India?s walk after the global economic summit talk did not have a swagger. Mind you, Manmohan Singh could have been excused a bit of self-satisfaction. The post-summit declaration unambiguously addressed every Indian concern. It also took note of Dr Singh?s advice on the need for a global coordinated fiscal stimulus to aid faster recovery of the world economy. Dr Singh restricted himself to saying the balance of power was clearly shifting from the western world to developing countries.
To understand how India played the summit it is necessary to go back a bit. Since mid-September, India has been in talks with China and Japan in preparation for the Asia Europe Meeting (ASEM) in Beijing. That meeting was held in the last week of October. After George Bush invited Dr Singh in October third week for the mid-November global summit, India opened a channel with other emerging economies like Brazil, Mexico and South Africa. Dr Singh was keen to stay away from the ?each country for itself? approach. His proposals therefore encompassed not just emerging economies, but also industrialised countries, most of which are dipping into recession.
Of course, this didn?t mean global leaders in the high table had to listen to Dr Singh. India is still a small player in the world economy compared with China, with which it is clubbed incorrectly, and often for not-so-charitable reasons (oil guzzlers, big food consumers, etc). China?s foreign exchange reserves are eight times that of India?s $250 billion and its contribution to the world economy last year was much larger compared with India?s. So when Chinese President Hu Jintao speaks, the US et al cannot afford not to listen.
However, Dr Singh, an economist and perhaps the only global leader who has been a central banker, planning chief and also a finance minister, brings intellectual authority to the table. Also, India, unlike China, is not so hugely dependent on exports, giving it greater flexibility in managing its domestic growth despite a global recession. India?s exports roughly account for 20 per cent of its GDP, whereas for China, exports make up a substantial 40 per cent of its GDP. So, these were the counterweights to India?s relatively small economic size at the summit.
The other Indian advantage was that the PM personally took the summit seriously. He told Bush when the latter had called that there was a risk the meeting could be counter-productive unless everyone prepared well. Finance Minister P Chidambaram and Deputy Chairman, Planning Commission, Montek Singh Ahluwalia, met think-tank representatives, former top bureaucrats and central bank governors to pick their brains on what should be India?s position at the summit.
Later, at the G-20 finance ministers meeting at Sao Paulo, Brazil, Chidambaram worked closely with emerging economy counterparts in fashioning a strong statement for a larger say in the International Monetary Fund and extra resources from the World Bank. Dr Singh?s sherpa or chief coordinator for the summit, Ahluwalia, was in Washington a couple of days ahead of the meeting for preparatory work.
Dr Singh had also articulated his thoughts at ASEM, where India was present for the first time. Whether it was global financial crisis, millennium development goals (MDGs) or sustainable development, there was clear evidence that the Indian PM was being listened to. ASEM, in some ways, set the tone for the summit agenda in Washington DC.
Dr Singh, who always wanted India to be part of the solution, highlighted four key issues in the summit: a globally coordinated fiscal stimulus, inclusivity while reforming Bretton Woods institutions, higher resources for developing countries badly hit for no fault of theirs, and a shield against protectionist tendencies by industrialised countries. All of these find detailed mention in the summit declaration.
Plus, India is now part of the Financial Stability Forum (FSF), an exclusive G-7 club until recently, that is entrusted with the task of surveillance and supervision of global financial markets. It also got the World Bank to fund an extra $3 billion specifically for investment in infrastructure. Of course, as widely noted, the declaration says emerging and developing economies must have greater voice and representation in the IMF and World Bank.
Europe and the US were divided on the need for coordinated fiscal stimuli. But what helped the consensus was strong argument by leaders like the Indian PM that such a move will help the world economy turnaround quickly. France?s Nicholas Sarkozy was not keen to commit on keeping trade free. The Chinese and Indian leadership played a big role in countering protectionism.
So, yes, India?s first attendance at the global economic high table wasn?t marked by its overwhelming entry. But, no, India?s middling economic performance didn?t mean its contribution was middling, too. This needs to be recognised.
?The author is national business editor, The Indian Express