Sunday, Apr 21, 2002
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By Sridhar Krishnaswami
The industrial countries "should also open up sectors such as textiles and services which are of significant export interest for developing countries,'' Mr. Sinha said in his statement to the International Monetary and Financial Committee. The Finance Minister is participating in the Spring Meetings of the World Bank and the International Monetary Fund.
Mr. Sinha referred to the removal of subsidies and other trade inhibiting measures as part of the priorities the international community must address urgently in the context of some of the economic and financial concerns. "At the global level, it remains essential to carve out measures for reducing vulnerabilities and maximising policy flexibility for encountering external shocks, particularly for developing countries,'' Mr. Sinha said.
He stressed the emerging market and developing countries should devote particular attention to fiscal consolidation and structural initiatives, particularly in their financial markets. "For developing countries, an enduring reduction in poverty remains the overarching priority in the longer run." He argued that policy responses to address global imbalances alone were insufficient.
Rather, it was critical for the international community to reflect upon the importance of securing the benefits of globalisation for all. The Union Minister touched on widening global imbalances which was accompanied by reduced volumes of capital transfers, currency volatilities, asset price fluctuations and new protectionist measures which were eroding the capabilities of developing countries in deriving the benefits of globalisation. "This calls for coherent policies as well as policy coordination by major advanced economies as they have a significant bearing on global growth and the development prospects of developing countries,'' Mr. Sinha noted.
India's growth performance in the last decade "was one of the most impressive among the major economies of the world," Mr. Sinha said, going on to make the point that the economy had shown "exemplary resilience" in the face of shocks such as the Gujarat earthquake, the terrorist attack on Parliament and the heightened tension on the border."
The process of implementing enduring structural reforms was being carried forward in India in right earnest. The latest Union Budget had announced far-reaching initiatives in the farm sector, terminated the administrative price mechanism governing the petroleum market and the capital account had been further liberalised, Mr. Sinha said.
"The results of efficient macro-economic management are reflected in the comfortable balance of payments situation and achievement of sustained low inflation. Foreign exchange reserves are now above $54 billion and the privatisation programme has picked up rapid pace in the recent months," the Union Minister pointed out.
On the subject of the IMF's policy agenda, Mr. Sinha has argued that while laudable efforts had been made at the bilateral and the multilateral levels for strengthening the surveillance mechanism, it was important to sharpen the focus of surveillance given the "widening" agenda. "For the developing countries, surveillance needs to go beyond crisis prevention; it should also identify the sources of growth and the policy actions required at the national and international level to actualise this potential," the Finance Minister said.
Referring to the role of the IMF in the HIPC initiative, the Union Finance Minister said there was the urgent need on the part of multilateral creditors to demonstrate their commitment to the Initiative for the Heavily Indebted Poor Countries. "In some cases, actual delivery of interim relief has come much later after the decision point,'' Mr. Sinha remarked.
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