PM sees limited scope for accelerating stimulus

Prime Minister Manmohan Singh on Saturday said the scope and options for acceleration of stimulus package for the recovery of the economic crisis are "limited." "Our response (of stimulus packages) was to a specific domestic situation. It is true that we have limited scope for accelerating stimulus package and our options are limited because of factors like substantial fiscal deficit and Reserve Bank's monetary policies. As of now inflation is not a problem," he said at the end of his two-day visit in Pittsburgh. He was replying to a question whether government would consider withdrawing the stimulus package in view of signs of recovery or whether it would inject a fresh dose. "I would not like to announce package or policy from the foreign soil" he said in reply to a specific question whether steps for stimulating the economy would be taken up. On stock markets picking up in the last few days, the Prime Minister said it was reflective of the economic recovery in the country. The economic fundamentals were basically strong, he added. At the Summit, Singh strongly pitched for continuance of the global stimulus package. The Summit declaration also favoured continuance of the policy and going slow on exit strategy. In his introductory statement at the press conference, the Prime Minister said the Summit was a productive meeting and its purpose was to review what has happened and chart the way forward. This Summit, he said, was not meant to be a trillion dollar summit but there was a comprehensive discussion among the leaders on a wide range of issues. Singh said some of the important issues discussed were that there will be no premature withdrawal of the global stimulus package and the emergency financing for the fund has been successfully completed. "We now have to address the issue of the fund quota increase by early 2011. We have agreed to shift 5 per cent share to countries that are under-represented," he said. Singh also said the Summit has agreed to help the World Bank and other regional development banks to find necessary resources on a review of their capital needs in the first half of 2010. He said the Summit has agreed on a new framework for discussing global macro balances and the contributions individual countries can make through their own policies with a new process of peer review or discussion in the G-20. The leaders also discussed the important issue of climate change and the G-20 has called for a successful outcome in the UN's Framework Convention on Climate Change in Copenhagen. The Prime Minister said the Summit also agreed that the countries should work for an early resolution of Doha round to counter protectionism. The success of the Delhi ministerial meeting in reviewing the process of negotiations was appreciated, he said. Singh said the leaders agreed that the G-20 will henceforth be the premier forum for international economic issues. This is an important development broadening the global governance structure, the Prime Minister said. Answering a question, the Prime Minister said there was no economic crisis in India and it was true that because of the global economic meltdown Indian exports were affected. "But still the economy clocked a growth rate of 6-6.5 per cent. As such there is no crisis in India," he said. On the G-20 decision to shift 5 per cent voting rights to emerging economies, he said that could result in developing and emerging economies getting over 50 per cent of those rights or near about it. The BRIC (Brazil, Russia, India and China) countries requested for seven per cent voting rights but were given 5 per cent. "The demand was seven per cent and five per cent was agreed. Obviously it was a compromise," he said. About the peer review in the G-20, he said this would help in bringing up policies of major developed and developing countries for review in the G-20. "This will give an opportunity to pick up holes in their policies. This will be an advantage," he said. This reflects the governance reforms that India has been seeking in international financial institutions, he said. To a question on whether the US was not keen on the successful completion of the WTO round, Singh said Obama certainly has stated that US was as much interested in its success as others. "I have no reason to doubt his sincerity," he said. To a similar question on protectionism, Singh said obviously the G-20 countries were worried about protectionism raising its head in some developed countries and there was no doubt about it.