“...when countries withdraw from quantitative easing they should keep in mind the spillovers on the developing countries,” he said.
Emerging economies followed the advice of the IMF when the major economies went through a period of downturn after the 2008 global financial crisis, Chidambaram said.
“So when they (developed world) sought our cooperation during the economic downturn it is only fair that they cooperate with developing countries during the economic recovery,” he said, while referring to the remarks of German Finance Minister Wolfgang Schaeuble that India should not attribute its problems to monetary polices of developed nations. As regards the tapering by the US Federal Reserve, Chidambaram said the concerns of the emerging economies have been acknowledged by the G20 and it was “for the US to follow up and address the concerns of the developing countries.” The US Fed’s tapering has caused flight of capital out of emerging economies and in turn hammering their currencies. On the general mood at the G20 conference, which was taking place in the backdrop of IMF projecting acceleration of global growth to 4 per cent next year from 3.7 per cent in 2013, he said, “the general mood is cautious...(it is) cautiously optimistic.” Taking on board India’s concern with regard to the impact of tapering, the communique said that, “all central banks (will) maintain their commitment that monetary policy settings will continue to be carefully calibrated and clearly communicated, in the context of ongoing exchange of information and being mindful of impacts on the global economy.” Chidambaram said massive amount of investment in infrastructure is required. “That is true for whole world but developing countries require more and better infrastructure and therefore we strongly support the World Bank’s proposal to set up a global infrastructure facility and the countries must contribute to that facility,” he said. (PTI)