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India opposes global bank levy

India on Tuesday reiterated its opposition to a single global bank tax to create a corpus for future bailouts of banks if any,even as the UK has just imposed a tax on its banks and some other G20 countries....

Written by ENS Economic Bureau | New Delhi |
June 23, 2010 1:08:59 am

India on Tuesday reiterated its opposition to a single global bank tax to create a corpus for future bailouts of banks if any,even as the UK has just imposed a tax on its banks and some other G20 countries might also autonomously ask their banks to pay such a levy.

Addressing a press conference here,foreign secretary Nirupama Rao said,“Our banking system is extremely healthy. The banks can spend for themselves.” Rao’s comment amounts to a re-affirmation of the country’s stand articulated earlier by finance minister Pranab Mukherjee and,more recently,finance secretary Ashok Chawla.

What India is saying is that a universal bank tax would be unfair to countries such as India,Japan,Canada and Brazil whose banks don’t need any tax-funded bailouts.

Despite the virtual negation of the idea of global bank tax in the G20 finance ministers’ meeting at Busan,South Korea earlier this month,the idea of common bank tax doesn’t appear to have died down,and in this context,India’s denouncing it,ahead of the forthcoming G20 leaders’ summit at Toronto,Canada on June 26-27 is significant.

Rao said India hoped that the fourth Toronto summit with its theme “recovery and new beginnings” would take stock of how and how far past decisions have been implemented and chart out the course of future action of the global forum entrusted with task of creating and perpetuating a framework for sustainable and balanced (global) development.

The Toronto G20 summit,the fourth in the short history of the grouping of the developed and emerged economies,would discuss global recovery amidst the persisting fears of Euro zone debt crisis triggering another global financial crisis.

Reform of international financial institutions (India is keen on expediting the reform of IMF which would result in its greater say in the body),financial regulatory reform (as an alternative to bank tax) and the need for a guard against protectionism are among the key topics that the leaders of nations would discuss at the Toronto summit.

India’s policymakers are hopeful that as a premier forum for international economic cooperation,the G20 would devise sound macro-economic policies.

Sustainable and strong policy responses to the global economic crises are expected to emanate from the forum,with a greater degree of permanence and without diluting its own cohesiveness.

Rao said,on the sidelines of G20 summit,the Prime Minisuer Manmohan Singh would have a series of bilateral meeting with heads of governments,including the Canadian prime minister Stephen Harper. India and Canada would sign a host of MoUs and agreements covering areas like civil nuclear energy cooperation,social society agreements as well as for enhanced cooperation in mining,agriculture,higher education etc.

Indian and Canadian leaders are currently evaluating the report of a joint study group that explored the pros and cons of a comprehensive economic cooprtation and partnership agreement between the two countries.

From 2011,the frequency of G20 would be regularised as an annual event,with the France to host the first in the series.

The PM’s delegation to Toronto summit will include Planning Commission deputy chairman Montek Singh Ahluwalia who would be PM’s sherpa during the meeting and national security adviser Shiv Shankar Menon. FE

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