India could take up QE tapering issue at G20

India is likely to take up the issue of quantitative easing (QE) by the US at the G20 Leaders' Summit in St Petersburg, Russia next week. Emerging economies, which have seen a flight of capital in the recent weeks on talks of stimulus withdrawal in the US, might together raise the issue at the summit.

Officials said issues such as economic crisis in the emerging markets, currency depreciation stimulus in the Euro zone, and quota reforms at multilateral institutions might also be discussed.

The summit, to be held in St Petersburg on September 5-6, is likely to discuss ways for economic stabilisation and global recovery, inclusive growth, job growth, trade, and international financial architecture, among others.

Prime Minister Manmohan Singh, who assured the nation on Friday on the net gains of globalisation, despite short-term shocks such as rupee depreciation, is likely to raise the issue of capital outflow from emerging market economies due to developments in the US.

The Indian currency has taken a beating since the US announced its plans to consider reducing its bond buying. The Western economies, however, may argue that many of the problems of emerging markets are because of domestic problems.

"Emerging markets need coordinated approach to reduce volatility in exchange rate. Emerging markets should know that they need to work in a coordinated manner," said Dipak Dasgupta, principal economic advisor in the finance ministry, referring to speculation in currency markets abroad.

Ahead of the summit, China, which had a lesser impact on its currency compared to other emerging countries, has asked the US to consider the spill-over effect of its monetary policy, especially the "opportunity and rhythm of its exit from the ultra-loose monetary policy".

BRICS (Brazil, Russia, India, China, and South Africa) may reach consensus on creating a $100-billion currency reserve fund to meet short-term financing needs of these nations.

Although the current situation in Syria is not on the formal agenda, the G20 leaders might not be able to escape the question of what should be done on the country. While the US, France, and Germany are backing action against Syria for alleged use of chemical weapons on civilians, Russia and China, which have veto power in the UN Security Council, are not in favour of it. The situation has led to a rise in crude oil prices.

G20 Finance Ministers' Deputies Meeting and Sherpas' Meeting will be held on September 2-4. The main discussion will focus on preparation of the final version of the joint statement that is planned to be endorsed at the summit.

ISSUES ON TABLE

* The G-20 summit is to be held in St Petersburg on September 5-6

* Primary issues to be discussed are economic stabilisation and global recovery, inclusive growth, job growth, trade, and international financial architecture, among others.

* Issue of quantitative easing tapering to be raised by all emerging economies which have seen a flight of capital in the recent weeks on talks of stimulus withdrawal in the US

* Other issues to be discussed include economic crisis in the emerging markets, currency depreciation stimulus in the Euro zone, and quota reforms at multilateral institutions