WORLD
The G20 meeting comes against the backdrop of an emerging sovereign debt crisis in some European countries which are caught in conflicting pulls on continuing the global stimulus package.
Leaders of the world's developed and major emerging economies are meeting here tomorrow to discuss strategies for ensuring a balanced and sustainable growth, even as India favours calibrated exit strategies and is opposed to any universal tax to fund bail out of banks.
The meeting comes against the backdrop of an emerging sovereign debt crisis in some European countries which are
caught in conflicting pulls on continuing the global stimulus
package.
From the Summit in Washington at the height of 2008 financial crisis to the 2009 spring Summit in London when they decided on a global stimulus package to pull the economy out of depression, the leaders are now facing conflicting demands - from the US against early exit to European demand for heavy cutting down of government spending to eliminate deficits on the heels of Euro Zone crisis.
Prime minister Manmohan Singh, who heads a high-power delegation to the fourth Summit of G20, is expected to put
forth the Indian view that it is necessary that the global economy continue to recover in a stable and predictable manner. For that there is need for investment and capital flows as well as an open and rule-based trading system that does not succumb to protectionist tendencies.
At the same time, the economist-prime minister is conscious that the recovery is still fragile and uneven as new worrying signs have emerged in the Euro Zone.
The challenge of the Toronto Summit, being hosted by prime minister Stephen Harper of Cananda, is three-fold,
according to Singh.
They are -- to ensure that global economic recovery is durable, balanced and sustainable, to calibrate exit strategies in the light of growing concerns over expansionary fiscal policies and to focus on medium and long-term structural issues relating to governance issues.
The theme of the Toronto Summit is "Recovery and the New Beginning" in which it is expected to deliberate on a "framework for strong, sustainable and balanced growth".
Planning Commission deputy chairman Montek Singh Ahluwalia, the Indian sherpa at the Summit, and top officials including finance secretary Ashok Chawla are already here ahead of prime minister's arrival working with negotiators on issues like how much stimulus should be continued and how much should be pulled back.
"It all depends on fiscal consolidation of the individual country's economy vis-a-vis the global economy. The countries which are still sluggish want the stimulus to continue and those like India, which have recovered fairly well from the 2008 crisis, would like a phased withdrawal," Indian officials say.
Finance minister Pranab Mukherjee has already set a target of halving the deficit by 2011 and that may be the period by which the stimulus withdrawal could also be attempted domestically, say the officials. But, they also point out, that the challenge is how the countries agree to do it in a coordinated manner.
The other major issue that is likely to come up at the Summit is the strong demand for a universal bank tax for a bail-out of banks, a move triggered by the 2008 financial crisis following the collapse of banks in the US and Europe.
French president Sarkozy and German Chancellor Merkel have written to G-20 leaders pushing the demand for the bank tax. The new coalition government in Britain has already introduced one.
But India has strong reservations on the issue and has made clear its position. New Delhi feels the banks in India have been conservative, a reason that stood them in good stead during the global crisis, and the sector is healthy. The Indian banking norms were sound and the system did not collapse unlike in the West, officials point out.
"I don't think the proposal will go through in an undiluted form. I think it will end up something like those who want can go ahead," an official said, adding in a lighter vein, "We don't like it (the tax). Those who have money don't want the tax. Those who don't have want it."
At the Summit, India is also looking at a framework of reforms of the international financial institutions and markets and to reiterate its opposition to protectionism of any kind. There is a need to take a position on financial sector reforms, fiscal stability board and the Basel norms.
There is also the issue of pushing for reforms of the voting rights in the International Monetary Fund (IMF) where a decision has already been taken to increase the rights to developing countries by 4.6%.
The G-20 Summit starts formally today with an official welcome and reception followed by a working dinner by the Canadian prime minister. On Sunday, the programme includes the Opening Plenary followed by other sessions and the Final Plenary.
The Summit is expected to come out with a declaration containing the strategies before the Summiteers head for Seoul in November for the next meeting.
Singh will have a heavy schedule which includes interaction with leaders of participating countries on the sidelines of the Summit covering a wide range of bilateral, regional and global issues of
mutual interest.
His bilateral engagements include those with US president Barack Obama, new British prime minister David Cameroon, French president Nicolas Sarkozy, Japanese prime minister Naoto Kan besides the host prime minister Harper.
During the bilateral meeting with Harper, India and Canada are set to sign a nuclear deal providing for cooperation in supply of uranium, equipment, research and radiation safety measures in the atomic sector. Agreements are also expected to be signed between the two sides in other areas including mining, education and culture.
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