Pittsburgh: Prime Minister Manmohan Singh on Saturday said the scope and options for acceleration of stimulus package for the recovery of the economic crisis were “limited” but in the same breath not appeared to rule out any such possibility.
“Our response (of stimulus packages) was to a specific domestic situation. It is true that we have limited scope for accelerating stimulus package and our options are limited because of factors like substantial fiscal deficit and Reserve Bank’s monetary policies. As of now inflation is not a problem,” he told a press conference at the end of his two-day visit here.
He was replying to a question whether government would consider withdrawing the stimulus package in view of signs of recovery or whether it would inject a fresh dose.
“I would not like to announce package or policy from the foreign soil,” he said in reply to a specific question whether steps for stimulating the economy would be taken up.
On stock markets picking up in the last few days, the Prime Minister said it was reflective of the economic recovery in the country.
The economic fundamentals were basically strong, he added.
At the G-20 Summit, Singh strongly pitched for continuance of the global stimulus package. The Summit declaration also favoured continuance of the policy and going slow on exit strategy.
In his introductory statement at the press conference, the Prime Minister said the Summit was a productive meeting and its purpose was to review what has happened and chart the way forward.
This Summit, he said, was not meant to be a trillion dollar summit but there was a comprehensive discussion among the leaders on a wide range of issues.
Singh said some of the important issues discussed were that there will be no premature withdrawal of the global stimulus package and the emergency financing for the fund has been successfully completed.
“We now have to address the issue of the fund quota increase by early 2011. We have agreed to shift 5% share to countries that are under-represented,” he said.
Singh also said the Summit has agreed to help the World Bank and other regional development banks to find necessary resources on a review of their capital needs in the first half of 2010.
He said the Summit has agreed on a new framework for discussing global macro balances and the contributions individual countries can make through their own policies with a new process of peer review or discussion in the G-20.
The leaders also discussed the important issue of climate change and the G-20 has called for a successful outcome in the UN’s Framework Convention on Climate Change in Copenhagen.
The Prime Minister said the Summit also agreed that the countries should work for an early resolution of Doha round to counter protectionism.
The success of the Delhi ministerial meeting in reviewing the process of negotiations was appreciated, he said.
Singh said the leaders agreed that the G-20 will henceforth be the premier forum for international economic issues.
This is an important development broadening the global governance structure, the Prime Minister said. Answering a question, the he said there was no economic crisis in India and it was true that because of the global economic meltdown Indian exports were affected.
“But still the economy clocked a growth rate of 6-6.5%. As such there is no crisis in India,” he said.
On the G-20 decision to shift 5% voting rights to emerging economies, he said that could result in developing and emerging economies getting over 50% of those rights or near about it.
The Bric (Brazil, Russia, India and China) countries requested for 7% voting rights but were given 5%.
“The demand was seven per cent and five per cent was agreed. Obviously it was a compromise,” he said.
About the peer review in the G-20, he said this would help in bringing up policies of major developed and developing countries for review in the G-20.
“This will give an opportunity to pick up holes in their policies. This will be an advantage,” he said.
This reflects the governance reforms that India has been seeking in international financial institutions, he said.
To a question on whether the US was not keen on the successful completion of the WTO round, Singh said Obama certainly has stated that US was as much interested in its success as others.
“I have no reason to doubt his sincerity,” he said.
To a similar question on protectionism, Singh said obviously the G-20 countries were worried about protectionism raising its head in some developed countries and there was no doubt about it.
Asked whether US was included in this as it has taken some steps against China on tyre imports, Singh said the US is included.
On re-balancing economy as mentioned in the G-20 declaration, he said as of now the G-20 is “an essay in persuasion. Whether this essay will succeed only time will tell.”
The prime minister acknowledged that in a highly interdependent world, India has a stake in the stability and growth of the world economy.
“If world economy collapses, there is obviously some effect on our country. Already the rate of our growth of our economy particularly our exports have suffered,” he said, adding that this has led to decline in exports of important labour intensive products like gems and jewellery, leather goods and textiles.
“So in an increasingly interdependent world, I think, no country by itself can ensure that all its goals of economic life can be achieved working to the exclusion of other participants in an increasingly interdependent world,” Singh said.