Group of 20 (G-20) leaders were unanimous in providing flexibility for member-countries to either continue with public spending and consolidate fragile economic growth or resort to austerity measures for keeping deficits under check.
In effect, the global leadership allowed both industrialised and emerging economies to go ahead with country-specific differential strategy to balance it out between growth and growing deficits that threatened Euro Zone countries with financial abyss.
The final draft communiqué that was being negotiated in last lap of two-day hectic parleys has allowed maneuverable room for individual countries on imposition of banks transaction tax as well. It has recognised that banks and financial institutions will have to pay for future crises.
This G-20 strategy will allow UK, Germany and France to experiment with this levy and cut budget spend to keep deficits under check. US President is, however, opposed to the withdrawal of economic stimulus package.
But, countries such as China, India, Brazil, South Africa and Canada will not be forced into taxing financial transactions. Instead, they will move ahead with tackling ‘systemic gaps’ if any, to avoid future crises. These countries strategy to cut huge budget spending in medium term will not be impacted.
However, the G-20 leaders agreed on three-year plan to half budget deficits by 2013 and deploy resources to expand infrastructure as well as development projects.
G-20 line is more in sync with prescription of the Prime Minister, Dr Manmohan Singh, for managing fragile global economic recovery.
But, most countries seem to have been on board over rejecting protectionist measures and setting up trade barriers.
The G-20 leadership has also agreed to bring down debt to GDP ratios
beginning 2016 to balance stress on public spending and growth to
deficits and financial profligacy.