India cautioned developed nations Wednesday against protectionism, and called for $500 billion more from the International Monetary Fund (IMF) to help developing countries see through the worst financial crisis in six decades, reports say.
Speaking at a dinner hosted by his British counterpart Gordon Brown for G20 leaders Wednesday, Indian Prime Minsiter Manmohan Singh said that the rise of protectionist sentiment in the industrialized world was of real concern to third-world countries.
The Indian premier said that he was not surprised by the phenomenon, given the downturn in economic activity and the rise of unemployment, adding that, it would be a test of leadership whether we persuade our citizens that we must not repeat past mistakes.
We know that the Great Depression was as deep and prolonged as it was because countries resorted to protectionist responses, leading to a downward spiral, he said, referring to the Great Depression of the 1930s.
Dr Singh, who will participate at the G-20 summit Thursday and hold talks with U.S. President Barack Obama later in the night, also wanted more resources allotted for the poor and developing world to help its countries tide over the present economic crisis.
He called for resolve to increase the resources available with the IMF substantially, by around USD 500 billion over the next two years and for an agreement on a fresh allocation of SDRs (special drawing rights) of around USD 250 billion. This, he said, would provide poor and developing countries with about USD 80 billion of usable resources at a time when liquidity was exceptionally tight.
While India will be able to manage, many other developing countries may not be in the same position, and this is where the international community can help, he said, while appealing for a free flow of private capital.
He said the developments since November when the G-20 leaders met last showed that the downturn was much deeper than expected and that the prospect of recovery has been pushed to next year.
This was the worst recession in 60 years, and was generating negative sentiments, which threatened to bring about a downward spiral, if not corrected in time. The pinch was being felt in both industrialized countries and developing countries, he added.
The Indian premier also suggested: increasing the capital of the Asian Development Bank (ADB) by 20 per cent, concrete steps to revive trade finance, and expansion of lending by export credit agencies, stronger regulation and improved supervision of global financial system besides bringing tax havens and non-cooperating jurisdictions under closer scrutiny.
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