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New Delhi, Nov 14: A top economist and a prime minister, Manmohan Singh will have some sobering thoughts for the G-20 leaders assembling in Washington this weekend to brainstorm over the global financial crisis. Arguably the most qualified leader to attend the summit, Singh would tell the developed countries not to use the recession in their economies as a ruse to tilt their policies toward protectionism. These countries, instead, should encourage a free flow of goods & services and enhance capital flows, he would assert.
Retreating into a politically tempting ‘protectionist cocoon’ would be the easy but worst way to resolve the crisis, Singh would tell the likes of German Chancellor Angela Merkel, UK Premier Gordon Brown and US President George W Bush, whose economies are now officially in recession.
The summit, looked upon by many countries as the next Bretton Woods—the historic talks after WWII that led to a dollar-led new world economic order—also holds the prospects of ending up as a gab fest, given the hawkish pre-summit stance of the European countries and the chances of an assertive posturing by the BRIC countries. The summit will surely test the negotiating skills of Bush, as European and BRIC leaders are determined to place the blame for the global crisis squarely on the US and its ‘cowboy capitalism’. Still, past the blame game, the summit could draw the contours of a more disciplined global financial order.
Singh is expected to take an assertive but positive stand at the summit. He will have the benefit of finance minister P Chidambaram and deputy chairman of the Planning Commission Montek Singh Ahluwalia on his side in the negotiations.
En route to Washington, Chidambaram has revealed India’s position at the summit. He said India is going to call for a greater global oversight mechanism for monitoring the activities of international financial market players. Though a common regulation framework on the global level may be ‘too ambitious’ as national regulators would loathe the idea, India will pitch for common prudential and regulatory standards for all financial institutions in the world and a convergence of accounting standards to prevent a collapse of global financial institutions.
“In retrospect, it is clear that if there had been effective surveillance mechanism, it could have identified the huge risks that had been taken by some international financial institutions. There must be some way by which countries would have a global oversight with commonly accepted regulatory...
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