Pranab cautions world leaders of currency war if crisis deepens

Speaking at the BRICS nations (Brazil,Russia,India,China and South Africa) conference at the headquarters of the International Monetary Fund (IMF),he said that currencies used in these countries should be widely appreciated and taken into account while determining the ingredients of special drawing rights (SDR) on account of their increasing contributions to global output and economy. “But we are not suggesting that right now,because there are many other factors which ought to be taken into account,including free convertibility and other things which are not uniform,but the importance of these currencies has increased,” Mukherjee said in response to a question.

Mukherjee also raised the issue of the grave threat being posed by rising global commodity prices and asked developing countries to increase their investments in agriculture to improve crop productivity.

“Increased investment in agriculture and productivity should be the strategic priority of G-24 to cool prices and provide food security to our people. There is a need to ensure transparency in commodity markets,” he said at a meeting of G-24 finance ministers on the same evening where he took over as the new chairman of the group.

The minister further stressed on the need to continue to push for more ambitious progress on reform of the governance mechanisms of international financial institutions (IFIs).

“The multilateral development banks also need to mobilise more resources to increase their assistance to low income and other developing countries,including finding ways of expanding their lending capacity,so that development finance is not neglected,” he added.

Speaking at the G-20 finance ministers’ meet,Pranab said that advanced economies should channelise their surpluses towards building infrastructure in developing nations. He also said that the growth process needs to be made more broad-based and especially strengthened in developing countries.

“If we need to add demand to the global economy to offset the moderation of demand by industrialised countries as they contract final output,perhaps a good way of doing this is to expand infrastructure investment in developing economies,” Mukherjee said.