After DC

If every fortnight we reduce our growth forecast by half a per cent our word will carry little weight

We may have paid a lot of attention to ourselves, but at Washington not much attention was actually paid to our prosaic positions. To be fair, the meet itself was a bit damp, with the incumbent president not coming out to play. A tired media and a scared world took notice only of Montek8217;s statement that in unconventional times you have to think unconventionally. Maybe the follow-up to the meeting of finance ministers in Brazil will be more productive in details.nbsp;

There are some interesting approaches which may be picked up by Obama8217;s team, which has let it be known sotto voce that the Washington meet was not of much consequence. The meeting of the G-20 FMs and central bank governors in November was of significance because Brazil took over the chair, at the group8217;s 10th anniversary. At the time, in John Kirton8217;s collection of position papers G-20 at Ten, Larry Summers underlined the process itself as important. Tracing its founding to the understanding a decade ago at the highest levels in the US that the IMF was incapable of solving a major crisis, he points out that the US might have managed to bail out Mexico, but what would happen if they did not share a 2000-mile border? He points out how the Canadian PM, Paul Martin, and his colleagues 8220;worked very hard to establish an enduring grouping of finance ministers and central bank governors that could assure political level discussion of international problems with an agenda set by political leaders rather than any international organisation8221;.

Another 8220;sherpa8221; at past G-20s, Bob Fauver, says in the same volume that the need to fight stagflation, inflation with no growth, is the principal problem the new US administration will face. When the worst is over, after the bailout, growth will still be slower than this year and unemployment will follow, he says. We need urgently to recognise all this rather than be flamboyant about 8220;We8217;re decoupling, we are still growing and will grow at nine per cent next year8221; cavalierism. Three months ago, I was confident that this year we would grow at six and a half to seven per cent, but the real problem would come next year. Earlier this month, speaking with an American official group, I could say that my forecast for this year was still the same; but now that the erosion of export and investment demand is in, we could expect growth next year of around five per cent. When I was speaking, the news of a six per cent forecast came in from the IMF and worse has come in since. As the diamond polishers post a loss of a lakh jobs, the textile industry half a million, and it goes on, we need the much announced immediate infrastructure programme andnbsp;at least a framework to seriously talk of the next year. This is important at home, and to be taken seriously abroad. If every fortnight we reduce our growth forecast by half a per cent our word will carry little weight.nbsp;

Experts across the world are all very disturbed about the next year-and-a-half and do not see an easy way out. The Chinese argue for more inclusive and efficient financial systems. The Brazilians, Mexicans and the Europeans take a bifocal approach: financial architecture changes should run concurrently with efforts on energy and trade policy and food security. Asked to write for India in the G-20 at Ten volume, I try and provide some historical perspective about the links between faster growth and India8217;s integration with the world. In the second half of the 8217;80s, Rajiv Gandhi was to develop the concept that India would grow fast as a part of a globalising world. There was a refreshing youthful emphasis on technology and the newer organisations and social institutions in which it would be embedded. As India began to grow faster, that reinforced the globalised worldview at home.

There are lessons for these times, about the dangers of slowing growth. We still need to heed

Rajiv8217;s advocacy of the pursuit of 8220;concentric circles of influence8221; 8212; especially relevant to food security and energy issues. India pursues three objectives in financial reform. The first is stability for reform. The second is improving global and national architecture to deepen the financial markets for inclusive growth. The third is the link between these two and trade policy. Like most Indians I have my story, which was spelt out in Sao Paulo. Now, we need the detailed and improved official version.

The writer, a former Union minister, is chairman, Institute of Rural Management, Anand

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