By Dipankar De Sarkar, IANS,
London : India is looking at President Barack Obama to signal renewed US global leadership and engagement by rejecting protectionist pressures at the coming summit of the Group of 20 (G20) countries.
The April 2 summit, which will be attended by Prime Minister Manmohan Singh – a respected economist who has dealt with international economic issues for four decades – has been called to combat the global financial crisis.
But the success of the summit in coming up with an action plan that will lay the roadmap to a recovery will depend largely on US leadership, according to sources at the G20 finance ministers’ meeting that kicked off Saturday.
“It’s a political issue: leaders are finding it difficult to resist protectionism under populist pressures, but protectionism is a sure way of killing any economic recovery,” the sources said.
“This is what leadership is all about.”
The 10-member Indian delegation to the the G20 Finance Ministers’ meeting, being held in the English market town of Horsham, is headed by Planning Commission Deputy Chairman Montek Singh Ahluwalia and includes Reserve Bank of India Governor D. Subbarao and Finance Secretary Ashok Chawla.
India’s call comes amid increasing evidence of financial protectionism by the world’s leading industrialised countries, including steps to encourage major banks to restrict lending to their domestic markets – giving credit to their exporters in the hope that importers will pay up.
The International Monetary Fund (IMF) expects a reduction by $700 billion in private capital flows to developing countries this year and India is keen to see the multilateral financial system replenish lost flow for two to three years in order to kick start lending – in particular by the Asian Development Bank and World Bank, whose lending has flattened out to around $13 billion.
“The old assumption that the World Bank is not needed for credit-worthy countries no longer holds true. You need it for middle-income countries,” the sources said.
A rejection of protectionist policies by Obama is important for India and other emerging countries, whose economic growth is considered key to any global recovery strategy.
India, for instance, is keen to see the US roll back moves curb the number of H1-B visas that are granted to skilled workers – the two largest recipients of H1-B five-year work visas to the United States are reported to be Indian IT majors Wipro and Infosys.
India, which wants a global response to the financial crisis, is keen to see the services sector remain open and will judge the response of industrialised countries by the “seriousness of their actions”.
“There’s a need for a leadership role from the US. The US has to fix its own financial system, the largest in the world and the most confident, and Europe will follow suit,” the source said.
India and other members of the BRIC countries – Brazil, Russia and China – have said they are willing to help restore international capital flows through the International Monetary Fund (IMF) but want an expansion of their IMF quotas, which determine financial contributions and voting powers in the organisation.
BRIC members, who met Friday, want changes to the IMF quotas to be speeded up to 2011 at the latest – preferably earlier.