Prime Minister Manmohan Singh, when asked about the preparedness of his government in dealing with the situation that was rapidly deteriorating atleast for the world economy, said: “We have already taken measures to arrest the situation by giving loan waiver to farmers by providing more liquidity to the financial markets and we are constantly keeping a vigil on the situation and will do everything to deal with the situation in a more proactive manner.”
The Prime Minister said: “We will manage a socially inclusive growth and maintain the 7.5 per cent target of economic growth when asked about the fallout of the financial crisis and the increasing possibility of unemployment. On the success of the G 20 summit and the way forward, the Prime Minister said: “The balance of power was shifting in favour of emerging economies.”
The statement assumes significance as there is a gradual power shift in favour of developing countries because India and China along with other economies of 20 nations are at a very embryonic stage of development and have been insisting that their voice be heard by the developed rich countries.
The western world is realising that there is a change as the crisis threatens to spill over to the developing world who have not been a cause of the problem and have not precipitated the crisis either. The developed economies have also realised that the developing countries have done nothing to cause or precipitate the crisis but have been the worse sufferers with their exports being hit, flow of remittances having shrunk, and foreign funds having withdrawn from the country, Singh said, adding that there was a need to mount fiscal stimulus to increase demand, inflation was no longer a concern as much the threat to the world economy threatening to slip into a deflationary
spiral.
At the summit, the Prime Minister said: “We all recognise that this is a global crisis and, therefore, calls for a global response. I hope the process started by this Summit will help us to evolve a global response.
The continuing weakness in the real economy suggests that the steps we have taken to increase liquidity must be supplemented by a coordinated fiscal stimulus.
We need to take special steps to provide resources to the developing countries. They were not the cause of the crisis but are the worst hit.
We need to introduce regulatory reforms in the financial system improving existing standards and aligning them internationally.
We also need much better multilateral surveillance of both macro economic and financial developments. The communiqué tasks the IMF together with FSF to perform this role. We welcome the signal in the communiqué to expand the FSF and other forums of supervisors. We must also work for a reform of the global financial architecture which must include a strengthened IMF and one which is more broadly reflective of changing economic realities.
We must avoid a retreat into protectionism. To this end we must work sincerely to the early conclusion of the Doha round achieving a balanced outcome.”
