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Asian meltdown won't affect liberalisation, India's growth rate will be 8 pc in future, PM assures G-15

J Sesha Sai in Montego Bay, Jamaica

Prime Minister Atal Bihari Vajpayee today lamented that recent events have shown that the boon of largescale capital flows can turn into a bane when they make a dramatic exit.

Intervening during the inaugural session of the G-15 summit in Jamaica, Vajpayee said: We have seen this happening in varying proportion in east and south-east Asia, Russia and more recently in Brazil.'' He said it was not abnormal for markets to react to a perceived aberration in a country's economic fundamentals or in its economic and monetary policies. But wide fluctuation in currency values has led to loss of confidence of foreign investors.

He said India herself has not remained unaffected by the crisis which has had its "impact on our external trade, foreign direct investment inflows into the country and portfolio investments". "We, however, remain committed to continuing with our economic liberation programme at a pace and in a manner that is best suited to our needs."

Vajpayee asserted that India's economy is expected to grow by five to six per cent this financial year. ''We would attain a sustainable growth rate of seven to eight per during the coming years,'' he added.

He also lamented that the priorities of development co-operation have receded into the background and urged the G-15 to play a crucial role in bringing the importance of development co-operation back to global agenda.

He said that increasingly global markets are driven by forces of specialisation. "It is for this reason we have proposed a new initiative aimed at intensification of G-15 linkages in the areas of bio-technology, information and communication technology and infrastructure,'' he said.

He said though liberation has increased trade opportunities for the developing countries, it has also destabilised the financial system. He, however, said that globalisation "is no longer a choice but a reality''.

According to him, when a crisis erupts, the country will need to be quickly assisted while at the same time prompt preventive steps are to be taken against its contagious impact.

''Any assistance should also pay special attention to the social consequences arising from such crises,'' he pointed out.

Vajpayee advocated transparency among all players -- both public and private, and developed and developing. Apparently upset over trade barriers against the developing countries under the World Trade Organisation, Vajpayee said some unilateral trade measures were hurting the developing nations.

He regretted that the expectations raised by the Uruguay round have unfortunately not been realised, and meaningful market access was still to accrue in areas such as textiles and architecture. ''We, however, see a resurgence in protectionism in the form of anti-dumping, safeguards and other actions.''

For service negotiations, the objective of developing countries should be to achieve substantial liberalisation in sectors of interest to them. Regarding movement of ''natural persons'', all these issues can be looked into at the preparatory meeting India is holding this year before the third WTO ministerial meeting, he said.

He welcomed the initiative of the International Labour Organisation to develop a global employment strategy to address the problem of growing unemployment.

He said developing countries should fully gear themselves to benefit from revolutionary technologies in the 21st century.

Earlier, the G-15 summit was formally opened at Montego Bay in Jamaica by Jamaican President P J Patterson with a call for restructuring international and multilateral financial institutions.

Addressing the summit on behalf of Asia, Malaysian Prime Minister Mahathir Mohammed blasted the international financial agencies for lack of support as his nation grappled with a financial crisis. He also focused on the growing disparities between the North and the South.

He said it was sad that the great Asian tigers are now "no more". "Reduced to whimpering and begging, they are a shadow of their former selves. Their people are starving, rioting and looting. Their governments have been overthrown and their political system so undermined that they cannot govern effectively. They have to accept foreign direction of their internal affairs,'' he said.

''But the assault on them is far from over. Whether it is planned or not, their impoverishment has exposed them to the danger of losing their independence. A condition for getting aid from institutions as the IMF is to open up their economies to unrestricted penetration by foreign businesses. They may not protect their indigenous banks and industries and these may be taken over or shouldered aside by foreign giants,'' he added.

The summit is being attended by seven heads of state including Sri Lanka which is the newest member of the G-15. Thus the strength of the group has risen to 17. The other members are Algeria, Argentina, Brazil, Chile, Egypt, India, Indonesia, Jamaica, Kenya, Malaysia, Mexico, Nigeria, Senegal, Peru, Venezuela and Zimbabwe.

Additional reportage: UNI

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