INDIA AND THE G20

INDIA READY TO SUPPORT FALTERING EUROPE UNDER IMF UMBRELLA

The Economic Times, November 3, 2011

CANNES: The big emerging economies, Brazil, Russia, India and China (BRIC), are likely to meet ahead of the G20 summit beginning Thursday to chalk out a joint strategy as the leaders of the world's biggest economies confront two surprise developments.

Embattled Greek Prime Minister George Papandreou called a referendum to approve the October 27 bailout package hammered out by European leaders even before the realisation of its inadequacy had sunk in.

The other development emanated outside Europe, when Japan intervened earlier this week to stem the rise of yen, effectively saying it had no faith in the G20 to offer a co-ordinated solution.

The referendum, a call on Greece's continuance in the Euro zone, and the simmering currency issue has completely altered the agenda of the G20, leaving it with the difficult task of assuring the global financial markets that it has the firepower to prevent the world from slipping into another recession. “We are not sure of the outcome because the nature of the crisis has changed,” said a government official.

The official is accompanying Prime Minister Manmohan Singh on his visit to the French resort to attend the meeting of heads of countries that together command over 85% of the world's GDP.

Global equities gave up a chunk of their October gains, crude retreated, euro dropped and Italian bond yields firmed as financial markets came to grips with the fact that the $130-billion third bailout package for Greece may not help contain the European debt crisis. &quotWe don't know whether the G20 will be able to deliver," said the Indian official, indicating the summit declaration could well be a general statement of intent that would be short on ways to address specific issues.

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