India on Saturday told the G-20 nations, particularly the rich members, that it is not responsible for creating global imbalances and volatility in the international markets.
“The position of India is, it did not (and does not) contribute either to the buildup, or to the persistence of global imbalances.
"Nor does it contribute to the volatility that we have been witnessing in several of the international markets, including commodity markets,” Finance Minister Pranab Mukherjee said.
The minister said this during his intervention at the BRICS meeting and the first session of the G-20 Finance Ministers meeting here.
According to latest estimates, the Indian economy will grow by 8.6 per cent in 2010-11 and that the Indian growth story remains robust.
Mukherjee said a large emerging economy like India is vulnerable to seasonal factors and their effect on the food prices.
“As a result of vagaries of weather, India has witnessed a high and unsustainable inflation on the food items…” Mukherjee said, adding the food inflation has also been accentuated by structural changes in the consumption pattern due to the growth of the economy.
"Such high food inflation has a tendency to feed into general inflation throwing challenges at our macroeconomic management.
"The high and persisting international prices of food commodities do not give us room for comfort in tackling food inflation in India”, Mukherjee said.
The issue of fixing a set of parameteres like current account deficit, to check global imbalances are being widely debated here.
Mukherjee said India has been fortunate that the current phase of growth has been more or less evenly balanced between consumption and investment on the one hand, and between domestic demand and external demand on the other.
However, the country has its own “share of concerns arising from elevated commodity and asset prices, and economic problems of a more structural nature that underlie the uncertainties in the global economy”.
Some of these uncertainties also derive from the aggressive macro-economic policy response to the global crisis itself, he said.
Federal Reserve chief Ben Bernanke had yesterday blamed emerging economies for fueling the global commodity prices.
Mukherjee said the global recovery is fragile and there are significant downside risks of tensions in the euro area periphery spreading to other regions.
Besides, there are risks due to high commodity prices, volatility in exchange rates and high employment.
"The global recovery remains fragile, uneven and is fraught with significant downside risks arising from the volatility in exchange rates, high commodity prices, persistently high unemployment and high inflation in some economies, and difficulties in formulating medium-term fiscal consolidation plans," he added.
The recent debt crisis in the Europe, especially in Ireland and Greece had even threatened to derail the fragile global economic recovery.
Mukherjee said a decision was taken at BRIC Finance Ministers and Central Bank Governors' meet in London in 2009 to commission a study by their finance ministries and central banks regarding where the world economy will be in the near future besides the role of the BRIC countries.
The BRIC forum consists of Brazil, Russia, India and China.
"To take this special relationship further forward, I propose to include South Africa in this study," the Indian finance minister added.