Opinion Perceptions of G20: India

Pratap Bhanu Mehta | Swaraj Aur Samvidhan<br> Perceptions of the G20 Summit are not independent of broader ideological and theoretical commitments of commentators and their sense of causes and effects of this crisis.

New DelhiApril 4, 2009 07:14 PM IST First published on: Apr 4, 2009 at 07:14 PM IST

Perceptions of the G20 Summit are not independent of broader ideological and theoretical commitments of commentators and their sense of causes and effects of this crisis. It would be hard to pretend,particularly for a country like India,that there is a unified perception. Indeed,the debate is quite vigorous. The debate is also backgrounded in two contexts. It is election season in India and so the amount of sustained attention a summit like this can get is limited. While India has also been hit by the global downturn,there is,domestically,not quite the same sense of crisis as there is globally. The Summit was probably also helped by low expectations — after all the pessimism leading up to the Summit,the communiqué came as a relief. But the following points stand out.

Economic interests

In a narrow sense,India’s performance is being judged by three concerns. The first was warding off incipient protectionism in the world trading system. On this measure,the Summit is being seen as something of a success. But there is some scepticism whether countries will walk the talk. After all,even after meetings in November,serious commitment was expressed in this direction,but protectionist measures are increasing.

The second core interest was eliciting a series of measures to restore confidence to the world economy. On this score,the Summit is being seen as a partial success at best. While the figure of injecting a trillion dollars into the global economy grabbed headlines,most commentators seem to believe that this injection is somewhat notional. It includes 250 billion dollars already committed,and most of it will be in the form of SDRs etc. Although there is some appreciation of the commitment shown towards developing countries,there is also some scepticism that this commitment too will turn out to be notional. In short,the total fiscal stimulus is still smaller than what might be necessary. India is being given high marks for making this point.

The third core interest was reform of international financial institutions. This is also being seen as a partial success: a work in progress whose outcome is yet not clear. There is a widespread sympathy over the clamping down on tax havens. It has even become a point in the political campaign.

Broader issues

But in a broader sense,there is great disquiet with the Summit. The Hindi media in India particularly highlighted the crisis of authority facing the financial community and the economics profession. There was a sense that the main “intellectual” protagonists in the Summit,whose views national leaders reflect,whether in the US or in India,have lost all credibility. To put it crudely,the people whose ideas and performance caused the crisis in the first place,are still running the show. This suggests that many of the leaders are still not willing to countenance more radical steps; they are prisoners of past points of view.

This point is a serious one because there is a sense that the Summit did not manage to convince people that there is even a consensus around the root causes of the crisis. Almost everyone agrees that the architecture of financial regulation had a lot to do with this. But there is some scepticism whether merely fixing the financial sector can address deeper long term challenges of systematic global imbalances,and a crisis of overproduction. The debate over the Summit is in part a debate over whether this is merely a crisis of finance,or something deeper. There is still a sense that global leaders exude with the exception of Angela Merkel an undue faith and deference to financial capitalism. In short,the real challenge for G20 will come when it begins to negotiate deeper structural imbalances in the global economy.