India on Friday exhorted the G-20 member countries to work together to support a well-functioning international economy by coordinating their policy actions in a manner that can ensure strong, sustainable and balanced growth.
Delivering his keynote address at a conference on ‘International cooperation in times of global crisis: Views from G-20 countries' here, Finance Minister Pranab Mukherjee pointed out that the financial and economic crisis of 2007-09 had not only exposed the fragility of existing global financial and economic institutions and the limitations of existing macro-economic policy tools but had also provided an opportunity to the world for new thinking in the world of finance and globalisation.
Mr. Mukherjee reminded the G-20 countries that with the global economies recovering from the crisis and preparing for a post-crisis scenario, there are certain immediate spheres where coordination in policy making would be essential. These, he said, were macroeconomic policies and exit strategies; pace of regulatory reforms to ensure financial stability, without affecting prospects of growth; reform in the governance of international financial institutions to reflect current economic realities; keeping international trade open and avoiding protectionism; and coordination on climate change and energy issues.
Stressing the need for coordinated policy actions, Mr. Mukherjee said: “While doing so, governments will have to build domestic political support for international policy coordination, wherein some national policies might have to be calibrated to ensure a more optimised global outcome.”
Even as the Finance Minister did not name any country that had been embracing protectionist policies, it may be recalled that the U.S. recently hiked the fees for H-1B and L1 category visas which, it is feared, would dent India's $50-billion IT market. And soon after, the State of Ohio banned outsourcing of IT contracts to foreign companies.
Mr. Mukherjee pointed out that in an era of globalisation, with almost all countries integrated into the global economy, complete decoupling is only a myth. The current economic crisis, which began as a financial turmoil, had clearly indicated that no country was insulated and “it is turning out to be much deeper and broader than expected,” he said.
“It is a crisis that spans several fronts: it began as a financial crisis, which then became a general economic crisis; it is also becoming an employment crisis; and has in many countries produced a social crisis. It is a crisis which is simultaneously individual, national and global. It is a crisis of both the developed and the developing world. Everything is so intricately intertwined that events in one country have a ripple effect across the world,” he said.
However, since an alternative to global integration is neither feasible nor desirable, strong cooperation among major economic powers is required for an integrated world economy.
Mr. Mukherjee informed delegates that as part of this process of multi-country thinking, India is trying to produce studies to understand economic processes in the context of G-20 nations and also the BRIC countries. “I am happy to inform you that India, and in particular the Ministry of Finance, is anchoring the writing and publication of an economic report on the four BRIC countries. This is being done to foster cooperation and one of the aims of this is to learn from best practices in different nations.”
The conference was organised in the backdrop of the meeting of finance ministers of G-20 countries next month, which is to be followed by the fifth G-20 summit of heads of states on November 11 and 12 in South Korea.
