IndiaPost.com - PM calls for reform & regulation in financial system

India Post News Service

NEW YORK: The current turmoil in the world financial markets in the wake of the unprecedented turmoil in the US was strongly reflected in the Indian Prime Minister Manmohan Singh's address to the 63rd session of the UN General Assembly in New York last week. The development gains that many countries have made are today threatened by a possible food crisis, a global energy crisis and most recently, unprecedented upheavals in international financial markets, Singh said. "The net impact of these problems is that both the industrialized economies and the developing economies face inflation and a slow down in growth after several years of robust expansion," he said. "Industrialized countries can afford periods of slow growth.

Developing countries certainly cannot." There is, therefore, urgent need for coordinated action by the global community on several fronts, he reiterated. "The explosion of financial innovation unaccompanied by credible systemic regulation has made the financial system vulnerable," he continued. "The resulting crisis of confidence threatens global prosperity in the increasingly interdependent world in which we live. There is, therefore, a need for a new international initiative to bring structural reform in the world's financial system with more effective regulation and stronger systems of multilateral consultations and surveillance.

That must be designed in as inclusive a manner as possible." Besides world financial upheavals, the Prime Minister's address focused on reform of the United Nations; world food crisis; transfer of financial resources from developed to developing countries; climate change; international terrorism; and the opening of international civil nuclear cooperation with India. The Prime Minister reiterated India's proposal for a Nuclear Weapons Convention prohibiting the development, production, stockpiling and use of nuclear weapons and providing for their complete elimination within a specified time frame.

On terrorism, he said, "It is vital that we strengthen international cooperation to combat terrorism and to bring the perpetrators, organizers, financers and sponsors of terrorism to justice. We should conclude expeditiously the Comprehensive Convention on International Terrorism." In this context, the situation in Afghanistan, he said, was a matter of deep concern. Welcoming the return of democracy in Pakistan, he said, "We are committed to resolving all outstanding issues between India and Pakistan, including the issue of Jammu & Kashmir, through peaceful dialogue."

He also said India sought to expand areas of cooperation with the democratically elected governments in Nepal and Bhutan in India's neighborhood. On the failure of the UN members to stick to the Millennium Development Goals, Singh said the commitments made by the international community to transfer financial resources to developing world have remained "largely unfulfilled." "Poverty alleviation and livelihood security are closely linked to energy security. We need a much greater measure of predictability and stability in the oil and gas markets," he said. "We need systems like early warning mechanisms to help countries to cope with oil shocks."

The world food crisis, Singh said, was the cumulative consequence of the neglect of agriculture in the developing world, exacerbated by distortionary agricultural subsidies in the developed world, while the diversion of cultivable land for producing bio-fuels is compounding the problem. "The world needs a Second Green Revolution to address the problem of food security," Singh said. "We need new technologies, new institutional responses and above all a global compact to ensure food and livelihood security.

This will require transfer of technology and innovation from developed to developing countries. India is keen to expand cooperation with Africa in Africa's quest for food and livelihood security for its people." On the issue of climate change, Singh informed the UNGA that India has unveiled an ambitious National Action Plan on Climate Change.

"Even as we pursue economic growth, we are committed to our per-capita emissions of greenhouse gases not exceeding those of the developed countries." In conclusion, Prime Minister Singh said the UN was a living symbol of pluralism and a vehicle through which the members' combined will and efforts to address global challenges must be articulated and implemented. "Unless we rise to the task, we would bequeath to succeeding generations a world of diminishing prospects."