PM pleads for much more calibrated exit from global stimulus

V S Chandrasekar
Toronto, Jun 27 (PTI) As differences persisted among
the G-20 countries on the exit policy, India Sunday warned
developed countries against cutting back on public spending in
the wake of the European crisis, saying it could trigger a
"double dip recession".
Advocating a "much more calibrated" exit from the
global stimulus, Indian Prime Minister Manmohan Singh told the
G-20 Summit here that the global recovery "is still very
fragile" and therefore there was need to give primacy to
consolidating the recovery while taking measured steps to deal
with the sovereign debt problems.
The economist-Prime Minister also called for firmly
resisting threats of new protectionist measures in
industrialised countries and existing barriers to trade,
especially those affecting developing countries.
There is no unanimity on when and how to withdraw the
stimulus for global recovery that was agreed in London last
year at the Summit, the fourth of its kind in two years
starting from Washington at the height of the financial
crisis in 2008, with the theme "Recovery: New Beginnings".
Countries like Britain, France and Germany want a
quick end to the stimulus so that government deficit does not
not shoot through the roof but nations like India and the
US are favouring a calibrated exit.
There is also no consensus on the proposal for a tax
to fund bail out of bank, a move India is opposed to. While
Britain has already levied a tax, France and Germany are
pushing for it.
Calling for a much more calibrated exit from stimulus
by other advanced countries, Singh favoured a "carefully
differentiated" approach reflecting the circumstances of
individual countries saying "we have a much greater risk of
deflation than inflation".
"The central problems we face today is how to ensure
protection of global growth in a situation where markets have
become very nervous about debt sustainability, especially in
some countries in the Euro Zone.
"Concerns about debt sustainability normally suggest a
need for fiscal contraction. But circumstances are not not
normal. The recovery is still fragile and private demand in
the industrialised countries simultaneously, could provoke a
double dip recession," he said.
His speech was heard with rapt attention at the Summit
being attended by world leaders including US President Barack
Obama, French President Nicolas Sarkozy, German Chancellor
Angela Merkel, new British Prime Minister David Cameron and
Chinese President Hu Jintao. (More) PTI VSC
RDM


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