World’s top 20 nations on Sunday pledged to boost global growth by 2 per cent, or over $2 trillion, over five years, and agreed to work on automatic tax information flow and IMF reforms — meeting key demands of India.
The communique, issued after the G20 meeting of finance ministers and central bank governors also took into account concerns of emerging economies, like India, about the impact of US stimulus withdrawal by asking central banks to calibrate and clearly communicate monetary policies.
“We will develop ambitious but realistic policies with the aim to lift our collective GDP by more than 2 per cent above the trajectory implied by current policies over the coming 5 years. This is over $2 trillion more in real terms and will lead to significant additional jobs,” it said.
A satisfied Indian finance minister P Chidambaram later told PTI: “The communique has been drawn by the deputies sitting together and I think our concerns have been fully reflected in the communique”.
The G20 ministerial joint statement committed a global response to Base Erosion and Profit Shifting (BEPS) based on sound tax policy principles.
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“We endorse the Common Reporting Standard for automatic exchange of tax information on a reciprocal basis and will work with all relevant parties…,” it said.
The G20 also expressed hope that it will implement the automatic tax exchange information among themselves by 2015. Facing challenges to get trans-border details on tax issues, India has been pressing for smooth exchange of financial information.
The G20 also expressed “deep regret” over delay in IMF quota reforms implementation as the US is yet to ratify it. “Our highest priority remains ratifying the 2010 reforms, and we urge the US to do so before our next meeting in April,” the two-page communique said.
Quota reforms, which were to be implemented by January 2014, will increase the say of emerging economies in IMF. On monetary policies, the communique said they need to remain accommodative in many advanced economies, and should normalise in due course, with the timing being conditional on the outlook for price stability and economic growth.
“All our central banks maintain their commitment that monetary policy settings will continue to be carefully calibrated and clearly communicated, in the context of ongoing exchange of information and being mindful of impacts on the global economy,” it said.
In an interview to The Australian Financial Review, Reserve Bank of India Governor Raghuram Rajan said New Delhi is well placed to weather financial crisis and argued that the central banks of developed nations must also keep in mind emerging nations while framing monetary policies.
“I don’t think we can proceed forward saying everybody is in their own boat and they sink or swim alone,” he said in reference to the need for advanced nations, like the US, to take heed of countries vulnerable to the stimulus withdrawal.