Indian officials, in their briefings in New Delhi, put India’s participation in context prior to Prime Minister Manmohan Singh’s departure for the G20 Summit at Cannes.
Planning Commission deputy chairman Montek Singh Ahluwalia, who is the Indian sherpa at the pre-summit deliberations, conceded last weekend that the current summit “is not an issue which is very India-focused.” He said the Cannes do would rather look at the prospects for overcoming the eurozone difficulties and moving on to a sustainable, more robust, global growth path. It is another matter that nobody has a clue to how that would happen.
Other officials have since said we should not go about wondering how relevant India is to the current debate on stabilising the euro zone. The fact that India has been consistently invited to the G20 Summit is enough indication of the significance the world attaches to India’s presence at these gatherings. The official also conceded that the Indian delegation would be keenly observing the proceedings at the Palais des Festivals et des Congres to take home notes on how to transform the Indian economy and initiate preventive action against possible future stress.
India’s apprehensions of a possible IMF-led bailout were clearly indicated in the PM’s pre-departure statement. He said: “Developing economies such as India need a conducive global economic environment to address the vast challenges they face. In an increasingly interdependent world, we have to be wary of contagion effects and the import of inflationary pressures in our economy. We need to ensure that developing countries have access to requisite funds through multilateral and development banks and to investible surpluses to meet their infrastructure and other priority needs.”
Officials have assured that India would fulfil its obligations to bolster IMF resources in the best way it could if called upon by the world community to do so. But nobody has raised that issue so far.
To the extent that the world leaders look up to Dr Singh as a wise man and an exceptional economic administrator with solutions to the world’s fundamental economic problems — US President Barack Obama publicly called him a guru at the L’Aquila Summit in Italy two years ago — summiteers gathered here are certain to give him a patient hearing. The PM is scheduled to meet his British counterpart, Mr David Cameron, for a 20-minute bilateral on Thursday followed by an exclusive 40-minute one-on-one with French President Nicolas Sarkozy. He is also scheduled to meet European Council president Herman Van Rompuy and European Commission president Jose Manuel Barroso in a 15-minute “pull aside” during the course of Friday’s summit, where he is expected to share his considerable bandwidth on coping with structural adjustment of the economy.
For now, Europe’s undivided attention seems to be on Chinese President Hu Jintao to whom they are looking to for bountiful largesse to fund a special purpose vehicle to bolster the European Financial Stability Facility (EFSF), which, in turn, would bail out sovereign debts of stressed member economies. They will also probably fete the Brazilian leadership in their hunger for instant dole.
India, though on the world’s radar for emerging investment opportunities and as a potential counterweight to China in the long run, does not quite measure up in the world’s estimate in matters of munificence. Indian officials admitted as much when they pointed out that nobody has approached India for help as yet. “We will actually get to know where Europe really stands, and where we stand in that scheme of things, only at Friday’s summit,” an official said on condition of anonymity.
For the record, India does not stand to lose much immediately in case of a large-scale European default. As much as 58 per cent of its exports in 2010 were directed at emerging economies, much of that going to China. However, if China were impacted because of a European collapse, it would have a domino effect on India. Also 48 per cent of India’s exports are to industrialised economies, mostly to the US, and, to a far lesser extent, Europe. So, if Europe takes the US down with it, as many global economists predict, it would have telling consequences for India. That’s what worries the Indian leadership right now.