FM: In his statement, the Prime Minister has highlighted three points he will make at the summit. The need for greater inclusivity, ensuring that the development prospects of developing countries do not suffer and the need to avoid protectionist tendencies. I have just returned from the G-20 Finance Minister’s meeting and the G20 Finance Ministers have put out a communiqué.

The key point is, we must agree to a new order of global oversight. And this can come only by, as the Prime Minister said, greater inclusivity in the international financial system. In many ways, the IMF and the G-7 are too narrow and too small. A more inclusive system can provide better surveillance and serve as an early-warning mechanism.

The second is that while the world grapples with the crisis, the countries most hit by it find their growth prospects hampered. We must not forget that there are only a handful of economies that are driving the world economic growth. Among them are China and India. Resources must be made available to developing countries, including India, so that they can continue to grow and try to have economic development.

Third, the crisis should not be an excuse to go into a protectionist cocoon. That would be the worst way to solve the crisis. We must now try to encourage free flow of goods and services and must continue to enhance the flow of capital. Except for increasing free flow of goods, services and capital, there is no way in which the world will recover and get back to the growth path. All this requires deep thought... and quick agreement among the leaders.

•What about the global financial architecture that is being talked about?

FM: Among the things that we must agree on are common prudential and regulatory standards for all financial institutions in the world, especially those with global footprints. We must have convergence of accounting standards, we must agree to locate the resources and agree upon the channels through which this resource would be diverted to the developing countries, these could be the existing multinational institutions or we could devise an ad-hoc fund dispersing mechanism, and finally, the international institutions which constitute the global financial architecture must be reformed. And this goes beyond the IMF and World Bank. This includes the Bank for International Settlements and the Financial Stability Forum.

•Are we talking about a global regulator?

FM: See, the regulation in the present context is a function which national regulators will be loth to give up. That is why regulation must be national. If we can agree upon common prudential and regulatory standards, and then ask national regulators to apply those standards, there can be some kind of a global oversight, where the national regulators are doing their job. I don’t think regulation can be raised to a global regulator. That’s too ambitious, and perhaps not possible in today’s circumstances.

•Does it mean there will be a global oversight body?

FM: I didn’t use the word global oversight body. I just said there must be some way in which we can have global oversight through which commonly accepted regulatory and prudential standards are being applied by national regulators. But these things are to be talked over, these are ideas, these are positive things.

•The Prime Minister has talked about pump-priming the economy? But we have not seen any economic stimulus package so far.

FM: That’s a question you should ask on the way back to India. We’ve just passed a supplementary demand, which is about Rs 1,05,000 crore additional cash expenditure. Where do you think it is going? All of it is going into NREG, rural development. Just look at the heads under which we have this.

•What would have happened if we had surveillance and early-warning mechanisms?

FM: In retrospective, it is clear that if there had been an effective surveillance mechanism, it could have or should have identified the huge risks that were being taken by some international financial entities. In the absence of this oversight mechanism, these financial entities, some of which have collapsed, took unacceptable risk. That was what led to the crisis in United States, which is there at the centre of the crisis.

•What will be the impact on India?

FM: We can’t measure the impact. We have said, we will be indirectly impacted, there will be impact to some extent on our growth, our exports, and it will also impact the currency flows, as it has already. But we are confident that given the underlying strengths of Indian economy we can weather the crisis and still return a decent growth in 2008-09, even the IMF’s last week’s assessment places India’s growth rate in the current fiscal at 7.8 per cent. We will still return a decent growth rate, we will suffer an indirect impact.

•Do we expect any serious outcomes given that the US has a lame-duck administration and India too is facing elections.

FM: The resolution of this crisis will take us to a point of time well beyond January 20, 2009. Likewise, it will take us to a point of time well beyond May 22, 2009, so I don't think we are going to take a election constricted point of view. We have to take a medium- to long-term point of view, and I believe the US also will take that view. So I think Obama inputs will be there in whatever President Bush presents. So we will have to take a view that takes us beyond those election dates. That is the stance that I think India will adopt.