Los Cabos (Mexico):, G20 nations, comprising the world’s leading and emerging economies, concluded a much-watched meeting at this Mexican resort with an endorsement of the Indian stand that investment in infrastucture was critical for sustained growth, global economic recovery, poverty reduction and job creation.
Indian Prime Minister Manmohan Singh has been pushing for long-term access to funds for infrastructure for developing countries. India has said it needs at least $1 trillion in the next five years in infrastructure funding. He also has maintained that fiscal prudence and austerity in debt-laden countries must be matched by measured fiscal expansion by surplus nations.
This was endorsed by the leaders, that included US President Barack Obama, German President Angela Merkel, Chinese Prime Minister Wen Jiabao and Russian President Vladimir Putin, in a document that is formally called the G20 leaders’ declaration.
“Investment in infrastructure is critical for sustained economic growth, poverty reduction and job creation,” the declaration said, adding the recommendations made by multilateral development banks in this regard must be implemented.
“The Los Cabos Declaration fully reflects our initiative that investment on infrastructure in developing countries can play a major role in strengthening development and in stimulating global recovery,” Manmohan Singh said, reacting to the document.
“The declaration indicates that multilateral development banks should be strengthened for this purpose. We would work with G-20 countries to transform their commitment to specific action.”
In his address during the plenary, Manmohan Singh said with developing countries such as India already facing serious problems due to the negative impact of the global economic crisis, funds for growth was getting scarce.
“Infrastructure investment in developing countries assumes special importance in this context. It lays the foundation for rapid growth in the longer term, while providing immediate stimulus for their economies and also for the global economy, by providing a robust source of demand,” he said.
But that, he added, was possible only if they can get access to long-term capital to fund such investment, which was difficult when capital flows stood disrupted. The multilateral development banks can play a major role in this context he said, especially after the first and immediate task of expanding their war chest to support programmes in rich countries had been accomplished.
“We now need to take steps to substantially expand the resource base of multilateral development banks so that they have the firepower to help developing countries pursue their development goals,” he said.
Another take away for India was a clear message from the leaders that growth cannot be ignored and while austerity was important for debt-ridden countries, surplus nations must counter it with expansion.
It was in tune with what the prime minister said. “I am not suggesting fiscal prudence is not important. I am only saying given the large adjustment needs, not all of it can be front-loaded everywhere. This is especially relevant within a currency area.” The prime minister said he was satisfied this stand was adopted.
“My overall assessment of the meeting is that there was general agreement that policy in all countries must shift to strengthening growth. There are many things that have to be done to achieve this, but there was also general agreement that the most urgent problem we must tackle is to reduce uncertainty about the Eurozone,” he said in his reactions. The declaration also had several other observations that were in tune with what Indian interlocutors have been pushing for at successive G20 Summits and other forums. These include the joint positions in promoting growth and jobs, no to protectionism, streng-thening the global financial system, food security, need to arrest fluctuations in commodity prices and fighting corruption. (IANS)