Todays G-20

Indias at tomorrows meeting with yesterdays mindset

Lawrence Summers,sherpaing for President Obama before the G-20,talked in London of the extraordinary crises the world is facing and the need to think out of the box,and in comprehensive terms. Three months earlier,after the American elections,when it was quite clear that he was part of the new dispensations brains trust,Summers wrote an authoritative piece in the special edition of G-20 at Ten brought out by the G-20 Research Group. He emphasised that his most dramatic moment in the Treasury with President

Clinton was when he had put forward the bailout for Mexico. At the time,Clinton had asked,in passing,what would happen if the crisis came in a country which did not have a two-thousand mile border with the United States. Summers then explains the importance of the BRICS and how Paul Martin and the Canadians argued for the participation of India,China ,Brazil,South Africa and Russia in the new world order and the expectations now.

We are caught in a time warp. The worst impact of the Lefts attack on the nuclear deal was to atrophy Indian initiatives on global issues. And now we have an important worthy stating that we have nothing to do on energy because we signed the Rio declaration. I love the Rio declaration,I was there,as a signatory to the compact on Sustainable Development: From Concept to Action,and as an advisor to the conference but honestly,how silly can we be? One can only hope that Pachauri hammers some sense into New Delhi. This business that our per capita emissions are low is three decades old,and leads to ho-hum. Energy,as I pointed out in the L20 volume which designed the invitation to China and India in these discussions,is an old reliable in the G-8 and G-20. Tanaka,who leads the practical global energy debate,

hasnt mentioned India in the last four months.

This time round the big issue is obviously global financing,as Summers and others have emphasised in G-20 at Ten as well as since. India has still not got out of the Bush-centric Bretton Woods dabba of trade barriers which is the problem and not the solution,as they have been saying. Our big complaint is tariff barriers: okay,okay,the world tells us in response,but the problem is that there is no income to trade. Notice,apart from the Indians,no one,but no one,is talking the trade language of the middle of the decade. The Chinese hurt the most,and they are saying you brought us here,now get us out. We are going to tomorrows meeting with yesterdays mindset.

Apart from more aid and another World Bank/ IMF window,what do we have to say on financing? Ahem,the World Bank and IMF are not exactly very fashionable today even though our bureaucrats have no other job offers. The Summers,the Gurrias,Colin Bradford are all pushing with ideas. Some fit in well with President Obamas inclusive regeneration of the American economy,and he wants Europe and others on board because if the others play spoilsport,he is bound to be hurt,as the multipliers in an open economy macro model demonstrate. The last time I was in Delhi,a friend still caught in last years problematique said disparagingly,Your hidden policy multipliers are all truisms,Yoginder. Thats the trouble with you econometric types. Rushing to catch my flight back to my nature park near Gandhinagar,all I could say was: Dont lets work with falsisms,friend of my youth.

In G-20 at Ten,in my invited piece on India in the global economy,I made an unorthodox suggestion,but one Delhi cannot buy because it does not believe in what it does politically. I argued that this was the time to bolster financial

institutions which support farmers,small businesses and artisans. Apart from the bailout this is what the US will do. I spell it out properly there but,briefly,these are the institutions which are the opposite of those causing the housing debacle. They have solid collateral: communities of workers. I ask for a global and national architecture for deepening financial markets to foster inclusive growth. I repeat my arguments built up with the former Swedish PM Ulsten earlier for the UN on facilitating credit lines as well as to preferential terms of financing and providing funds for collateral support systems and sharing of investment risks. I

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argue that artisan and producer groups,linked with local and global markets,need local government agencies providing social and economic infrastructure. Rule-based borrowing by regional governments has been choked by ill-advised reform,as I and others are saying in the Finance Commission debates. I doubt if this will be listened to right now. But ideas have a way of coming back.

The writer,a former Union minister,is chairman,Institute

of Rural Management,Anand expressexpressindia.com