India may be ready to return to the path of fiscal consolidation from next April but Prime Minister Manmohan Singh will most likely push for continuation of the stimulus by developed countries at the Group of 20 Summit on the Financial Crisis and the World Economy in Pittsburgh. At the summit the third such in the last 12 months the PM is likely to say that this is not the time to think of exit because developing countries will not be able to tap wider trade opportunities. His key message will be that the world economy still requires large doses of stimulus, a top government source said on board the PMs aircraft. Just ahead of his departure from New Delhi earlier today,Singh himself said: The global economy and financial markets have shown a distinct improvement but we are still not out of the woods. Drawing confidence from Indias growth in a year when most countries battled recession,he said: Even though our growth rate has slowed to 6.7 per cent in 2008-09,we approach the summit with a sense of confidence. Though India has a lot at stake in a full revival of the world economy,Singh pointed out that its growth is primarily driven by domestic demand,a robust savings rate and a resilient external sector. Capital flows,especially portfolio flows,have started picking up,and we remain an attractive investment destination, he said. Indian stock markets have seen $10 billion in FII inflows this year alone. Sources said Singh has had informal talks with leaders in the last few weeks to find common ground in Pittsburgh. He spoke with UK Prime Minister Gordon Brown the day before and is scheduled to have a bilateral with the new Japanese Prime Minister and possible pull-asides with President Barack Obama and the Australian PM. The two-day summit will likely be dominated by discussions on the need and timing of an exit strategy. The fear of inflation in the coming months looms large in some European countries and is certain to create tension. France and Germany will press for an early unwinding. The US and the United Kingdom that account for roughly 70 per cent of global financial intermediation,remain united in recommending continuation of the stimulus. Central bankers,including Federal Reserve Chairman Ben Bernanke,have said the worst is over for the global economy. This had stock markets bouncing back world over. But India itself will push for continuation of stimulus measures by developed countries. I will convey Indias interest in seeing the earliest possible return to trend growth and stabilization of the banking and financial sectors in the advanced economies,because this directly affects our exports,capital inflows and investment, Singh said. Singh,who is expected to speak at the Plenary Session on the second day of the Summit on September 25,will again caution against protectionist measures by industrialized nations in times like these. He first spoke about the danger of such defence mechanisms in Washington DC in November 2008.
