India today made a strong pitch for global safety nets to tackle volatility in currency movements and markets, a demand that has come against the backdrop of economic shocks triggered by Chinese devaluation of yuan.
Finance Minister Arun Jaitley also sought a well-designed and quickly-triggered safety nets under IMF like strengthening of liquidity arrangements via multilateral swap arrangements between member countries.
“Recent episodes of market volatility and currency movements again pose a lingering question on the need for global safety nets for addressing market concerns.
“I strongly believe that ad hoc, individual, reactionary measures can contain the adverse impact of such events only for a limited period. These cannot provide a sustainable solution which can happen only by global policy coordination,” Jaitley said.
He did not name China but was apparently referring to the global shocks China caused with its currency devaluation following its economic slowdown and the impact it had on economies including India.
Jaitley was making an intervention in the session on ‘Framework for strong, sustainable and balanced growth’ at the G20 meeting of Finance Ministers and Central Bank Governors.
With top economic policymakers from across the world looking to tackle challenges arising from slowdown in China for global growth, Jaitley made a detailed presentation while co-chairing the session which was the second of the G20 Meeting of Finance Ministers and Central Bank Governors.
He said if the USP of G20 is collective and coordinated action, then G20 should seek policies which do not place the burden of tackling the impact of negative spillovers of domestic policy actions solely on affected countries.
“The G20 should, therefore, seek to strengthen liquidity arrangements via multilateral swap agreements between member countries, possibly coordinated by the IMF. Such well-designed and quickly triggered safety nets should be explored under IMF,” the Minister said.
Last night, Jaitley and RBI Governor Raghuram Rajan participated in the first session on ‘Global economy’ where IMF chief Christine Lagarde said that India is among the few bright spots in the global economy.
At a time when the growth remains weak in developed and emerging economies like China were also witnessing slowing down of its growth, India continues to grow at a decent pace, Lagarde had said.
Referring to the theme of this year’s G20 meeting, the three I’s of Inclusiveness, Implementation and Investment for Growth, Jaitley said, “While we have considerably enhanced our inclusive growth efforts, our efforts related to Implementation and Investment for growth needs to be accelerated in light of the challenges posed by repeated downward adjustments to global growth projections.”
He said that the preliminary implementation status of Brisbane G20 meeting commitments, as shared by the international organisations, shows that around one third of the commitments have been completed and progress is being made on majority of the remaining ones.
However, “considerable challenges stem from the fact that implementation is lagging in relatively larger economies, hence significantly affecting the growth impact.”