Seoul: A day before the world leaders assembled at Seoul to kick off formal meetings of the Group of Twenty (G-20), it is still not clear whether they will succeed in forging a collective strategy to protect the growth process and avoid some of the simmering differences from boiling over.
India, the second fastest growing major economy after China, is a keen stakeholder in preserving growth momentum.
According to Montek Singh Ahluwalia, deputy chairman of the Planning Commission and a key member of the country’s negotiating team, officials are working to bridge the differences ahead of the meetings of the global leaders.
“All critical issues are (still) left in square brackets; not sure how it will shape up,” he said. “Some of these final decisions will be made when the heads of governments speak. Otherwise, the G-20 is continuing the agenda that it has started. Many things will legitimately happen.”
India approaches the Seoul negotiations emboldened by the US endorsement of its induction into the global high table. That was preceded by a reordering of the quotas at the International Monetary Fund (IMF), whereby the voting share of emerging countries improved by 6%.
Together with quota changes initiated in 2008 that are still being ratified, this will improve India’s ranking to eighth on the IMF board as opposed to its present standing of 22.
Most of IMF’s financial resources are generated through quota subscriptions; each member country is assigned a quota, based broadly on its relative position in the world economy. A country’s voting power depends on the quota size.
The key focus at Seoul will be to manage some forward movement on the so-called development agenda and the mutual assessment process (MAP). The former, introduced at the behest of South Korea, the first country outside the Group of Eight to host the gathering, essentially seeks to focus on long-term development issues. MAP is intended to generate a mechanism to ensure a more coordinated policy response to ensure optimum outcomes as also to avoid conflicting policy moves.
At the last meeting of the G-20 in Toronto, IMF was asked to review the macroeconomic projections by individual countries, divided into four groups: advanced countries such as the US with a current account deficit, advanced countries such as Germany with a surplus current account, emerging market countries such as China with a surplus, and, emerging market countries such as India with deficits.
The completed review has been submitted by IMF to the G-20 secretariat and is now part of the ongoing discussions, Ahluwalia said.