The key point is we must agree to a new order of global oversight: Chidambaram
Frankfurt: Three points will be highlighted by Prime Minister Manmohan Singh at the Summit on Financial Markets and the World Economy, which is being held in Washington on November 14 and 15. The first point is the need for greater inclusivity in the international financial system. The second is the need to ensure that developing country growth prospects do not suffer. The third is the need to avoid protectionist tendencies.
These points are indicated in Dr Singh’s departure statement of November 13 and Finance Minister P. Chidambaram elaborated on them in an interaction with journalists on board Air India One.
“The key point,” Mr. Chidambaram noted, “is we must agree to a new order of global oversight. And this can come only by, as Prime Minister said, greater inclusivity in the international financial system. In many ways, the IMF is unable to be an early warning system. The G7 is too narrow and too small. A more inclusive system, we believe, can provide better global oversight and serve as an early warning mechanism.”
Elaborating the second point, Mr. Chidambaram observed that “as the world grapples with the crisis and the countries most hit by the crisis find their growth prospects hampered, we must not forget that there are only a handful of economies that are driving world economic growth.” Among these countries were China, India, and a few other countries. There were also some countries that have “the ability to become drivers of economic growth.” So it was vital that the few countries able to drive economic growth and other countries that have “got on to the bandwagon of development” should not suffer in “the period in which we grapple with the economic crisis.” This meant resources should be made available to these countries, including India, “so that they can continue to grow and drive world economic growth.”
Thirdly, the Finance Minister commented, “the crisis should not be an excuse to go into a protectionist cocoon. That would be the worst way to resolve the crisis…Without the free flow of goods and services and capital, there is no way in which the world will recover and get back to the growth path.”
Mr. Chidambaram asserted that the resolution of the crisis was going to take quite a while, well beyond India’s 15th general election. Asked about the implications of the Summit being held by the Bush administration, which was “as lame-duck as any lame duck can be,” and about election-oriented imperatives in the Indian government’s response to the financial crisis, the Finance Minister responded: “The resolution of this crisis will take us to a point of time well beyond January 20, 2009. Likewise, it will take us to a point of time well beyond May 22, 2009. So I don’t think we are going to take an election-constricted point of view. We’re going to take a medium- to long-term point of view.” He added that he believed the U.S. would also take that view. “President Bush and President-elect Obama are reported to have talked about these issues at great length only two days ago. So I think the Obama input will be there in whatever Mr. Bush presents. So we’ll have to take a view that takes us well beyond these election deadlines. That’s the stance, I think, that India will adopt.”