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The fourth G20 summit in less than two years has ended atToronto on 26-27 June, 2010. The summit ended with glo-bal leaders evolving a consensus of sorts on several issues of economic importance. India, which was represented in

strength at the summit, says it is happy with the outcome.The leaders of the world's most powerful economies pledgedto slash back spiraling debts on Sunday as they sought torebalance a global economy knocked off its axis by a finan-cial crisis.

The heads of the G20, which groups established world powers and the most dynamic emerging players,vowed to nurture the still shaky recovery with coordinatedmeasures to spur growth and ensure financial stability.

But observers quickly noted the agreements were not bind-ing and the summit statement was filled with caveats andexemptions, pushing many of the tougher decisions on tothe next G20 summit in Seoul in November.

The leaders' joint statement, released at the end of two daysof talks in Toronto, warned that "failure to implement con-solidation where necessary would undermine confidence andhamper growth."

"Reflecting this balance, advanced economies have committed to fiscal plans that will at least halve deficits

by 2013 and stabilize or reduce government debt-to-GDP ratios by 2016," it promised.

Nevertheless, the group exempted Japan and its huge public deficit from the pledge and noted that mea-sures should be "tailored to national circumstances."

The statement called for "greater exchange rate flexibility in some emerging markets" but shied away fromspecifically fingering China, which is under pressure to allow the yuan to strengthen to ease trade imbal-ances.

Amid US fears that global growth may once again become overdependent on American consumers, theG20 called for "efforts to rebalance global demand to help ensure global growth continues on a sustainable

path."

"I understood that

fisc al c onsolidationobviously needed

high pr ior i ty in

those advanced nations that

were experienc ing exceptionalfisc al stress and in those where

sovereign d eb t was shaky."

G20 Summit

Leaders Agree to Cut Defic its by 2013

By: Ram Kumar P andey

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European leaders- Germany's Chancellor AngelaMerkel, French President Nicolas Sarkozy andBritain's Prime Minister David Cameron -- cameto the talks calling for fiscal restraint and a newlevy on bank profits.

They made some headway on the former, but willbe forced to go it alone on the banking tax, as coun-tries like Australia, Canada and India that haveexperienced no banking failures rejected the pro-posal out of hand.

The G8 statement said "We agreed the financialsector should make a fair and substantial contri-bution towards paying for any burdens associatedwith government interventions." "We recognizedthat there are a range of policy approaches to this

end. Some countries are pursuing a financial levy.Other countries are pursuing different approaches."

Observers said the degree of divergence in thecountries' policies for dealing with the recoveryshowed that, now that the initial shock of reces-sion has passed, national agendas are once morecrowding out G20 cooperation.

Outcom e For India

The first point was the civilian nuclear pact withCanada. Canada is an important supplier of Ura-nium and nuclear technologies. The pact is actu-ally going to help take India’s plans on that frontforward. In fact the bilateral that the India primeminster had with the Canadian prime minster ac-tually seems to signal a new beginning in the rela-tionship. Stephen Harper said that the 70s are over and in fact this is the first visit by an Indian primeminister after 1973.

There were several other agreements for miningand other MoUs signed. Another key bilateral wasthe India US bilateral, Manmohan Singh meetingBarack Obama. Much of it was political; no War-ren Anderson extradition demand was raised there.The key thing was that India told the US to takedisclosures by Headley; the 26/11 accused moreseriously and wanted the United States to get Pa-kistan to act more on terror.

PM asks rich nations to resist protectionismMaking it clear that each country needed to de-vise its own strategy to weather the deepest globalfinancial crisis in decades, Indian Prime Minister Manmohan Singh on Sunday asked rich nations toresist protectionism.

Stating that the India was better placed in han-dling the situation with an average growth of 7per cent in the past two fiscals, the prime minister said emerging economies must also rely less onexports and push domestic demand.

As the leaders of the Group of 20 advanced andemerging economies listened in attention, theOxford-educated economist-prime minister saidIndia on its part will go for medium-term fiscal

consolidation and halve its fiscal deficit by 2013-14.

Manmohan Singh said he understood that fiscalconsolidation obviously needed high priority inthose advanced nations that were experiencingexceptional fiscal stress and in those where sover-eign debt was shaky.

"But other advanced countries should opt for amuch more caliberated exit from the stimulus. Weshould adopt a carefully differentiated approach,reflecting the circumstances of individual coun-tries," the prime minister added.

China sets strongest yuan rate in years after G20pressure:

China set the strongest yuan exchange ratein years after Beijing came under renewed pres-sure at the Group of 20 summit to let the currencyappreciate.

The People's Bank of China said it set thecentral parity rate -- the centre point of thecurrency's allowed trading band -- at 6.7890 to thedollar.

It was the strongest level policymakers haveset since China unpegged the currency in July 2005and moved to a tightly managed floating exchangerate.


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China had effectively pegged the yuan at about6.8 to the dollar for the past two years to prop upexporters during the global financial crisis. Criticssay the policy gives Chinese producers an unfair advantage.

Manmohan meets Obama at G20 summit:Prime Minister Manmohan Singh and US Presi-dent Barack Obama held their second substantivedialogue in two months, during which they areunderstood to have discussed terrorism, globaleconomy and other issues of mutual concern.

Singh and Obama met on the sidelines of the G20Summit and are believed to have discussed the situ-ation in the region.

This was the the first meeting between the twoleaders after they met and reviewed bilateral tieson the sidelines of the Nuclear Security Summit inWashington in April.

During the meeting, the two leaders are also un-derstood to have discussed about the global eco-nomic recovery and the G20 Summit. At the Sum-mit, India and the US had cautioned against wind-ing up of the government funding.

Obama said the two countries would continue tosee how businesses of both countries can get towork together and then generating recommenda-tions to "each of us in terms of how we can im-prove ties between the United States and India."

What is the G-20

The Group of Twenty (G-20) Finance Ministers and

Central Bank Governors was established in 1999to bring together systemically important industri-alized and developing economies to discuss key is-sues in the global economy. The inaugural meet-ing of the G-20 took place in Berlin, on December 15-16, 1999, hosted by German and Canadian fi-nance ministers.

Mandate

The G-20 is the premier forum for our interna-tional economic development that promotes open

and constructive discussion between industrial andemerging-market countries on key issues relatedto global economic stability. By contributing to thestrengthening of the international financial archi-tecture and providing opportunities for dialogueon national policies, international co-operation, andinternational financial institutions, the G-20 helpsto support growth and development across theglobe.

Origins

The G-20 was created as a response both to thefinancial crises of the late 1990s and to a growingrecognition that key emerging-market countrieswere not adequately included in the core of globaleconomic discussion and governance. Prior to theG-20 creation, similar groupings to promote dia-logue and analysis had been established at the ini-tiative of the G-7.

The G-22 met at Washington D.C. in April andOctober 1998. Its aim was to involve non-G-7countries in the resolution of global aspects of thefinancial crisis then affecting emerging-marketcountries.

Two subsequent meetings comprising a larger group of participants (G-33) held in March andApril 1999 discussed reforms of the global economyand the international financial system.

The proposals made by the G-22 and the G-33 toreduce the world economy's susceptibility to cri-ses showed the potential benefits of a regular in-ternational consultative forum embracing theemerging-market countries. Such a regular dia-logue with a constant set of partners was institu-tionalized by the creation of the G-20 in 1999.


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Membership

The G-20 is made up of the finance ministers

and central bank governors of 19 countries:

The European Union, who is represented by therotating Council presidency and the European Cen-

tral Bank, is the 20th member of the G-20. To en-sure global economic fora and institutions worktogether, the Managing Director of the Interna-tional Monetary Fund (IMF) and the President of the World Bank, plus the chairs of the Interna-tional Monetary and Financial Committee andDevelopment Committee of the IMF and WorldBank, also participate in G-20 meetings on an ex-officio basis.

The G-20 thus brings together important indus-

trial and emerging-market countries from all re-gions of the world. Together, member countriesrepresent around 90 per cent of global gross na-tional product, 80 per cent of world trade (includ-ing EU intra-trade) as well as two-thirds of theworld's population. The G-20's economic weightand broad membership gives it a high degree of legitimacy and influence over the management of the global economy and financial system.

Achievements

The G-20 has progressed a range of issues since1999, including agreement about policies for

growth, reducing abuse of the financial system,dealing with financial crises and combating ter-rorist financing. The G-20 also aims to foster theadoption of internationally recognized standardsthrough the example set by its members in areassuch as the transparency of fiscal policy and com-bating money laundering and the financing of ter-rorism. In 2004, G-20 countries committed to newhigher standards of transparency and exchange of information on tax matters. This aims to combatabuses of the financial system and illicit activities

including tax evasion. The G-20 has also aimed todevelop a common view among members on is-sues related to further development of the globaleconomic and financial system.

To tackle the financial and economic crisis thatspread across the globe in 2008, the G-20 mem-bers were called upon to further strengthen inter-national cooperation. Since then, the concerted anddecisive actions of the G-20 helped the world dealeffectively with the current financial and economiccrisis. The G-20 has already delivered a number of significant and concrete outcomes. For examples,it committed to implement the unprecedented andmost coordinated expansionary macroeconomicpolicies, including the fiscal expansion of US$5 tril-lion and the unconventional monetary policy in-struments; significantly enhance the financial regu-lations, notably by the establishment of the Finan-cial Stability Board(FSB); and substantiallystrengthen the International Financial

Institutions(IFIs), including the expansion of re-sources and the improvement of precautionarylending facilities of the IFIs.

Reflecting on these achievements and recognizingthat more needs to be done to ensure a strong, sus-tained and balanced global recovery, the G-20Leaders at Pittsburgh Summit designated the G-20 as the premier forum for international economiccooperation.

» Argentina

» Australia

» Brazil

» Canada

» China

» France

» Germany

» India

» Indonesia

» Italy

» Japan

» Mexico

» Russia

» Saudi Arabia

» South Africa

» Republic of Korea

» Turkey

» United Kingdom

» United States of America


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Chair

Unlike international institutions such as the Or-ganization for Economic Co-operation and Devel-

opment (OECD), IMF or World Bank, the G-20(like the G-7) has no permanent staff of its own.The G-20 chair rotates between members, and isselected from a different regional grouping of coun-tries each year. In 2010 the G-20 chair is the Re-public of Korea, and in 2011 it will be France. Thechair is part of a revolving three-member man-agement Troika of past, present and future chairs.The incumbent chair establishes a temporary sec-retariat for the duration of its term, which coordi-nates the group's work and organizes its meetings.

The role of the Troika is to ensure continuity inthe G-20's work and management across host years.

Meetings and ac tivities

It is normal practice for the G-20 finance minis-ters and central bank governors to meet once a year.The last meeting of ministers and governors washeld in St. Andrews, UK on 6-7 November 2009.The ministers' and governors' meeting is usually

preceded by two deputies' meetings and extensivetechnical work. This technical work takes the formof workshops, reports and case studies on specificsubjects, that aim to provide ministers and gover-nors with contemporary analysis and insights, tobetter inform their consideration of policy chal-lenges and options.

Interaction With Other International Organiations:

The G-20 cooperates closely with variousother major international organizations and fora,as the potential to develop common positions oncomplex issues among G-20 members can add po-litical momentum to decision-making in other bod-ies. The participation of the President of the WorldBank, the Managing Director of the IMF and thechairs of the International Monetary and Finan-cial Committee and the Development Committeein the G-20 meetings ensures that the G-20 pro-

cess is well integrated with the activities of theBretton Woods Institutions. The G-20 also workswith, and encourages, other international groupsand organizations, such as the Financial StabilityBoard and the Basel Committee on Banking Su-

pervision, in progressing international and domes-tic economic policy reforms. In addition, expertsfrom private-sector institutions and non-govern-ment organisations are invited to G-20 meetingson an ad hoc basis in order to exploit synergies inanalyzing selected topics and avoid overlap.

Externa l Com munication

The country currently chairing the G-20 posts de-tails of the group's meetings and work program ona dedicated website. Although participation in themeetings is reserved for members, the public isinformed about what was discussed and agreedimmediately after the meeting of ministers andgovernors has ended. After each meeting of min-isters and governors, the G-20 publishes acommuniqué which records the agreementsreached and measures outlined. Material on theforward work program is also made public.

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Magazine G20 Summit Www.upscportal