Asserting that India like most countries have learnt their lessons from the earlier US Fed-induced taper tantrum, Finance Minister Nirmala Sitharaman on Wednesday said that both the government and the RBI are keeping a close “watch” on the situation this time round in the backdrop of recent US Fed announcement on its approach to taper in coming days.

“Most countries have learnt lessons from global financial crisis and devised their plans. India too learnt lessons from taper tantrums. We along with RBI are keeping a watch,” Sitharaman said at the ICRIER-organised G20 International conference.

Evergrande impact

She was responding to a question posed by NITI Aayog Vice-Chairman Rajiv Kumar on whether she saw fears of global contagion emanating from the recent Evergrande-related developments in China and would the upcoming G20 Summit this month end try to act and contain similar things or any taper tantrums that may occur in coming days.

Sitharaman made it clear that she as on date was not aware of the agenda that may come up at the upcoming G20 summit this month-end.

“Without referring to one country, I do admit there is a sense of worry around the world (post Evergrande), but the fear that it will hit us is not there,” Sitharaman said.

Finance Minister, however, said that all global forums will have to discuss “debt sustainability” and “sovereignty” issues.

“Debt sustainability is an issue. I am sure every global forum will have to address and talk. If debts which have been given that brings the sovereignty of nation into picture, it is a matter of serious concern and many countries are sitting up to say what is happening around the world. Therefore, I’m sure larger issues of debt sustainability, sovereignty and how small countries are facing the challenging situation when two extreme situations are posed before them should be discussed and addressed,” she said.

Covid

Sitharaman also said that one virus (Covid-19) has highlighted that how the world was interconnected and global coordination was what was needed to tackle the crisis. G20 grouping has risen to the occasion and played an effective role, she added.

Her remarks on the need to address “debt sustainability” are significant as it comes at a time when there is a raging debate in the US on its need to raise the federal debt ceiling as any default on US debt would trigger a historic global financial crisis.

US Treasury Secretary Janet Yellen has reportedly cautioned that US economy would fall into a recession if Congress failed to raise the debt ceiling before a default on the US debt.

Meanwhile, Sitharaman said that coordinated and concrete measures of the G20 have helped shore up and sustain global economic recovery simultaneously salvaging and strengthening the international financial architecture and financial regulatory arrangements. This is in addition to the unprecedented policy support provided domestically by the governments of the G20 countries, she added.

G20 is not only working towards recovering from the present crisis, but has also begun working on strengthening future pandemic preparedness and response, Sitharaman said.

She highlighted that G20 is committed to use all available policy tools as long as required to address adverse consequences of Covid-19. G20 grouping is also determined to avoid premature support policy withdrawals which could threaten global financial stability., she added.

On cryptocurrency

“G20 is also preparing for innovations like crypto assets and global stablecoins,” she said.

Sitharaman also highlighted that G20 would have to be proactive in delivering just and fair outcomes.

India, which has been a member of G20 since 1999, will take up G20 presidency in 2023.

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