HOW WARM IT IS AWAY FROM HOME...
|Prime Minister Manmohan Singh with Argentine President Cristina Fernandez de Kirchner (top) and Brazilian President Dilma Rousseff on the sidelines of the G20 summit at Strelna, near St Petersburg, on Friday. (PTI pictures)
...AND HOW CHILLY IT IS BACK HOME
The following are results of a “mood of the nation” survey carried out for ABP News by Nielsen, which predicts a regime change if the general election is held now. The survey was conducted among 8,976 voters in 28 cities from August 20 to 23
Strelna, Off St Petersburg, Sept. 6: India is heading back from the G20 summit with two consolations in hand: one symbolic, the other substantive.
The summit declaration found reference to concerns New Delhi has been raising to the spillover effects of volatile currency withdrawals on emerging economies, with member states committing themselves to “cooperate to ensure that policies implemented to support domestic growth also support global growth and financial stability and to manage their spillovers on other countries”.
This commitment followed recognition by G20 summiteers that “excess volatility of financial flows and disorderly movements in exchange rates can have adverse implications as observed in some emerging economies”. The resolve, if only in principle, left Indian negotiators satisfied that their worries had found an echo at the summit.
The Indian side did not read a part of the declaration, which stressed that central banks (of developed economies) would continue to run monetary policy in the interest of respective domestic concerns, as necessarily averse to Indian interests.
“Other countries will not change to economic policies that are not in their national interest and we do not expect that, either,” economic affairs secretary Arvind Mayaram said after the declaration had been initialled.
“But there is a clear understanding that unconventional monetary policies should be calibrated and communicated.”
Earlier in the day, the deputy chairman of the Planning Commission and the Prime Minister’s sherpa at the G20 summit had conceded that part of India’s current economic difficulties had to do with domestic issues.
“We have domestic problems that need to be addressed,” Montek Singh Ahluwalia said. “But the exchange rate volatility was also triggered by a change in market expectations not unconnected to high global volatility. Those are things we need addressed at a global level.”
India drew as much, if not more, comfort from the enhancement of the India-Japan currency swap kitty from $15 billion to $50billion.
Both Ahluwalia and Mayaram stressed that India did not need to draw down on the swap fund, maintaining it had enough foreign policy reserves (about $280 billion) at the moment to feel comfortable.
Asked why the enlargement of the currency swap fund was required if no withdrawals were thought necessary, Mayaram said: “This is essentially to shore up the sense of security on the markets. We needed to negate the negative market sentiment and this will help. This is a psychological signal to calm volatile sentiment.
“We expect less volatility now. In fact, the signals have already started to look good. We are in a situation of greater comfort. The very fact that there is now a $50 billion fund available to dig into should give a fillip to the markets.”
Mayaram also said the declaration had recognised the principle of taxes being levied on MNCs by the countries where they were making profits.
“We do not hold case-specific discussions at this level, but what has happened to our satisfaction is that the principle of our stand on taxing MNCs has been upheld.”