By Arun Kumar, IANS
Washington : India wants a resumption of the Doha round of world trade talks with a firm commitment from all to resolve pending issues treating developing countries differentially to protect subsistence farmers and fragile sectors.
“The discussions on agricultural issues must keep in view the interests of millions of subsistence farmers that cannot be equated with those of other sectors,” Finance Minister P. Chidambaram told a World Bank Development Committee here Sunday.
“The interests of the poor also require us to reaffirm the overarching principle of special and differential treatment for developing countries, in order to protect their fragile sectors,” he said speaking for Bangladesh, Bhutan, India and Sri Lanka.
Welcome as the emphasis on Aid for Trade was to ease the supply side constraints stifling their infrastructure and institutions, it “cannot be a substitute for the benefits of fair trade that would flow from a successful conclusion of the Doha Round, particularly with respect to market access.”
On the steps initiated by the International Monetary Fund (IMF) to give more voice to developing countries in its decision making process, Chidambaram reiterated that Voting Shares should take into account the ability to contribute to the World Bank and the potential need for assistance from the World Bank.
Thus, while GDP (on market- and/or exchange-rate) would no doubt be relevant, other relevant variables could be the depth of poverty (below $1/day and/or $2/day) and quality of infrastructure. This would provide a better reflection of the need and relevance of the World Bank for a country, he said.
“Without recognition of the need to re-examine the variables and the formula for calculation of IBRD shares, any discussion on the structural options would, in our view, be incomplete and superficial. We would, therefore, like these issues regarding the formula to be included in the discussions on Voice and Participation to make them more meaningful.”
World real GDP growth was over 5 percent last year, primarily due to a robust performance of Asian economies, notably China and India, supported by most of the industrial countries and emerging markets, he noted. However, recent financial market turbulence triggered by the sub-prime residential mortgage has enhanced the risk of global credit crunch, which may adversely affect the global economy in the coming years.
If growth in industrialised economies slows, it will have an adverse impact on the prospects of emerging and developing economies through, among other factors, reduced demand for their exports, he warned.
While a significant slowdown now appears unavoidable, especially when most of the world economy is operating at near or above potential, he regretted that action on major policy adjustments that is necessary and sufficient for an orderly mitigation of risks has not been taken so far.
If the deficits or surpluses of countries with largest imbalances continue to expand, the impending threat of counter-productive protectionist measures is real and cannot be disregarded, Chidambaram said.
Besides housing market corrections underway in the US, he listed other important risks as high volatility in the commodity prices including oil prices, inflationary pressure forcing central banks to tighten their policies, over-leveraged global equity market and continued imbalances in some major economies.
On climate change, Chidambaram said effective action on it requires a multi-sectoral and multi-country approach in both developed and developing countries.
India is committed to addressing the challenges of climate change and has made progress in de-linking economic growth and energy use and reducing the CO2 emission-intensity of the economy, he said.
Asking the Bank to innovate, leverage and scale up financing for the full menu of energy options, he said Bank energy investments of $10 billion fell short of the huge investment needs in developing countries where access to affordable energy is a binding constraint in development.
India alone requires energy investments to the tune of $154 billion in the next five years to sustain its growth and human development objectives, Chidambaram said.
Endorsing the need to enhance the Bank’s over-arching role in knowledge services and the research priorities associated with it, he said the main task for the Bank should be to ease access to IBRD and design more customized and innovative products to address the specific needs of middle income countries.
Stressing that financial services should be regarded as the fundamental and paramount service that the Bank provides, he proposed that it may develop a global inventory of best practices to help cross-learning from one country to another.
Welcoming the Bank’s proposed engagement with partner countries on Global Public Goods, he said country ownership should be the focal point for integration of GPGs within national developmental strategies.