Singh in Beijing. (PTI)

Beijing, Oct. 24: Prime Minister Manmohan Singh made a forceful intervention at the Seventh Asia Europe Meeting (ASEM-7), giving the first indications that India would take a lead role in any economic crisis-resolution mechanism.

Singh — who was listened to with rapt attention by a galaxy of world leaders — called for a “global monitoring authority to promote global supervision and co-operation in the increasingly integrated world in which we live”.

Lashing out at the developed economies for “a regulatory and supervisory failure” and a failure in the “market discipline mechanism”, Singh said: “The sad truth is that in this age of globalisation, we have a global economy of sorts but it is not supported by a global polity to provide effective governance.”

Outlining in detail the repercussions of the escalating meltdown, Singh said: “The resulting crisis of liquidity, accumulation of bad assets, shortage of capital and collapse of confidence threatens to spill over into the real economy by way of reduced demand for goods and services, particularly exports, reduced access to trade and suppliers’ credits superimposed on other crises — food and fuel price rises that have strained budgets and balance of payments, leading to rising inflation and living costs in many developing countries.”

The Prime Minister was uncharacteristically harsh in his criticism of those responsible for the current crisis and quoted John Maynard Keynes as saying: “When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.”

Elaborating on the Keynesian theme, Singh said: “Clearly there has been a massive failure of regulatory and supervisory powers. Speculators have had a free run for far too long a period. International institutions like the IMF have also not covered themselves with glory. There has been an unacceptable failure of effective multilateral supervision of major developed economies and in particular of what has been going on in their financial markets.”

Singh’s speech reflected the growing anger in the rest of the world against the irresponsible behaviour of advanced countries and international financial institutions which had so far lectured them on how to manage their economies.

India has not yet formally responded to George W. Bush’s invitation to participate in the G20 summit in the US next month. But whether or not India attends the meeting, the Prime Minister made it clear that developing nations will no longer sit quietly at the high table when efforts get underway to resolve the economic crisis gripping the world.