Prime Minister Manmohan Singh believes that most of the major economic indicators are still negative, when one looks at the world economy as a whole.
On the sidelines of the G-8/G-5 Summit in Italy when Prime Minister Manmohan Singh met British Prime Minister Gordon Brown, he shared the view that he doesn't want stagflation to come in world economy.
The discussion was on the trade, and the Doha round and the need to prevent protectionism, and there was a discussion on the state of the world economy, foreign secretary Shiv Shanker Menon said.
Menon said that Prime Minister Singh mentioned to his British counterpart that "whatever might be the green shoots of recovery, it is still very fragile."
At the G-5 talks, PM Singh also reiterated the need for the decisions that had been taken at London by the G20 to be implemented, as the last thing that the developing countries can afford for recovery would be delay, or for the world economy to go into a stagflation if the sufficient stimulus is not provided to the global economy.
PM Singh thinks that the developing countries would be the least equipped to cope with the effects of the stagflation. He insisted that the recovery must be based on an inclusive strategy of growth which takes the poor countries into account.
PM Singh also said that when devising solutions to the world economic crisis, it is essential to take into consideration the burden of mass poverty, and that is something that must be addressed in the process otherwise.
He said, "You have seen estimates by the World Bank, by the IMF for the increasing number of people who would slip back into poverty, unless the economic crisis is addressed very quickly."
The joint trade declaration of the G5 countries which includes China, India, Mexico, Brazil and South Africa also said that, "We are concerned with the present state of the world economy, which submits the developing countries to an inordinate burden resulting from a crisis they did not initiate. We are convinced that the successful conclusion of the Doha Round on the basis of its development mandate will provide a major stimulus to the restoration of confidence in world markets and inhibit emerging protectionist trends which are particularly damaging to developing countries."
PM Singh and his team are saying at various platforms that the global economy has not fully recovered and economic stimulus is still needed. Also, India is saying again and again that any kind of protectionism will harm the recovery of trade and economy.
India has also expressed its readiness to complete the Doha round without further delay.
The G5, meeting in it's political declaration said that these developing countries will, "continue to promote the reform of the international financial system in a comprehensive, balanced and result-oriented way, with the purpose of establishing a new international financial order which is fair, just, inclusive and well-managed."
The rich nations are dominating the IMF and the World Bank. The G-5 countries want their share in these organisations and other international organisations with fat funds.
The G-5 statement said, 'We pledge to devote appropriate efforts to fundamentally resolve the issue of under-representation and inadequate voice of developing countries in international financial institutions, which is urgently needed. Towards this end, the G5 will collaborate with other world leaders. In this light, we welcome the outcome document adopted by the United Nations Conference on the World Financial and Economic Crisis and its Impact on Development."
There were also considerable discussions on the need to reform not just financial institutions, but also the institutions of international governance. 'This was a recurrent theme,' Dr Singh said.
If G-5 agenda materialises in real terms for Indian businessmen -- a big change can be expected.
The accounting systems of various countries and various laws that manage the world of accounting are starkly different.
As the accounting is done today all over world, one country's chartered account can produce $ 20 million profit from the same data that shows $10 million loss in another country.
The standardisation of accounting practice will come sooner than later if one wants to correct the "imbalances in the structure of the world economy" as Dr Singh emphasised to PM Brown.
In view of this, the Indian companies are better advised to shift to globally accepted standard practices.
Another noteworthy issue debated amongst China, Brazil, India, Mexico and South Africa was about the currency.
Brazil's president Lula suggested that the G-5 should consider using their own currencies to settle their trading accounts with each other. A consensus could not be developed on the issue of "reserved currency."
The China-based companies have started settling accounts with Hong Kong based companies in China's currency RMB.
