India sees G20 as top forum, but some concerns

An overall view of world leaders attending the first Plenary Session at the G20 Summit on Financial Markets and the World Economy at the National Building Museum in Washington, November 15, 2008.

NEW DELHI (Reuters) – The finance minister said the Group of 20 nations will be the top economic forum for the future but he is concerned that no mechanism exists to oversee an economic action plan agreed by world leaders last weekend.

The minister, Palaniappan Chidambaram, added it was not quite clear to India whether the incoming U.S. administration was wholly on board with what the George W. Bush's team had agreed at the meeting. Therefore, a clear statement would be reassuring.

"Otherwise I think it's a good beginning, we are happy, the emerging economies are happy," he told the World Economic Forum's India Economic Summit on Tuesday.

Leaders from major industrialised and developing nations meeting in Washington pledged steps to rescue the global economy from the worst financial crisis in over 70 years and agreed to give emerging nations more say in financial affairs.

The plan included short-term action such as fiscal stimulus to boost domestic demand, aiming to restart world trade talks, and expanding a financial stability forum to emerging economies.

It also agreed to longer-term steps such as reforming the International Monetary Fund.

G20 finance ministers were told to work on specifics by March 31, ahead of the next summit expected in April.

"The G20 has come to stay as the single most important forum to address the financial and economic issues of the world," Chidambaram, said.

"We are happy with the way the G20 is working out but we will have to see what it reports in March."

Advisers to U.S. President-elect Barack Obama, who didn't attend the summit, have said he supported a coordinated response to the global financial crisis and was ready to work with G20 countries on improving the financial system when he took office.

The G20 communique pledged to reject protectionism, an issue which has raised concerns among Indian firms because Obama's rhetoric during the election campaign took a protectionist bent.

Obama will have an important say in whether all the reforms see the light of day when leaders meet for the next G20 summit.

SUPERVISION

India, with other emerging economies, has pressed for greater influence in world economic affairs as it has grown rapidly into a $1 trillion economy.

The weekend meeting heralded a shift in the consultation process between advanced and developing nations.

The Group of Seven industrialised nations, which includes the U.S., Japan, Germany, Britain, France, Italy and Canada, long dominated world economic affairs, although in recent years India was invited to breakfast meetings at G7 summits.

Other emerging nations, such as China and Brazil, are exerting increasing influence on world trade.

Last weekend's meeting also agreed to establish supervisory colleges for major crossborder financial institutions but fell short of announcing major regulatory breakthroughs and left it up to individual countries over what action to take.

Chidambaram said he was concerned there was no accord on some kind of global oversight of the plan's implementation because some countries might lag behind.

"I would have liked a global oversight mechanism -- not a global regulator, just a global oversight mechanism -- to ensure national regulators and national authorities are implementing the action plan between now and March 31," he said.

(Additional reporting by Surojit Gupta)