Endorsing the United States' assessment of the global economic situation, as opposed to the German one, Prime Minister Manmohan Singh on Sunday told the G-20 that global recovery was “still fragile” because private demand in the industrialised countries remained weak, which meant government support to boosting demand must not be given up prematurely.

Dr. Singh warned against a double-dip recession as there was a danger that different countries might go different ways. Contradictory policies, if followed by many industrialised countries simultaneously, “could provoke a double dip recession. This will have very negative effects on developing countries, and on the prospects for achieving the Millennium Development Goals,” he told the gathering of leaders whose countries account for 85 per cent of the world GDP

The Prime Minister, however, said the outcome of the decisions taken at the Pittsburg Summit shed valuable light on the policy responses needed in different groups of countries. So while agreeing with the U.S. on need to avoid a premature withdrawal of the stimulus, he also carefully provided an escape clause for countries where inflation, rather than deflation, has become the bigger threat.

Striking the right balance in a climate of uncertainty was not easy, he said but suggested that he would prefer to err on the side of continuing the stimulus policies as the risks of destabilising the recovery were “too great” now. In his view, deflation was a bigger risk than inflation.

India wanted “effective policy coordination” in the G-20 even as concerted efforts were on towards fiscal consolidation. In a reference to the German stand, which has been calling for a quick exit, he said “other advanced countries” needed to adopt a much more calibrated exit from stimulus. The timing of the exit was crucial. “Credible steps” by the industrialised countries faced with exceptional fiscal stress was crucial, even if in the short term the markets remained sceptical.

In a veiled reference to the Chinese approach, he said developing countries should rely less upon exports and more on domestic demand by giving a boost to investment, especially in infrastructure. However, since this could result in higher current account deficits amongst the developing countries, he said there had to be an expansion in both multilateral and private capital flows.

Dr. Singh had meetings on Saturday with British Prime Minister David Cameron and French President Nicholas Sarkozy. Dr. Singh invited Mr. Cameron to visit India. The visit will take place in July. Mr. Cameron said his government was fully supportive of India's bid to becoming a permanent member of the U.N. Security Council.

Mr. Sarkozy told Dr. Singh that his government would support India in its efforts to become a permanent member of the Security Council. He said France wanted India to play a bigger role in the institutions of global governance.

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