INITIAL POST-SUMMIT GOI REMARKS

UNCLAS SECTION 01 OF 02 NEW DELHI 002944 SIPDIS SENSITIVE STATE FOR SCA/INS AND EEB USDOC FOR ITA/MAC/OSA/LDROKER/ASTERN/KRUDD DEPT PASS TO USTR MDELANEY/CLILIENFELD/AADLER DEPT PASS TO TREASURY FOR OFFICE OF SOUTH ASIA MNUGENT TREASURY PASS TO FRB SAN FRANCISCO/TERESA CURRAN E.O. 12958: N/A TAGS: EAGR ECON EFIN EINV ETRD IN SUBJECT: INITIAL POST-SUMMIT GOI REMARKS ¶1. (SBU) SUMMARY. Prime Minister Singh and Finance Minister Chidambaram have made positive remarks in their early days back from the G-20 Summit held November 14-15, while Commerce Minister Nath has made some unhelpful - but not uncharacteristic - protectionist references. Singh and Chidambaram emphasized the importance of the Summit attendees consisting of the G-20 rather than just the G-8. Singh termed the summit a "success" and highlighted that developing countries would be given additional infrastructure-focused finance. Nath, on the other hand, seemed to disregard the G-20 Declaration's call against protectionism, and declared he would guard against cheap imports flooding India. End summary. PM SINGH NOTES SATISFACTION WITH SUMMIT -------------- ¶2. (U) Prime Minister Singh spoke with reporters on his return flight to India after the Summit, emphasizing that the inclusion of the G-20 rather than the G-8 indicates that the "balance of power is increasingly shifting in favor of the emerging economies." He deemed the November 15 meeting a success, with complete agreement on several critical areas. He acknowledged that he had had reservations about the ability of the US and Europe to agree on common goals. Instead, all the participants had agreed to the need for fiscal stimulus, which Singh stated was already underway in India, pointing to high farmer support prices, farmer debt write off, expanded social services and infrastructure expansion. ¶3. (U) Singh approved of the G-20's acknowledgement that the developing countries were suffering from a crisis not of their making. He noted that it was agreed that infrastructure investment would be important to sustain growth in developing countries and thus the international financial institutions (IFIs) would open new facilities to assist towards that end. Finally, he pointed to the reform of IFIs in their supervision and management systems and their giving greater weightage to emerging countries. FINANCE MINISTER SUPPORTIVE BUT NOTES "REGRETS" -------------- -------------- ¶4. (U) Finance Minister Chidambaram spoke about the G-20 Summit at the annual India Economic Forum - an offshoot of the World Economic Forum - on November 18. He echoed the Prime Minister's satisfaction with the inclusion of G-20 members, as a recognition that developing countries also had a vital role to play in finding ways to address the financial crisis. Chidambaram stated that the industrialized countries realized they needed to engage growth centers and other emerging economies, asserting that the G-20 has "come to stay". He wouldn't predict whether the G-20 would replace the G-7 but did think the G-20 would become the most important multilateral group of countries. Chidambaram further opined that Africa is under-represented in G-20, and Europe "a bit" over-represented, but judged that now is not the time to deal with such concerns. ¶5. (U) Chidambaram then identified two "regrets" from the Summit - President-elect Obama's absence and the failure to establish a global oversight mechanism to identify problems to national governments and regulators for action. The Finance Minister said India and other "like-minded" nations wanted to know if the incoming Administration endorsed the US views put forth at the Summit. He also lamented the absence of a new global oversight mechanism, although he was quick to define the role as advisory to national-level regulators. Chidambaram reiterated that he believed that the G-20 would not support a global regulator, but could use an oversight mechanism. Further, Chidambaram suggested that a group of "wise men and women" should be established to oversee implementation of the G-20 Summit action plan and report periodically to the G-20. COMMERCE MINISTER NATH'S PROTECTIONISM -------------- ¶6. (U) Senior Indian economic officials met with Prime Minister Singh on November 17 to discuss possible measures to assist the industrial sector, and in particular, exporters. Among the policy measures discussed by Finance Minister Chidambaram, RBI governor Subbarao, and Commerce Minister Nath were assistance with insurance and credit terms for exporters, increases in lines of credit, and NEW DELHI 00002944 002 OF 002 increases in import duties in certain sectors. The RBI has already extended pre-shipment credit for exporters from 180 days to 270 days. ¶7. (U) Commenting after the meeting with the Prime Minister, Commerce Minister Kamal Nath underlined the need to stop imported 'cheap goods' from hurting domestic industry. He noted that there was a significant overhang between India's applied rates on a wide range of industrial goods and its WTO-bound rate. "We will take measures to prevent cheap imports from coming in. We will not hesitate to increase tariffs sharply for sectors like chemicals and engineering," Nath emphasized. WHITE