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China prevailed upon the G—20 grouping to water down a resolution to correct global economic imbalances, even as India raised concerns about rising commodity and energy prices.
The final G—20 communiquhat was issued after two days of hard bargaining was a compromise worked out between the member countries, as it excluded key indicators like foreign exchange reserves and fiscal deficit at the insistence of China.
“There were differences, therefore in this communiquit was agreed that we will try to identify and complete the process (of selecting indicators) by April,” India’s Finance Minister, Mr Pranab Mukherjee, said after the G—20 meeting of Finance Ministers and Central Bank Governors.
“It has not been simple. There were obviously divergent interests, but we were able to reach a compromise on a text,” French Economy Minister, Mr Christine Lagarde, said.
Sitting on huge foreign exchange reserves, China does not want these to be included as one of the parameters for tracking and correcting structural flaws to reduce global trade imbalances.
China is sitting on $ 2.8 trillion worth of forex reserves and is accused by the US of manipulating its currency, the yuan. “Our aim is to agree, by our next meeting in April” on a set of indicative guidelines to ensure orderly economic growth, the communiquaid.
Taking on board India’s concerns over rising commodity prices, the resolution called for stepping up investments in the agriculture sector of developing countries.
Faced with double digit food inflation, India also pressed for a coordinated approach to tackle food, commodity and oil price volatility, which make emerging economies “vulnerable“.
The issue was raised by Mr Mukherjee, who said that “India did not contribute to the build up or persistence of global imbalances”, but “found no room for comfort in tackling food inflation” in the backdrop of high international prices.
Commodity prices increased by 20 to 30 per cent in 2010, according to International Monetary Fund (IMF) estimates.
The communiqussued said: “We discussed concerns about the consequences of potential excessive commodity price volatility... We reiterated the need for long term investment in the agriculture sector in the developing countries.”
The ministers also agreed on a plan to strengthen the international monetary system (IMS) with regard to disruptive capital flows and disorderly movement in exchange rates, a matter of great concern to India.
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