India to push for global ‘chit fund’
Prime Minister Manmohan Singh walks into the summit meeting of the world’s 20 most powerful economies in the Baltic port city of St. Petersburg on Thursday nursing a severely debilitated economy and a soiled reputation at home, hoping to join leaders of other emerging economies now in intensive care, in the hope of resuscitation.
But the word going around ahead of talks in this historic city, is that the summit will only nurse bruised egos of the world’s two most powerful leaders in a historic clash of civilisations. Russia, desperate to resurrect its faded superpower glory, is pitted in muscle-flexing against the world’s sole superpower, the US, now riding a miraculous recovery after five years of crippling slowdown.
Prime Minister Manmohan Singh walks into the summit meeting of the world’s 20 most powerful economies in the Baltic port city of St. Petersburg on Thursday, nursing a severely debilitated economy and a soiled reputation at home, hoping to join leaders of other emerging economies now in intensive care, in the hope of resuscitation.
But the word going around ahead of talks in this historic city and hometown of Russian strongman Vladimir Putin, is that the summit will only end up nursing bruised egos of the world’s two most powerful leaders in a historic clash of civilisations. Russia, desperate to resurrect its faded superpower glory, is pitted in dangerous muscle-flexing against the world’s sole superpower, the United States, now riding a miraculous recovery after five years of crippling slowdown.
US President Barack Obama has already nixed a one-on-one with Mr Putin ahead of Thursday’s powwow of the big and not-sobig chieftains of the global order, over Russia’s asylum to US spy contractor Edward Snowden, and its support for Syria’s rogue regime. The US leader rejecting an exclusive meeting with the head of the host nation is tantamount to a major diplomatic snub.
To that end, observers believe the G-20 summit may well end up as a G-2 showdown, leaving the remaining 18 members to contemplate the world’s future from the sidelines.
China, the world’s second biggest economy, has been slowing down too since May after years of logic-defying growth. Its new leader, Xi Jinping, arrives in St. Petersburg riding the curiosity factor.
In this seesaw of swinging global fortunes, India, much like other emerging giants, hopes to raise the voice of reason amid the cold war vibes of two recalcitrant leaders, Mr Putin and Mr Obama, with dia- metrically opposite views on how to manage the world.
For now, it doesn’t look like Dr Singh, who recently said in the Rajya Sabha that G-20 leaders are all ears to his advice, may have much of a chance of being heard. That’s because the emphasis in the Indian camp is still on blaming the West for its economic misfortunes, even when critics at home, including former RBI governor D. Subbarao, have blamed policy paralysis in the government and supply side bottlenecks for bringing the economy to its knees.
In his customary presummit statement released before leaving New Delhi, Dr Singh called for an orderly retreat from the “unconventional monetary policy” that would result in collateral damage to developing economies.
What this essentially means, hinted India’s economic affairs secretary Arvind Mayaram, on board the PM’s aircraft, is that the US and Japan must calibrate their pump priming plans to save precious dollars from fleeing emerging markets.
Why India never raised the issue of “unconventional monetary policies” at previous summits, when the US Fed’s three successive pump-priming programmes pushed hot money into emerging markets, including India, remains an enigma.
The reason it is saying so now is because the rupee has depreciated over 20 per cent since May, after the Fed first signalled that it would taper its $85 billiona-month QE3 plan, and Japan hinted it would inflate its economy while pumping in fresh cash.
This is good enough reason for India, and other major emerging economies like Brazil, Russia, China and South Africa, to meet informally for a separate brainstorming ahead of the formal summit inaugural. Having been equally mauled by the flight of dollars, they all plan to discuss a common bailout strategy. How much common sense will prevail at the discussion is anybody’s guess.