The travails of the global economy appear to be still not behind us, despite gradual recovery during 2010 from the worst global economic conditions since World War II. Continued fiscal and debt burdens vitiate the recovery process, imparting a degree of fragility and uncertainty to global economic conditions. The world needs a new source of growth and stability, and India, a rapidly growing economy with strong internal demand, offers a new opportunity.
India remained relatively untrammeled by the developments in the Eurozone and reverted to close to 9% GDP growth rates in 2010. Growth was broad-based across all sectors, including agriculture, manufacturing and services. Public commitment to calibrated exit from expansionary fiscal policy and continued corporate and household confidence have helped sustain a virtuous growth cycle. The resurgence of the rural economy and intensified infrastructure mission further strengthened the foundations for medium-term growth propensities.
Global trade will continue to be a major factor in stability and growth of the world economy. After falling drastically during the global economic crisis, trade has recovered. India’s engagement with the world in terms of exchange of goods and services has been buoyant. At the same time, global trade negotiations again seem to have hit a roadblock and the commitment to concluding the Doha Round in 2010 was further postponed. Given the proliferation of specific bilateral and regional trade agreements, which meet the expectations of the parties involved, as well as creeping protectionism, there is good reason to question the direction of a global trade agreement that may not ever be fructified.
Although trade must remain on the global agenda, a number of other global challenges need to be also addressed through international cooperation. Climate change is high on the priority list, but the global economic crisis focused attention on issues such as employment, financial stability, and urbanization. The one incontrovertible fact that the recessionary conditions have thrown up is that nationalism needs to be superseded by multilateralism in resolving challenges. Further, developed countries whose development models are at the heart of many issues must assume a more responsible role. Fortunately, the progress of technology offers new solutions to entrenched problems, and innovation must be harnessed for the greater global good.
Much of global stability derives from strategic and security considerations. As large emerging economies grow, resources such as food, energy, raw material, and water will be constrained. There is a need to calibrate access to resources in a manner that will not stunt aspirations of hundreds of millions of poor people for a life of dignity, while at the same time preserving such resources for future generations. Environmental degradation and greenhouse gas emissions as well as conservation issues are at the top of the security agenda.
The world is poised for a new level of cooperation and partnership. India as a large emerging economy will have a central role to play.