While the government of India is under pressure to go in for the fiscal consolidation and to walk an extra mile on austerity measures, the world leaders meeting at the summit of Group of Twenty Finance Ministers and Central Bank Governors (G-20) at Los Cabos (Mexico) should refrain from coming out with an ‘one-size-fits-all’ kind of a remedy.
“Different economies of the world are grappling with different kinds of problem, one may argue that the governments in most parts of the world have little elbow room to step in with stimulus packages, but then there is a difference in the nature of the issues faced by them. For instance, the Indian government needs to tighten its belt in containing non-targeted oil subsidies and curbing non-plan wasteful expenditure, but it must not compromise on the plan expenditure,” said the chief of the Associated Chambers of Commerce and Industry of India (ASSOCHAM).
“In fact, at a time when the private sector seems to be wary of fresh investments, it is the state sector which can give a stimulus to the economy, not necessarily by packages but by front-loading the Plan budget for the FY-12’-13’,” said Mr Dhoot. “The targets set by Prime Minister Manmohan Singh to execute infrastructure projects worth Rs two lakh crore for the current fiscal year, should be met rigorously, because there is a very little time for us to repair the damage being done by the sentiments being further affected due to the outlook downgrades by the Standard and Poor’s and the Fitch.”
“Under such circumstances, we are confident that Prime Minister Dr Manmohan Singh will press for a G-20 prescription, which leaves the dosage administration to the individual country rather than a uniform medicine,” added the ASSOCHAM president.
Endorsing the view of Dr Montek Singh Ahluwalia, deputy chairman, Planning Commission of India who is also accompanying the Prime Minister for the G-20 summit, Mr Dhoot said, “We at ASSOCHAM are in full agreement with the right kind of an advice given by Dr Ahluwalia of leaving it to the individual members.”
Touching upon the Eurozone crisis, the ASSOCHAM chief said, “Victory of the pro-bailout parties in the Greece elections came as a huge relief to the world economies, including India, but the problem seems to be far from over.”
“We carried out an internal survey and observed that the industry leaders in India remain concerned on the developments mainly on two counts, one, we are losing markets for exports in Europe and the other is that the currency fluctuations is playing havoc with the emerging economies. Besides, the Indian rupee, has also lost significant ground, exerting pressure on the domestic inflationary expectations and keeping the country in the vicious cycle of high inflation and low growth,” added Mr Dhoot.
Mr Dhoot also called upon the world leaders to shun the tendencies of protectionism which raise their ugly heads as and when the world economic growth faces contraction. “The world at large is looking up to you to show the way, not merely by some well-meaning statements but concrete plans implementation of which should be left to the individual members.”
“There are still economies in Asia which have managed to guard themselves from the contagion of slow world growth. Somehow, the G-20 leadership should ensure that these economies are encouraged to further improve so that they can lead the overall global recovery in the period of next six to 12 months,” said the ASSOCHAM president. “The current problems, mainly emerging from the European governments, have come closely after the 2009 crisis and the world leadership, including the central banks, must show the courageous approach so that we do not slip into a long haul of economic woes.”