TORONTO: Making it clear that each country needed to devise its own strategy to weather the deepest global financial crisis in decades, Indian Prime Minister Dr Manmohan Singh on Sunday asked rich nations to resist protectionism.
Stating that India was better placed in handling the situation with an average growth of 7 per cent in the past two fiscals, the Prime Minister said emerging economies must also rely less on exports and push domestic demand.
As the leaders of the group of 20 advanced and emerging economies listened in attention, the Oxford-educated economist-Prime Minister said India on its part will go for medium-term fiscal consolidation and halve its fiscal deficit by 2013-14.
"Contractionary policies if followed by many industrialised countries simultaneously could provoke a double-dip recession," the Prime Minister warned at the opening plenary at the downtown Metro Toronto Convention Centre.
"We have much greater risk of deflation than inflation. We must, therefore, give primacy to recovery, while also taking steps to deal with sovereign debt," he said. The business district of this Canadian entertainment and commercial capital was virtually taken over the police, which also arrested over 400 protestors amid violence and rioting in some areas. Some local residents also criticised Canada’s Mr Stephen Harper government for spending some $1 billion in hosting the G-8 and G-20 summits.
Dr Manmohan Singh said he understood that fiscal consolidation obviously needed high priority in those advanced nations that were experiencing exceptional fiscal stress and in those where sovereign debt was shaky.
"But other advanced countries should opt for a much more calibrated exit from the stimulus. We should adopt a carefully differentiated approach, reflecting the circumstances of individual countries," the Prime Minister added.
Speaking about developing countries, the Prime Minister said the need was to increase investment demand by focusing on infrastructure that can sustain growth in the short term by offsetting the contraction on account of lower exports. "But growth in developing countries would be greatly helped if threats of new protectionist measures in industrialised countries are firmly resisted and existing barriers to trade, especially those affecting developing countries, are reduced." In this context, he said it was imperative to conclude the Doha Development Round of the World Trade Organisaion (WTO).
The G-20 was formed in the late 1990s after the East Asian fiscal crisis as a forum for finance ministers and central bank governors to discuss the global financial system. Comprising 19 countries and the EU, it assumed a summit level in November 2008.
Besides India, its member countries are the US, Canada, Russia, Britain, France, Germany, Italy, Japan, Argentina, Australia, Brazil, China, Indonesia, Mexico, Saudi Arabia, South Africa, South Korea and Turkey. The leaders met last at Pittsburgh in September and will do so again in South Korea in November.
Meanwhile, thirty-six years after Canada slapped sanctions on India after it exploded an atomic device, the two countries were expected to sign a civil nuclear agreement on Sunday night paving the way for supply of uranium and cooperation in research, development and radiation safety.
A research partnership to improve the pressurised heavy-water reactors used by both countries is also being planned, official sources said on Sunday. The civil nuclear cooperation agreement will be inked when Prime Minister Dr Manmohan Singh meets his Canadian counterpart Mr Stephen Harper for a "substantive" bilateral engagement.