London: Existing global stimulus plans are “probably adequate” for 2009, but policy-makers must act to extend support efforts into next year, Prime Minister Manmohan Singh said in an interview published on Tuesday.
Singh will meet global leaders in London on Thursday at a G-20 crisis summit where old and emerging economic powers will work toward avoiding an economic slump and rebuilding the international financial system.
“I’ve seen a letter from the managing director of the IMF saying that the stimulus that has been planned in the year 2009 by major economies amounts to 2% of GDP,” Singh told the Financial Times in comments published on the business newspaper’s website.
“This is probably adequate, but it’s necessary to ensure that stimulus is sustained and maintained in the year 2010,” he said in the interview.
While the United States, China, Japan and Britain have voiced support for doing more to boost economic activity, now others -- such as Germany and France -- have said that current stimulus measures could be enough.
Singh said India’s own fiscal stimulus was also adequate for the time being and falling inflation created more room for monetary easing “when and where it becomes necessary.”
“We will have a new government in place following the general elections by the end of May. Our government is very clear on what we will do if we come back to power,” he said.
“We will act in the short run to stimulate the economy to return to our medium growth potential, which is around 9% or so.”
He said it was too much to expect agreement on all issues at the G-20 summit, especially on wide-ranging areas such as global reform which could take some time to work through.
But he said India was not to blame for stalled global trade talks -- which many see as a key to boosting economic activity across the globe.
“There is no truth in the charge that India is responsible for the deadlock in the Doha round,” he said.
“While public attention focuses on points of disagreement, we should remember that a great deal of work has been done to narrow differences. The negotiators just did not have enough time.”
He said protectionism in all its forms must be rejected by the G20 this week.
“The phenomenon of industrialized countries pressurizing their banks to give preference to lending at home does present a problem,” he said.
“It is a form of financial protectionism which should be avoided and where possible reversed.”