Heading home with little to take away from the summit of heads of state and government of the 20 most economically powerful countries, PM Manmohan Singh said, “The Group of 20 is, on the international plain, as essay in persuasion.” He repeated the phrase thrice in the course of his interaction with Indian media on board his special aircraft on the way back home.
In that one statement Dr Singh seemed to articulate that it wasn’t an easy job to bargain for concessions with the world’s most powerful negotiators who were themselves busy sorting the mess left behind by the global financial meltdown of 2008. Dr Singh had recently told Rajya Sabha that his voice of reason was heard and respected by the G20 leadership.
He seemingly conceded that that voice of reason had gone unheard, at least this time around. Prior to heading for the summit, Dr Singh and his team of negotiators had raised serious concerns about what they believed was “unconventional monetary policy”, suggesting that the US Federal Reserve, in particular, go slow on tapering its quantitative easing programme, and consult emerging economies like India while modulating their money policies. India has recently suffered huge setbacks in the stocks and currencies markets owing to pullout of money by foreign institutional investors since May on hints of the Fed’s tapering plans.
India’s concerns were, however, largely ignored by the developed economies, and even emerging member countries, particularly China, that form the Brics coalition, who forcefully suggested that India should set its house in order rather than blame global conditions for its precarious economic plight.
The summit declaration that followed took note of India’s concerns, but made no commitment to accept India’s pleadings of working in tandem in articulating monetary objectives.
Earlier, India’s economic affairs secretary Arvind Mayaram had seemed to suggest at a post-summit briefing in St. Petersburg on Friday that the summit declaration had endorsed India’s stand on “unconventional monetary policy”. Instead, the final declaration actually suggested that central banks of the world’s advanced economies would continue to be dictated by their domestic conditions, including price stability, rather than prop up sinking emerging markets like India.
Asked about the mismatch between India’s demands and the priorities of the developed economies Dr Singh said, “...in fact, most developing countries leaders made the same point that I made and I expect that as an essay in persuasion, it was a good idea and good ideas are scarce in the world. I do believe sooner or later it will catch attention.”
Dr Singh’s intervention at the summit over two days this week stood out for singular lack of conviction and exposed India’s economic vulnerability to the West, after policy planners basked in the glory of the so-called invincible India story in the past decade, raising hopes of India emerging as among the world’s biggest growth engines this century along side China.
As reported by this newspaper from the summit, India’s self-defeatist appro-ach at the summit invited ridicule from not only China and Russia, but even minion at the Brics high table, South Africa. The PM failed to engage any of the major world leaders at the summit in one-on-one talks, neither did the leaders of Brics states find time for exclusive talkshop with him. The only consolation that Dr Singh drew at the summit was a pact with Japan’s deputy prime minister Taro Aso securing India a $50 billion pledge to prop up the rupee in extreme crisis. Japan is funding major infrastructure projects in the country, including the giant Delhi-Mumbai freight corridor. It has been shifting focus on India following diplomatic and geopolitical confrontations with China. While Dr Singh himself touted the Japanese pledge as a second-line of defence in case of a severe breach to its foreign exchange reserve, His officials had earlier boasted that the promise was only that, an insurance against future catastrophe, of which India had no immediate need nor fear. India’s push for currency swap deal among Brics member countries drew little traction apart from an agreement by the five member countries to set up a $100 billion kitty with no assurance of timeline for implementation. While India has been expressing hope in the $100 billion contingency reverse agreement and a $50 billion Brics development bank, it remains wary of China eventually dominating the agenda at these two institutions to India’s detriment.
Smarting under the rebuff at the summit, and the counter-advice that vulnerable markets must fortify defences at home to stabilise their economies, Dr Singh agreed on his return journey that “ultimately, we have to get the fundamentals of our economy in robust health.”
He, however, drew consolation that there was “overall appreciation” about the unintended concerns of unorthodox monetary policies being pursued by countries like the US and the euro zone.