As the uncertainty over the Eurozone debt crisis looms large, the G-20 finance ministers will hold a crucial two-day meeting in Busan from Friday on ways to tackle high debts in advanced economies so that the contagion can be prevented from engulfing rest of the world.
The Indian delegation headed by finance minister Pranab Mukherjee arrived in the South Korean city of Busan on Thursday to take part in the ministerial.
Besides the G-20 meeting, Mukherjee will also hold meeting with his BRIC counterparts.
"Major issues likely to dominate the G-20 finance ministers' meet include the current global economic situation, problem of rising fiscal deficits and high debt/GDP ratios in advanced economies and an action plan to tackle them," an official statement said here today.
The G-20 meeting, considered a better representative body than the rich nations' bloc of G-7, assumes importance since the Eurozone is
struggling to come out of debt crisis that has already engulfed Greece, while Spain, Portugal and Ireland are on the verge of going belly up.
The crisis has accentuated the problems in the global economy, already crawling back to recovery after the global financial meltdown erupted late 2008 with the fall of the Wall Street bankers and other financial institutions.
Besides the Eurozone crisis, a review will be done of the actions taken so far for building a framework for a strong, sustainable and balanced growth to correct the various global imbalances as decided at the earlier Pittsburgh summit.
"This mainly includes the need for fiscal contraction, promoting sound fiscal and monetary policy frameworks, building a sound financial sector and adoption of collective policy options as a common strand across all group of countries for moving towards a more balanced economy," the statement said.
So far as India is concerned, it has already started partially withdrawing fiscal stimulus, given since the late 2008 to spur the slowing economy.
The meet will be a stock-taking exercise on the progress of regulatory reforms in the financial sector which mainly include international rules on capital, leverage and liquidity, compensation reforms, OTC derivatives and high standard accounting standards and non-cooperative jurisdictions. There will also be stress for completing the regulatory reforms as per the committed timelines, the statement added.
Other issues to come up before the meeting include strengthening of financial safety nets to cope with financial volatility, reducing the economic disruption from sudden swings in capital flows and perceived need for excessive reserve accumulation.
Reserve Bank Governor D Subbarao, part of Indian delegation, will attend G-20 central bank governors' meeting. The central bank has also started reversing its easy money policy, as the economy recovers, but inflation remains high.