Leaders agree policies must shift to boost growth: PM

Los Cabos: India today said the heads of G-20 nations agreed policies in these countries must target growth. It also expressed satisfaction on the fact that the leaders agreed to India’s appeal to augment resources of multi-lateral development banks to fund infrastructure needs in developing and poor countries.

Prime Minister Manmohan Singh said, “My overall assessment of the meeting is there was a general agreement that policies in all countries must shift to strengthening growth. There are many things that have to be done to achieve this. There was also a general agreement that the most urgent problem we must tackle is reducing uncertainty about the Euro zone.”

He said the G-20 summit was held amid very difficult circumstances. “Faltering growth in most countries was overshadowed by the threat of uncertainty in the Euro zone, arising from a combination of excessive sovereign debt and banking weakness. The summit provided a very valuable opportunity for G-20 leaders to share their concerns.”

The prime minister said the Los Cabos Declaration fully reflected India’s demand that infrastructure investment in developing countries could play a major role in stimulating a global recovery. The declaration indicates multilateral development banks should be strengthened for this purpose. “We would work with G-20 countries to transform their commitment to specific action,” Singh said.

At the opening of the summit on June 18, Singh had suggested resources of multi lateral development banks be enhanced for lending to infrastructure needs of both poor, as well as developing countries to stimulate growth there, as the Euro zone crisis had choked capital inflow into these nations.

He said Euro zone leaders had assured other G-20 countries they were committed to protecting the integrity of the Euro zone. “They recognise the need to move beyond the present monetary union towards unified banking supervision and adoption of common and enforceable fiscal rules,” he said.

However, this would be a gradual process.” Making changes in treaties involving 17 parliaments (for the Euro zone) and 27 (for the European Union) is a time-consuming process,” Singh said.

Euro zone leaders indicated a strong commitment to take whatever action was needed to protect the Euro area, as long-term institutional structures were built, Singh said, adding they would be able to give more specific indications after the European Summit.

He added India’s contribution of $10 billion to the International Monetary Fund reflected its recognition of the fact that it should play its part as a responsible player in the global community.

The IMF has assured contributors it would be available whenever needed, he said, adding, “It will, therefore, continue to form part of our reserves.”

Many leaders had also emphasised the importance of accelerating governance reforms in the IMF, including a change in the quota formula to reflect economic weight, he said.

He added the summit also reiterated the stand against new protectionist measures.

“This is an important statement of intent by G-20 leaders to resist protectionist tendencies, which, typically, increase in periods of high unemployment and low growth,” he said.