assistance to these countries, and I was very happy that in anticipation of the meeting both the Fund and the Bank came out with schemes. Though there are doubts whether the resources available with the institutions will be adequate to take care of all the demands that may build up.
But there was the unanimity at the meeting that international financial institutions must be provided with adequate resources to meet the challenge of the crisis as far as developing countries are concerned," said Singh.
Acknowledging the burden on the developing countries, Singh also said, that they are the worst sufferers because of the global economic crisis.
"There was also the recognition that as far as the developing countries are concerned, though they had done nothing to contribute to this crisis, they were probably the worst sufferers. The growth of exports was going down, the flow of capital and direct investment was slowing down.
There were attempts on the part of the foreign capital to fly out putting pressure on the exchange rate of a number of developing countries. Also there was a danger that the flow of remittance from overseas workers may also decline. Our concern was that in tackling the crisis, the developed countries must not lose sight of the impact of the crisis on the developing countries," said Singh.
World leaders gathering in Washington DC had backed a series of measures to kick-start the global economy with better financial market regulation and more say for emerging countries.
India's impressive growth of around nine per cent in the past few years has attracted global attention and investors have moved in to take part in the long-term growth prospects.
Its economic clout has meant India is an important voice in major global economic and political foras and New Delhi has been acknowledged as a leader of developing countries at world trade talks.