FM says G-20 summit to focus on global oversight

Does not 'expect the need for another Bretton Woods type of institution'. Finance Minister P Chidambaram said he did not “expect the need for another type of Bretton Woods institution” ahead of the 20-country Summit on Financial Markets and the World Economy starting in Washington DC on November 14. “It’s very difficult to say that we could invent another Bretton Woods type of institution. What we’re trying to do is improve global governance and global oversight of these financial institutions,” Chidambaram said at an on-board press conference. Reiterating and expanding on Prime Minister Manmohan Singh’s three-point Summit agenda — greater inclusivity, protecting developing countries’ growth prospects and avoiding protectionist tendencies — the finance minister said, “The key point is that we must move towards a new global order that can only be achieved by greater inclusivity in the international financial system.” “The International Monetary Fund (IMF) has been unable to be an early warning system. The G7, too, is too narrow and small,” Chidambaram said, adding, “More inclusivity would ensure better oversight and serve as an early warning system.” Suggesting that India would be focusing on a greater role for developing countries in the global financial system, the finance minister said, “As the world grapples with the crisis, only a handful of countries are driving economic growth, China and India among them. It is very important that countries that can drive economic growth should not suffer in the period during which we grapple with the crisis.” To this end, the finance minister said it was important that the crisis was not used as an excuse to go into “a protectionist cocoon”. “We must try to encourage freer flow of goods, services and capital without which the world will not recover and get back to the growth path,” he said. The finance minister, who returned from the meeting of G20 finance ministers in Sao Paulo earlier this week, said the broad agenda set out in Brazil included “common prudential and regulatory standards for all financial institutions in the world, especially those with global footprints, and a convergence of accounting standards” as well as reform of multilateral institutions, including the Bank of International Settlements. “We must agree to locate the resources and agree upon the channels through which the resources would be made available and diverted to developing countries. These could be the existing multinational institutions or we could devise an ad-hoc fast-disbursing mechanism,” he said. He added that if infusion of additional capital in multilateral institutions was discussed and was consistent with India’s voting share, the government would accept its share of responsibility. The finance minister also refuted contentions that the two-day summit was unlikely to yield workable solutions to the global financial crisis or for India because it was being hosted by a “lame duck” President (George Bush) and an Indian prime minister who would be facing elections in a few months. “The resolution of the crisis lies well beyond January or May 2009. We are not taking a medium- and long-term view,” the finance minister said. From 8 per cent to ‘decent growth’ Finance Minister P Chidambaram appears to have modified his earlier assertion that India’s economy will grow at 8 per cent this fiscal. Instead, he now says the country is looking at “decent growth”, citing IMF’s 7-7.8 per cent and the Prime Minister’s Economic Advisory Council’s 7-7.5 per cent figure. “At any rate it will be faster than the UK,” he quipped in response to a comment that the British media had cast doubts on India and China’s growth outlook. On a shoestring The delegation accompanying the prime minister to the Washington summit has 91 people, of which his security detail accounts for more than 20 per cent. The total cost of the delegation, including chartering Air India One, is over Rs 1 crore. This, however, is considered “shoestring”.