Chidambaram calls for global consensus on the issue

Oil producing states urged to rethink their pricing policy

Washington: India has sought a global consensus on the spiralling prices of food and oil in many countries, saying the problem will transform into a global contagion if timely action is not taken.

“Unless we act fast for a global consensus on the price spiral, the social unrest induced by food prices in several countries will conflagrate into a global contagion leaving no country developed or otherwise unscathed,” Finance Minister P. Chidambaram told the Development Committee of the World Bank and the IMF.

“The global community must collectively deliberate on immediate steps to reverse the unconscionable increases in the price of food which threatens to negate the benefits to the poor nations from aid, trade and debt relief,” the Minister told the 77th meeting of the Committee.

Unjustified

Describing the rise in global oil prices as unjustified, Mr. Chidambaram urged the oil producing countries to rethink their pricing policy.

“The prices of crude oil that have shot up to the region of $110 a barrel do not reflect either the cost of producing the oil or the risks inherent in the market and, in fact, not even the inter-play of demand and supply. These runaway prices require producer nations to seriously contemplate the management of production and pricing policy,” he said.

“The food prices, which hit the poor hardest, are expected to remain firm in the medium term unless we make serious interventions. The demand for biofuels will probably increase, and energy and fertilizer prices could be expected to remain high in the medium term.”

The Minister asked the developed countries to cut off subsidies on food crops for bio-fuel production.

“In a world where there is hunger and poverty, there is no policy justification for diverting food crops towards bio-fuels.”

Decline in aid

Mr. Chidambaram noted with concern that aid had declined in both 2006 and 2007 that, in his view, flies in the face of the Monterrey Consensus target of achieving official developmental assistance (ODA) level equal to 0.7 per cent of the GNI and the Gleneagles commitment in 2005 to double ODA to Africa in five years.

“On the demand side, the capacity of developing countries to absorb scaled up foreign assistance has increased. However, the quality and quantity of aid still needs considerable improvement, especially with regard to its predictability,” he said.

Favouring early conclusion of the Doha round of global trade talks, he warned against the WTO agenda being overloaded with issues related to labour standards and environment. — PTI

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