G-20: India not keen on uniform bank tax, stimulus withdrawal

NEW DELHI - India’s expectations from this weekend’s Group of Twenty (G-20) summit in Toronto are likely to be low key and understated.

Sources said that while the negotiations at the London and Pittsburgh Summits were much easier and very successful in terms of projections and deliverables in areas such as financial sector reform, financial institution recoveries and growth, the problem of policy coordination is likely to be dominant at the Toronto summit.

While admitting that none of the G-20 countries would like to sit on judgment vis-’-vis differences in perception between developed and developing countries, the sources said: “policy coordination is a national sovereign issue and while some developed countries do have a sovereign debt crisis, others don’t have such similar problems, and therefore, would question the need for unilateral fiscal consolidation or imposing a tax on the banking sector.”

“Balance is required and it will be different for India, which has been conservative and has a healthy banking sector. It is important to note that debt is within manageable limits. We do not have nine percent growth at the moment, but having around eight percent is a major achievement, given the present global fiscal crisis. It is something people would give an eye for,” they added.

The sources said the G-20 Summit in Seoul in 2011 would be the place where modalities for determining fiscal consolidation could be firmed up.

They further said that India does not believe there is a need for a bank tax, though countries like Germany and France are in favour of it. India, they added, expects most of the G-20 members to concentrate on boosting domestic demand and they would not be comfortable about allowing debt or deficit to rise.

“Tax is not necessary as far as India is concerned. You can’t tax everybody for one or two people’s problems. Insofar as the Euro Zone Crisis is concerned, countries would like to deal with the sovereign debt problem themselves, but would want global support. From India’s point of view, global fiscal recovery is still weak-not sure that it is solid,” the sources said.

As far India is concerned, it would wait for outcome of the ongoing Sherpa-level meeting at the Toronto G-20 before leaders determine the next course. They said that India hopes to reduce its fiscal deficit within the next three-and-a-half years.

“What we need from the G-20 is a direction as to where the world is going. Domestically, fiscal deficit will roll back. As far providing stimulus to economies that have been hurt by the global meltdown, India would want for it to continue and would not want a complete roll back at present,” they concluded. By Ashok Dixit (ANI)