Press Conference by Prime Minister Dr. Manmohan Singh following G-20 Summit in Pittsburgh, PA, USA
September 25, 2009
MEA Official Spokesperson (Mr. Vishnu Prakash): Good evening once again and welcome to the press conference by the Prime Minister of India Dr. Manmohan Singh. The Prime Minister would be making an opening statement. Thereafter he will be happy to take a few questions. Sir, the floor is yours.
Prime Minister (Dr. Manmohan Singh): Ladies and gentlemen, we have had a very productive meeting in which there was a comprehensive discussion among the leaders of the world on a wide range of economic issues.
The communiqué including its summary statement is before you, as is the text of my remarks. This Summit was not meant to be a trillion dollar summit as was the case with the London Summit. Its purpose was to review what has happened since the last meeting in London and chart the way forward in the light of experience. Some of the important issues we discussed are:
1. There will be no pre-mature withdrawal of stimulus.
2. The emergency financing for the International Monetary Fund has been successfully completed. We now have to address the issue of the IMF quota increase by early 2011. We have agreed to shift 5 per cent share to countries that are under-represented in the IMF.
3. We have agreed to help the World Bank and other regional development banks to find the necessary resources based on a review of their capital needs to be completed in the first half of 2010.
4. We have agreed on a new framework for discussing global macro balances, and the contributions individual countries can make through their own policies with a new process of peer review or discussion in the Group of 20.
5. We have discussed the important issue of climate change. The G20 have called for a successful outcome in the United Nations Framework Convention on Climate Change at Copenhagen.
6. We have agreed that we should work for an early resolution of the Doha round of trade negotiations so as to counter protectionism. The success of the Delhi Ministerial meeting in reviving the process of negotiations was appreciated.
7. We have agreed - and in some ways this is the most important conclusion emerging from the meeting - that the Group of 20 will henceforth be the premier forum for international economic issues. This is an important development to broadening the global governance structure, to incorporate major developing and emerging countries into the new framework.
Question: Mr. Prime Minister, how serious is India’s economic crisis and how can the NRIs help? Can you clarify, Sir, Chinese bragging going on around the globe including in the media in India and here in the US?
Prime Minister: There is no economic crisis in India. It is certainly true that as a sequel to the global economic crisis our exports have suffered. That has affected the rate of growth. Even then our economy is growing at the rate of six to six and a half per cent. Therefore, there is no crisis as such in India. As far as the NRIs are concerned, they are very welcome to contribute to India’s development through bank deposits, through participation in capital markets both direct and portfolio investment. Portfolios are open to non-resident investments and we very much welcome their participation in processes of economic development in our country.
Question: On behalf of Indian Correspondents resident in the US, who unfortunately will not be traveling with you tomorrow, I would like to wish you a very happy birthday.
Prime Minister: Thank you very much.
Question: I would like to draw your attention, Prime Minister, to a late night announcement by the White House last night which implied that the G20 will be replacing the G8 as the primary vehicle for economic negotiations globally. What in your opinion is the impact of this on the changing architecture of international economic diplomacy?
Prime Minister: I think interdependence of nations is a fact of life. Interdependence in a globalised world means that no country, howsoever powerful it may be, can take on the entire burden of economic adjustment and economic decision-making that may be required to manage the global system in an orderly fashion. It is that perception and that reality which has I think persuaded many people in Europe and the United States that this G8 is ill-equipped to handle all the global issues. With the rise of Asia, with the growth of India, China and Brazil, the economic decision-making has to take into account the views of these countries if it is to have an optimum impact.
Question: President Obama has piloted a Resolution in the UN Security Council asking all countries to sign on to the NPT. What would your response be to that? Is this another irritant in the Indo-US relationship which has seen better days under the previous Administration?
Prime Minister: We have been assured that this is not a Resolution directed at India; and that the US commitment to carry out its obligations under the Civil Nuclear Agreement that we have signed with the United States remains undiluted. That, we have been assured officially by the United States Government.
Question: After three rounds of G20, can you give us a sense of what India’s aam aadmi has gained from this? How does he benefit in his daily life from these G20 meetings?
Prime Minister: If the world economy collapses, there is obviously some effect on our country. Already the rate of growth of our economy, particularly our exports, has suffered. This has led to a decline in exports of important labour-intensive products like gems and jewellery, leather goods, textiles. No country by itself can ensure that all its goals of economic life can be achieved working to the exclusion of other participants, in the increasingly interdependent world that we live in. There is, therefore, a necessity for India to ensure that the global economic system continues to progress. We need an external environment which is conducive to the growth of our exports. We need an external environment which is conducive to the increasing flow of capital; an international environment which is conducive to increased flows of technology. All these things have a bearing on the rate of growth of our economy.
Question: Sir, the G20 has reaffirmed commitment towards continuation of stimulus packages and also no premature withdrawal of stimulus packages. Given our fiscal situation, do we have any scope for any more stimulus measures? Also given the fact the way inflation is rearing its head again, is not it time to start thinking of some amount of withdrawal of the easy monitoring fiscal policies?
Prime Minister: Our specific circumstances have to respond to our domestic situation. It is certainly true that we have a limited fiscal space and, therefore, the scope for fiscal stimulus, accelerated stimulus, is rather limited. Monetary policy had some scope, but that also would be affected if inflation really becomes a problem. As of now inflation is not a problem. Inflation is under control. But you are right that our options are limited, constrained as we are by the substantial amount of fiscal deficit. Also with the monetary initiatives which the Reserve Bank has taken, the scope gets reduced at the margin.
Question: Over-leveraging of banks in the industrial economies took the whole world almost to the brink of disaster. IMF and World Bank used to advise everybody else. Now, will the IMF and the World Bank have any role in monitoring the economies and banks of industrialised nations?
Prime Minister: There is the IMF, there is the World Financial Stability Board, there is also an agreement in today’s meeting that the Group of 20 economies will be monitored by the IMF through an independent process of evaluation, and there will be a sort of peer review. So, obviously I think the process of peer review, if it gets going, will provide opportunities for all Group of 20 countries to exchange views, to discuss, to analyse the weaknesses and the strength of the economies of various countries including the strength of their financial system, the banking system included.
Question: Mr. Prime Minister, you mentioned that India has put a priority, or the G20 leaders put a priority, on concluding the Doha Round in 2010. These negotiations have gone on for some time and there is a perception that the US is maybe not moving as aggressively as it should be to finish that round. I just wanted to know what sort of signal you got from President Obama on this point. Did it appear to you that the United States was interested in wrapping up those negotiations?
Prime Minister: That is certainly what he stated that the United States is as much interested in ensuring that the Doha Round reaches a satisfactory, balanced conclusion as any other country. And I have no reason to doubt his sincerity.
Question: The Foreign Ministers of India and Pakistan are scheduled to meet very soon in New York. How hopeful do you feel about the outcome of those talks and what will India’s main message and focus be during those talks?
Prime Minister: India’s message is that India seeks to normalise its relations with Pakistan. The only obstacle is that Pakistan should give up its old attitudes regarding the use of terror as an instrument of state policy. We hope that they would carry out investigations based on the material that we have supplied to Pakistan regarding the massacres that took place in Mumbai in November. Although the tragedy took place in India, the conspiracy was hatched in Pakistan, and that has been admitted by Pakistan Government. We sincerely hope that they would carry forward this process of investigation and bring to book all the culprits. If that is done, I have said it in Parliament, we will move an extra mile in order to normalise our relations. We are neighbours, and as neighbours we have an obligation to work together.
Question: On the very eve of this Conference, a sensational disclosure about Iran’s nuclear capability has come out. Every big nation has reacted very sharply to it including the United States, England and France. What is India’s position about it? Will this disclosure in any way affect the directions taken by G20?
Prime Minister: This is not a subject matter which came up for discussion in the G20. I heard only today about this news being flashed. As far as India is concerned, our position has been a principled position. Iran is a signatory to the NPT. As a signatory to the NPT, it has all the rights which go with its membership of peaceful use of atomic energy, and it must also carry out all its obligations. That is our position and that is the principled position we have taken in the last five years.
Question: Sir, in your remarks you have said that stimulus packages should not be withdrawn now because you believe that there is economic recovery but it has not yet fully reached its goal. As of today food prices in India are not under control and exports position is also not good. What are the steps that you will be taking going from here? Are you going to give any further packages, bring about any major change in policy to uplift the mood?
Prime Minister: I should not like to announce any changes in policies while I am on the foreign soil.
Question: As India takes its seat at the high table in international affairs, we still live in a very unstable neighbourhood. How does India navigate its way through this unstable neighbourhood? Specifically there is a recent report where Gen McCrystal has made some critical observations about India’s role in Afghanistan, although he acknowledges that it is useful for the Afghan people. Is there any hint from the US that India should dilute its stakes in Afghanistan?
Prime Minister: No, not to my knowledge. The United States and other European countries have been very appreciative of the role that India has played in Afghanistan. We have not supplied any armed forces; we are there to assist Afghan people in reconstruction and development. We are helping to finance some of the most important projects in the area of power, road transport, health, education. Till today we have committed about 1.3 billion dollars. Not only the Government and the people of Afghanistan appreciated but whenever I have had an opportunity to discuss with the European leaders and the leaders of the United States, they have been of the same view.
As far as the neighbourhood is concerned, I agree with you that we live in an unstable environment. We have to sail in these difficult waters as best as we can.
Question: Sir, through the Summit did you get an opportunity for a one-on-one meeting with President Obama?
Prime Minister: President Obama this time did not give anyone any separate meetings. But I had an opportunity to talk to him last night. I was sitting immediately to his right. I had an opportunity this morning also to talk to him on some important issues. But as a principle, this time he said because of his preoccupation with the Conference he was not able to meet any leader bilaterally.
Question: Sir, aap angrezi mein answer karna chahen to kar sakte hain. Hum janna chahte the ki is baar jaise black money ya phir tax havens ya us tarah se jo doubtful money hai, kya uski importance kam ho gaya ya uspe dhyan nahin diya gaya? Yeh lagta hai ki jo progress pichhle chheh mahinom mein hua hai vo sufficient raha hai. Yeh kitna bada subject raha is baar ki meeting mein? Ya bilkul mention nahin kiya gaya usko?
Prime Minister: No, the regulatory system has to be reformed is part of the continuing agenda of the G20. Therefore, treatment of entities in tax havens remains a matter of concern. Even today’s discussion touched upon that. So, it is not correct to say that that is a subject which is not of concern to the Group of 20.
Question: Sir, in your statement you have talked about the need for rejecting all kinds of protectionism. Similar words have been echoed by President Hu Jintao. More or less the words appear in the statement of the Brazilian President as well as the South African President. Are you all hinting at some of the protectionist measures initiated by some of the western economies?
Prime Minister: Obviously we are worried about protectionism raising its ugly head in many developed countries. So, there is no doubt about that.
Question: And in particular are you hinting at some of the measures that have been announced by the United States?
Prime Minister: The United States included.
Question: Sir, which part of the G20 agreement will help rebalance some of the major imbalances in the world economy? The macroeconomic review will say that China should increase domestic consumption and more foreign exchange resources should be diverted away from the dollar. Is there anything in this meeting’s outcome which will help achieve this kind of aims?
Prime Minister: As of now the Group of 20 is an essay in persuasion. Whether this essay in persuasion really succeeds in achieving its objectives, only time can tell.
Question: Sir, did you get to meet the South African President and whether there was any talk on MTN which is a big issue now? Secondly, on stock markets nothing fundamentally has changed in the last one and a half years but the stock markets in India back home have gone up, almost doubled, in a short period of time. Fundamentally the economy is still reviving. Do you have any concerns on it?
Prime Minister: As far as the MTN issue is concerned, I did mention this to President Zuma that I sincerely hope that this deal will go through and that Indian companies will not be subjected to any discriminatory treatment. It has been agreed that this matter can be further discussed with the Government of South Africa.
As far as the stock market is concerned, I am now out of touch with what is happening in stock markets. But obviously in recent months the stock markets have benefited from the return of confidence, the return flow of capital back into India. So, that is one factor. Plus, I think the fundamentals of the economy continue to remain strong. If fundamentals have a role in influencing stock prices, I think that is in the right mood.
Question: Mr. Prime Minister, you mentioned the proposal to shift five per cent share representation on the IMF Board. Is this a figure that comports with India’s perception of the governance overhaul that was necessary or is this a compromise figure?
Prime Minister: It is a compromise figure because as of now the developing countries’ quota is about 44 per cent. The four countries who are members of BRIC had suggested a rebalancing to the extent of seven per cent, in which case the developing countries would have I think more than 50 per cent or nearly that. So, the compromise is, seven was the demand, five is the agreed. So, obviously it is a compromise.
Question: Okay. Secondly, how exactly will the peer review process work? Is it possible that this may place constraints on domestic policy-making in the future, given the specificity of circumstances that each individual country and particularly India, as you mentioned, faces?
Prime Minister: As far as our domestic policy is concerned, every year the fund reviews it under Article 4. I do not see what more can be done as far as reviewing the Indian policy. But bringing the policies of major developed countries within the framework of a review by the Group of 20 will give us an opportunity to pick up holes in the functioning of their economies. I think that is a positive factor.
Question: Mr. Prime Minister, to expand a little bit on the climate change issue, there is a speech by President Hu at the United Nations talking a little bit about climate change. There is only about two months’ time left before Copenhagen. Are you optimistic about reaching an agreement at Copenhagen? And what actions could either developed or developing countries take to reach an outcome?
Prime Minister: Let me say that I am not an astrologer. There are difficulties. On the signs of climate change, now there is a broad agreement. But how to bring about the adjustments in emissions is a complicated matter which requires an exercise in burden-sharing. There is no agreement about the rules of the game as to how this burden-sharing is to be brought about. Developing countries are of the view that the major responsibility for bringing about this situation is that of the developed countries and, therefore, they should carry out credible action in order to control emissions; and that if the developing countries are required to take any national action, for that financial resources as well as technological support should be provided. There is a broad, vague agreement that any agreement in which developing countries are also required to take any national action will have to be accompanied by credible action on the part of developed countries by way of additional provision of finance and also in ensuring flow of technologies at affordable price. But other than expressing a pious wish with regard to the success of the framework convention meeting in Copenhagen, the Group of 20 did not go into the mechanics of these things.
Question: Out of all the planks on which agreement was reached between the G20 leaders, what do you think has been the one thing that is the most beneficial for India? You talked earlier about a conducive environment for exports. You also mentioned protectionist pressures rising in the developed world. How confident are you that the two can be reconciled?
Prime Minister: I think things could be worse with regard to protectionism. There is an evidence of creeping protectionism but it has not reached an alarming point. Therefore, it is necessary to wield international pressure to restrain and to restrict the growth of protectionism.
With regard to which of the measures taken will benefit India, let me say that I believe the institutionalisation of the Group of 20, plus also the agreement that countries which have adopted stimulus should not prematurely withdraw, has a very significant impact for the growth of Indian economy. India needs an international environment in which its economy can grow. That means, if the world economy is growing, if the world trade is growing, that certainly will help to improve our own growth reforms.
Question: Sir, you said there was an agreement that the stimulus packages should continue. Was there any realisation of the fact that this economic downturn should not block funds to developing countries for mitigation and adaptation to climate change at the G20 meeting?
Prime Minister: I am afraid the view that the developing countries should not adopt any mitigation or adaptation measures has no support among developed countries. Even developing countries recognise their responsibilities to undertake the adaptation and mitigation measures depending upon their capacities based on the principle of equity. I am not aware of anybody asking that the developing countries should not be asked to undertake any mitigation or adaptation efforts.
Question: Sir, important public figures in Pakistan have very openly admitted that the aid which was being given by the American Administration to them was being openly utilised for military purposes. Again huge aid has been given to them. Do you say that it will be again used for building military assets against India?
Prime Minister: I have seen those reports and the Government of India has officially taken note of that. We have brought this to the notice of the US Government. Even in the past whenever sophisticated weaponry was made available by the United States to Pakistan, we have always known that the only country against whom these weapons can be used is India.
Question: Mr. Prime Minister, two thirds of the Indian population and the area is very much affected by the Naxalite terrorism. In fact it is also said that they are getting foreign aid from the neighbouring countries. There is a doubt that proper steps are not being taken in this regard. Further, all development projects and programmes are very much affected. In fact, there is no development in those areas.
Prime Minister: We have to operate from both sides. We have to accelerate the tempo of development. But you are very right, if the law and order situation is disturbed, the development work cannot also proceed. A minimum amount of enforcement of law and order is an essential precondition even for carrying out development work. So, on both fronts action is being taken.
Question: Sir, just to take you back to Sharm el-Sheikh, you have broken through old mindsets in dealing with Pakistan. Does the lack of action on the ground by Islamabad disappoint you? Are you at all hopeful of Pakistan taking any credible action and thereby the Composite Dialogue process being restarted?
Prime Minister: If you read my statement in Parliament soon after I came back from Sharm el-Sheikh, I think I have explained the whole position at great length. There is no change in my thinking on that subject.
Question: Sir, sab se pehle to deshvasiyon ke taraf se aapko janm din ki badhai dena chahoonga, aur yeh janna chahoonga ki cake Geneva mein milega ya phir plane mein milega. Saath hi is mauke par aap deshvasiyon ko kya kehna chahenge?
Prime Minister: I am very grateful to the people of India that they have given me this unique opportunity to serve them. I completed the first five years that they have given me this opportunity for. They have renewed their confidence in me and it is a debt I can never repay. The only way I can make even an effort to repay is to rededicate myself to the service of the people of India to the best of my ability.
Thank you very much.
MEA Official Spokesperson: The press conference now draws to a close.