The recently concluded G-20 summit in London was a missed opportunity for India in pushing at least one big idea: dealing with the problem that is the price of oil and its increasing determination within the fickle global financial system. Stable commodity markets which reflect the fundamentals of the real economy are a global public good and the G-20 summit was the ideal forum to institutionalise this, preventing thereby a recurrence of the food and fuel riots and all their attendant instability.

The summit was historic; the shift in the balance of economic power was unmistakable. For the first time, emerging market economies sat at the same table as equal partners with the developed economies. India’s role was widely interpreted as being suitably constructive, pushing for achievable goals like reforming the governance structure and resourcing at the IMF, while not over-reaching like China did with demands for a new global currency.

However, India dropped the ball on one of the crucial dimensions of the crisis — the need for much tighter regulation of global commodity markets. This would have tapped into the two themes being pushed at the G-20 — fiscal stimulus (US and UK) and greater regulation (France and Germany). Even producer countries like Russia and Saudi Arabia were likely to be in favour of greater regulation; price volatility has brought significant instability to their economies, with the resultant debt overhang in Russia proving to be particularly debilitating.

Only nine months ago oil prices were $147 and inflation in double-digits, prompting a global backlash ranging from hearings in the US Congress to violent protests on the streets of Haiti. While some the market ‘fundamentalists’ tried to justify the surge in commodity prices on the basis of higher demand and tighter supply, subsequent events have belied that analysis.

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