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Editorial Posted On Sunday, October 04, 2009 | To begin with, the IMF will sell 8 per cent of the gold it possesses to raise new capital and be able to borrow more and lend more. The sharing of the World Bank voting rights will be more equitable and countries like India and China will have more voting rights and say in the functioning.
Is the world economy still in the deep woods? Or is there hope at the end of the tunnel? Is there a new architecture on power sharing or is it in the making? Is the new system confined to tackling just the economic crisis? Or are the ramifications much wider? Are the richest and the most powerful nations beginning to realize that they no longer call the shots, or all the shots any way? Has the Group of Seven or Eight been replaced by the Group of 20 with nations such as India, China, Brazil, South Africa and more? Is the declaration emerging out of the Pittsburg Summit on September 25 and 26 a landmark declaration?
Are the claims that the very grave economic recession is diminishing genuine? Does it amount to pulling wool over the eyes of the people? Is it just an exercise meant to be self-congratulatory? Or is that without such claims, though based on facts and figures, confidence building measures would be half-hearted? Or is the talk of economic recovery by world leaders, economists, professors and financial wizards meant to lull the frayed nerves with a sleeping dose?
Has this not built hope among billions of people, rich, poor, not so rich and those just on the fringes to look up and rise to a new sunshine? Has the world been saved from a possible depression by a collective will, unmatched in history? Have the world leaders risen to the occasion without wasting time? Have they woken up to an unprecedented crisis? Have they tried to catch the bull by the horn? Do they believe in the maxim that diseases desperate need remedies equally desperate?
There could be differences of opinion among optimists and pessimists on many of these questions: question of life and death. Yet, it cannot be denied by either the prophets of hope or prophets of doom that the world is at a new crossroads. It is not just that the New Millennia, the 21st century, arrived with great hopes of new frontiers of progress, but it came on the back of a number of economic and other crises, which were overcome with patchwork solutions and sometimes genuine and strong measures. But an undercurrent of fear has, and perhaps will, always lurk behind the best will in the world.
For starters, India appears to have played a key role at the Pittsburg Summit with the Prime Minister, Dr. Manmohan Singh, being accepted as an economic thinker engaged in out of the box moves and proposals. It is not just as an old warhorse, he was seated next to President Obama, but it was acknowledged that his views had to be heard with respect and more than that with deliberation. The good Doctor's prescription has a healing touch about it. He had no doubt taken with him a team of advisers and officials with plans, outlined without fanfare, yet requiring serious consideration.
To begin with, the IMF will sell 8 per cent of the gold it possesses to raise new capital and be able to borrow more and lend more. The sharing of the World Bank voting rights will be more equitable and countries like India and China will have more voting rights and say in the functioning. The World Bank has already agreed to lend more than $4 billion to India to partially finance India 's infrastructure, especially highways and power sector as well as India 's power grid so that transmission losses are diminished and quality of power and sharing is enhanced.
There is clear recognition of the fact that the US , Europe, Japan and several other nations may still have deep pockets, but there is now a hole in those pockets and their trillions are dripping and their arrogance of yesteryear is somewhat at a discount. This is evident from the fact that there are still huge job losses in the US, though it is claimed that from more than 750,000 people losing a place of work every month until June this year, there are still 370,000 people unable to retain their access to the place of work.
Although President Obama has claimed that 41 per cent of those out of work have been re-employed, but many of those have had to accept employment which gives that 25 per cent wage compared to the earlier position: a security officer earning $60,000 a year now cleans windows at 16,000 a year. Thousands of school-teachers and bus drivers have lost jobs and children are walking to the school, 15 minutes from home, come rain, shine or snow.
Food prices at grocers and eateries have doubled in five years. Even a Mac or other cheap outlet, including an office canteen, don't give you a meal for less than $5 or 6 against $2 five or six years ago. Every thing is dear. People are cutting heavily on clothing against the trend of buying new garments all the time. Shop-alcoholics are few. New York stores and posh restaurants are deserted. Detroit , where America most of its cars are built is a deserted city, though Houston in Texas , the oil country, is flourishing with housing nearly fully occupied and the city bustling. About 10,000 pubs or beer bars have closed in Britain alone, and possibly tens of thousands in the US and Europe as people are no longer able to engage in their pastime of downing a pint before returning home. Are they able to buy enough beer to take home or are they cutting down on the traditional habit? Have the street brawls among naughty youngsters come down as a result? Scotland Yard is silent.
The first point that is in the process of implementation is that the capital of the World Bank and the International Monetary Fund should be doubled. A corollary of this is that the developing nations, and not just the middle level developing economies, must be given more resources to build up their infrastructure. This would help the big nations to be able to sell and export their goods. They need not just go on demanding that the poor countries must provide total open access to their goods and yet allow the rich nations to set up new barriers to trade and deny entry of the Third World products as well as human skills for one reason or another excuse.
Lalit Sethi, NPA
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Friday, September 03, 2010