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Our Bureau

New Delhi, Sept. 7 No return to protectionism and a commitment to medium-term fiscal stability should form the two major components of any ‘exit strategy’ framework that may be discussed at the forthcoming summit of G-20 leaders at Pittsburgh, according to Mr Wayne Swan, Treasurer (Finance Minister) of Australia.

Speaking to Business Line here on Monday, Mr Swan noted that the G-20 Finance Ministers and central bankers had, in their preparatory London meeting at the weekend, concluded that it was premature for countries to withdraw their fiscal and monetary stimulus packages put in place to combat the global economic slowdown.

“This is not the time to implement any exit strategy, given that the growth prospects for the world are now sluggish at best. But we could nevertheless prepare a framework for a coordinated exit strategy once recovery is secured and there is sustained return of private demand,” he stated.

The key to such a framework is a pledge by all countries not to go back to protectionism. “Here, I must acknowledge India’s taking the lead and hosting a meeting of global trade ministers last week to revive the Doha Round talks that had collapsed in July last year,” Mr Swan noted, while also welcoming the progress achieved in establishing a free trade agreement (FTA) between the two countries.

A joint feasibility study on an India-Australia FTA, initiated early last year, is expected to be completed in about a week’s time. India is currently Australia’s fifth last export destination, with trade concentrated in commodities such as coal and gold, and services such as education. Only last month, Petronet LNG Ltd signed a 20-year agreement with Exxon Mobil Australia for securing 1.5 million tonnes of liquefied natural gas annually from the Gorgon fields in West Australia.

During the fiscal ended June 30, 2009, India’s share in Australia’s exports was 5.9 per cent, behind China’s 13.3 per cent (China is Australia’s second biggest trade partner after Japan).

“The importance of China and India will only grow, given that the world can no longer rely on the American consumer to drive global demand. By 2014, developing Asia on its own is projected to contribute to half of world GDP growth. India alone will contribute around 10 per cent of global growth in each year to 2014,” he added.

Mr Swan said that his country “strongly believed” that India should become a permanent member of the United Nations’ Security Council. At the same, he ruled out any supply of uranium to India, in view of the latter not being a signatory to the Non-Proliferation Treaty (NPT).

“It is our long-held, principled belief not to supply to any non-NPT country”, he held.

The Australian Treasurer also emphasised the need for all countries to return to a path of fiscal rectitude over the medium-term.

Australia, he pointed out, had implemented major economic stimulus measures, which enabled it to be the only advanced economy to have recorded positive growth over the past year.

Without the stimulus, the economy would have contracted by 1.3 per cent.

But despite all these measures, Australia’s debt-GDP ratio is expected to peak at just 13.8 per cent in 2013-14 (before falling subsequently), whereas these would rise to 75 per cent in the Euro area, 83 per cent each in the US and UK, and 136 per cent in Japan.

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