India is keen to expand the mandate of G20 to include development in its agenda. Focus on the new topic will hopefully also keep the build-up of currency wars?especially between China and the US? out of top billing at the G20 summit.
In his pre-departure statement, PM Manmohan Singh said: ?We will encourage G20 to focus on the development agenda being introduced for the first time in Seoul.?
Planning Commission deputy chairman Montek Singh Ahluwalia, India’s sherpa at the summit, said issues like currency have figured in the backroom consultations. But he stressed that such frictions could be narrowed if the Seoul meet agreed on a mutual assessment process.
For India, focussing on development makes sense as it can also be used to counter protectionist tendencies repeatedly flaring up in the US and EU in the aftermath of the financial meltdown.
The G20 is now moving out of the firefighting role of the past two years. The group, accounting for 80% of global GDP could get trapped in quota-setting like the recently aborted current account deficit plan, as the specter of a recession fades. For EU and the US, however, quota-setting for fiscal deficit, trade deficit and even caps on government debt are overriding priorities to ensure the global financial order does not tip over.
As foreign secretary Nirupama Rao said, the development agenda is very significant for India. It will come in handy for emerging economies to counter quotas as anathema to their booming economies. While she did not say so, the lack of an immediate crisis could push the summit in these directions.
For India, the currency war is difficult to take sides on. Significantly, Singh?s statement steered clear of it, choosing instead to concentrate on ?rule-based international economic environment, whether in the field of trade, investment flows, technology transfers or open markets. We have to be particularly wary of protectionist sentiments. There are also developmental imbalances within and between countries, and rebalancing of the world economy is a major challenge.? Singh will cut short his Seoul trip, avoiding the dinner for the heads of state on the last evening and return early.
