With its domestic expenses overshooting previous estimates, the Manmohan Singh government will play a limited role in the international efforts to revive the debt-ridden European countries.
The finance ministers and central bank governors of the G20 nations will meet in Mexico City on February 25 to get funds to tackle the Euro-crisis.
Finance minister Pranab Mukherjee, who will be leading the Indian delegation in Mexico, had recently said that he is “losing sleep” over rising fiscal deficit as the subsidy bill is likely to exceed the 2011-112 budget estimates by over Rs 1 lakh crore.
Adding to this, New Delhi will also point out that the volatile situation in West Asia is likely to destabilise international oil prices. “India, a large importer of crude, needs to save resources to tackle this adverse effect. We are also gearing up for the food security bill,” said a top official. The government has already missed the 4.6% fiscal deficit target it had set for 2011-12.
Now, this could rise to 5.6%.
New Delhi will also object to any effort for mandatory commitment to augment the International Monetary Fund (IMF) fund by $600 billion. “Our stand is countries should be asked to give money according to their strength,” said the official.
While India plans to take this calculated risk of not taking a huge financial burden, it is confident that China would not be able to take advantage of this situation. New Delhi thinks that the Chinese government is already over-exposed to large scale valuation losses by investing in dollar assets. A section of the finance ministry also feels that the Chinese leadership may not have the appetite to buy more risky assets.