London, Apr.2 (ANI): There seems to be a bit of a martyr act being played out by emerging economies as they lay the blame squarely on the rich nations for the cesspool of a financial crisis that the world finds itself in.
Complaining about protectionism by the original G-7 nations which include the US, Britain, Canada, France, Germany, Italy and Japan, the group of developing economies who joined this elite grouping at a later stage are now telling these nations to get their house in order, stop protectionism whether financial or in capital goods flow. Speaking on the background of talks that are being held, Indian Foreign Secretary Shivshankar Menon said that India "is part of the solution rather than be part of the problem."
Thursday's G-20 Summit is expected to address three key issues viz. (1) To take whatever action is necessary to stabilise financial markets and enable families and businesses to get through the recession; (2) To reform and strengthen the global financial and economic system to restore confidence and trust and (3) To put the global economy on track for sustainable growth.
Speaking at the dinner hosted by his British counterpart Gordon Brown last night at the Buckingham Palace, Indian Prime Minister Dr. Manmohan Singh said: "We have made aggressive use of both monetary and fiscal policy with a total fiscal stimulus or expansion of the fiscal deficit about the planned level of almost four percentage points of GDP in 2008-09."
"Effective regulation of the banking system has gained us much more than any additional strain imposed by temporary fiscal expansion," he addedSpeaking on behalf of developing economies, Dr. Singh said India wants to be the voice of developing nations.
He reiterated his view that there is a need for a new world financial order and the reinvention of the International Monetary Fund (IMF). India is technically not a part of the G-20, a grouping of rich nations, and yet its importance to resolution of global financial woes cannot be understated.
Though nothing much is expected from the summit deliberations, India will hope to achieve some success. India is looking to establish itself as a responsible member in the international financial system.
Dr.Singh described the G-20 as an institutional mechanism that has an important role to play in addressing the global economic and financial slowdown by taking coordinated and purposeful action.
He called on leaders attending today's summit to take credible decisions which will help to halt and reverse the current slowdown and to instill a sense of confidence in the global economy.
"We must ensure that countries hurt by the massive withdrawal of private capital that has taken place which is unlikely to be reversed in 2010 are able to rely upon an increased flow of resources from the international financial institutions. This would help these countries to maintain a higher level of demand than would other wise b possible and thus help global revival," Dr. Singh said."Multilateral development banks can play an important role in maintaining the flow of resources to developing countries over the next two years. As an immediate step, we must endorse a 200 percentincrease in the capital of the Asian Development Bank which can be approved by its Board of Governors in May," the Prime Minister said."The World Bank should also expand its lending in the next two to three years in a manner which helps to fill the gap left by the withdrawal of private capital flows. By directing its lending to infrastructure development and recapitalising of hte banks it would help support contra cyclical policy in a manner which stimulates an early resumption growth in these economies," he added."We must also take concrete steps to revive trade finance which has been badly affected in part, I regret to say, because of financial protectionism. Export credit agencies can expand their lending. The IFC pool to support trade finance can be substantially expanded with bilateral assistance from countries in a position to contribute. An issue of vital concern to developing countries is the rise of protectionist sentiment in the industrialized world. This phenomenon is not surprising given the downturn in economic activity and the rise of unemployment. However it will be a test of leadership whether we can persuade the public that we must not repeat past mistakes," Dr. Singh said."Leaders of the developing countries have struggled to overcome the doubts and fears of our public to persuade them of hte merits of integrating with the global economy. I believe we have had substantial success in this effort and the open economy has brought prosperity to an ever widen circle both developing a industrialized countries. These hard won gains will be destroyed if industrial country markets are not kept open in these difficult times." (ANI)