Singh to seek monetary boost from big nations

Prime Minister Manmohan Singh on Wednesday travelled to St Petersburg in Russia to attend the G20 summit, where he will call upon the US and other developed nations to scale back monetary stimulus in an orderly manner, to avert hurting emerging economies.

“I will emphasise in St Petersburg the need for an orderly exit from unconventional monetary policies being pursued by the developed world for the last few years, so as to avoid damaging the growth prospects of the developing world,” Singh said.
The prime minister left New Delhi for a four-day-tour to the main city of northwestern Russia.

His call for orderly unwinding of stimulus has come at a time when the US Federal Reserve’s plan to taper its policy of “Quantitative Easing” hit emerging economies.

The move also pulled down the domestic currencies of developing nations, including the Indian rupee. Noting that the eighth G20 summit is to take place in St Petersburg, against the “backdrop of persisting challenges and vulnerabilities in the global economy,” Singh said: “Though there are encouraging signs of growth in industrialised countries, there is also a slowdown in emerging economies, which are facing the adverse impact of significant capital outflows.”

The American Federal Reserve, on May 22, indicated that it would soon “taper” its bond-buying programme Quantitative Easing, keeping in view the signs of recovery in the US economy. This has resulted in flight of capital from emerging economies, rocked financial markets and pulled down currencies in many developed nations over the past several weeks.

“It is also important that G20 encourages and promotes policy coordination among major economies in a manner that provides for a broad-based and sustained global economic recovery and growth,” said Singh . The US central bank’s stimulus programme had earlier resulted in cheap cash flooding into the emerging markets looking for higher returns.

Singh last week told Parliament that global factors like tensions in West Asia over Syria and the prospect of the US Federal Reserve tapering its policy had caused general weaknesses in emerging-market currencies.

“The (G20) summit comes at a time when we, in India, have introduced several reform measures and have taken steps to strengthen macro-economic stability, stabilize the rupee and create a more investor-friendly environment. At the same time, a stable and supportive external-economic environment is also required to revive economic growth,” he said on Wednesday.

Singh said that India would once again emphasise that the G20 should ensure primacy of the development dimension in its deliberations, focus on job creation, promote investment in infrastructure as a means of stimulating global growth and to create potential in developing countries to sustain higher growth in the medium term.
India will also stress the urgent need to reform institutions of global, political and economic governance.