COVER STORY
INDIA ON WORLD STAGE G-20 Summit Accepts the Growing Influence of Developing Nations

Prime Minister Dr. Manmohan Singh and Smt. Gursharan Kaur being welcomed by US President Barack Obama and First lady Michelle Obama as
they arrive for the G-20 Summit dinner in Pittsburgh, PA, USA on September 24, 2009.

Dr. Manmohan Singh is truly the only qualified among all the G-20 Summit leaders to talk about the complex world of international finance because he has doctorate degree in economics and has practiced his knowledge throughout his life, said John Kirton, director of G-20 Research Group of Toronto University.

Group photograph of Prime Minister Dr. Manmohan Singh with the other Heads of State at the G-20 Summit in Pittsburgh, PA, USA on September 25, 2009.

PM Singh’s personal qualifications and India’s thriving democracy continue to give it an edge at international summits dealing with the world of economy. In spite of India’s dismal contribution in international trade, which is little above 1 percent, India sits confidently on high table.

India’s economist-turned-prime minister Manmohan Singh listed out a series of measures to ride out the economic crisis INDIA ON WORLD STAGE G-20 Summit Accepts the Growing Influence of Developing Nations that has shaken the world and to ensure quickest possible return to normalcy in the global economy. Among them is replacing lost export demand - which has hurt India badly - by expanding investment in infrastructure, including energy, transport and other public services.

Prime Minister Dr. Manmohan Singh met the British Prime Minister Gorden Brown
on the sidelines of the G-20 Summit at Pittsburgh, PA, USA on September 25, 2009.

The Prime Minister asked the World Bank and other multilateral institutions to step up to fulfill this role, in effect asking richer nations to commit additional resources to fund them. And in a snarky aside to his rich colleagues who may hesitate to commit additional public resources for such recapitalization, the normally softspoken had this to say: We must keep in mind that what is needed for these institutions is small compared to the massive scale of public money used to stabilize the private financial system in industrialized countries.

Protests against the Summit and its policies

The G-20 Summit is certainly a step forward for developing countries. The bottom- line of such high-level international summits can be termed successful if rich people yield even little space to developing or poor countries. In real world, developed, rich and powerful countries are controlling leverages of the finance sector while the leaders of the developing countries, who are struggling with poverty, inflation and money for infrastructure but still growing impressively, are trying to make these Western countries realize that they can no more dictate the world — because their growths are stagnating, their dependence on the developing world is increasing and it is becoming irreversible.

It’s a welcome sign that the leaders of the world’s biggest economies who had gathered in Pittsburgh, PA on September 24-25, 2009 for the Group of 20 Summit have agreed that the organization will replace the Group of Eight as a permanent body for international economic cooperation. The change reflects the world’s shifting economic powers and a need for the U.S. and the traditional European powers to secure the cooperation of fast-growing economies such as China, India and Brazil to make progress on pressing issues.

The G-8 — made up of the U.S., Japan, Germany, Britain, France, Italy, Canada and Russia — has come under criticism for being an elite, anachronistic body that couldn’t get much done because the main issues they faced often involved emerging nations that weren’t at the table. The recent Summit of G-20 leaders has aimed for significant agreements today on regulating the global financial system as well as more modest progress on climate change. G-20 leaders said, "We are committed to a shift in International Monetary Fund quota share to dynamic emerging markets and developing countries of at least 5 percent from over-represented countries to underrepresented countries using the current quota formula as the basis to work from. Today we have delivered on our promise to contribute over $500 billion to a renewed and expanded IMF New Arrangements to Borrow."

PM Singh had said at the Summit, "We have 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."

PM Singh in his interaction with media-persons pointed out, "Agreement on 5 percent shift was a compromise. Developing countries had asked for 7 percent." Nevertheless this shift means that China, India and other countries would get voting rights in functioning of IMF.

"We have achieved a level of tangible, global economic cooperation that we’ve never seen before," President Obama said shortly after the summit meeting. "Our financial system will be far different and more secure than the one that failed so dramatically last year." The leaders pledged to rethink their economic policies in a coordinated effort to reduce the immense imbalances between export-dominated countries like China and Japan and debt-laden countries like the United States, which has long been the world’s most willing consumer.

The following points of the statement released by the G-20 leaders suggests why the summit at Pittsburgh was a way forward and positive for India and other developing countries. The statement said G-20 countries will "make sure our regulatory system for banks and other financial firms reins in the excesses that led to the crisis. Where reckless behavior and a lack of responsibility led to crisis, we will not allow a return to banking as usual."

This means that millions of dollars of hefty pay packages and salary-linked performance which breeds greed amongst bankers and financers will come under scrutiny. G-20 leaders also said, "We designated the G-20 to be the premier forum for our international economic cooperation. We established the Financial Stability Board to include major emerging economies and welcome its efforts to coordinate and monitor progress in strengthening financial regulation."

The statement resolved that, "We stressed the importance of adopting a dynamic formula at the World Bank which primarily reflects countries’ evolving economic weight and the World Bank’s development mission and that generates an increase of at least 3 percent of voting power for developing and transition countries, to the benefit of under-represented countries. While recognizing that over-represented countries will make a contribution, it will be important to protect the voting power of the smallest poor countries. We called on the World Bank to play a leading role in responding to problems whose nature requires globally coordinated action, such as climate change and food security, and agreed that the World Bank and the regional development banks should have sufficient resources to address these challenges and fulfill their mandates."

G-20 has decided to take steps to increase access to food, fuel and finance among the world’s poorest while clamping down on illicit outflows. Steps to reduce the development gap can be a potent driver of global growth.

On the big issue about food security and concrete action to help poor face climate change, the Summit leaders stated, "Over four billion people remain undereducated, ill-equipped with capital and technology and insufficiently integrated into the global economy. We need to work together to make the policy and institutional changes needed to accelerate the convergence of living standards and productivity in developing and emerging economies to the levels of the advanced economies. To start, we call on the World Bank to develop a new trust fund to support the new Food Security Initiative for low-income countries announced last summer. We will increase, on a voluntary basis, funding for programs to bring clean affordable energy to the poorest, such as the Scaling Up Renewable Energy Program."

The big question is whether the Group of 20 will be more effective because it includes important new players like India and Brazil or whether it will simply be more unwieldy. American officials acknowledged that the economic crisis crystallized priorities of countries with normally conflicting agendas in ways that occur only rarely in normal times. But they said they were betting that individual governments would see their self-interest as more tied than before to the stability of the rest of the world.

"The announcement today is more than symbolic," said Robert M. Kimmitt, who served as deputy Treasury Secretary under President George W. Bush. "The fact that leaders are turning to the strategic challenge and doing it in a coordinated way at the level of the Group of 20 is significant."

"I’m quite impressed," said Eswar S. Prasad, an economist at Cornell University who had initially been skeptical about the proposed "framework" for stable growth. "A commitment by the U.S. to take the process seriously is a potential gamechanger that would give the framework some credibility."
[ BY AJAY GHOSH ]