New Delhi: Criticising the US for resorting to protectionism in the wake of the global financial crisis, India on Friday warned such a “negative” trend will have a cascading effect on major economies and undermine efforts to overcome the downturn in the shortest possible time.
“That the biggest economy in the world, the US, where this global financial tsunami originated, should be resorting to trade-restrictive practises is particularly disturbing,” external affairs minister Pranab Mukherjee said at the India Today Conclave here.
He said the US government’s stimulus package imposing restrictions on public procurement or discouraging US firms from outsourcing or restricting foreign workers is not in keeping with the spirit of global cooperation.
“It also runs counter to the current efforts to stem the sharp decline in the economic growth worldwide, especially in the US and other developed markets,” he said.
Asserting that it would be shortsighted to go into protectionist mode, Mukherjee dubbed the US move as a “negative trend” which is “likely to have a cascading effect in other major economies and thereby undermine the global efforts to overcome the current crisis in the shortest possible time-frame.”
Mukherjee pointed out that the G-20 meeting in Washington last year had underscored the “critical importance of rejecting protectionism and not turning inward in times of financial uncertainty.”
He stressed on the need to re-orient the growth paradigm to be followed by the international institutions and the donor countries.
“It is all the more critical because the developing countries still have positive growth rates and can provide the basis for global economic recovery,” Mukherjee said.
“A well directed aid and trade effort can help in generating domestic economic demand and green growth,” he said.
On 26, US President Barack Obama in his maiden budget speech said his administration would do away with tax breaks for firms outsourcing jobs to overseas destinations, including India. At the same time, the US administration would be providing tax relief to 95% of American working families.