3rd EU-India Macroeconomic Dialogue - New Delhi, India, 30 - 31 October 2009
Participants discussed economic challenges following the crisis.
India and the EU - economic challenges following the crisis
The dialogue allowed for a useful exchange of views on the economic outlook and challenges for India and the EU. DG ECFIN and the Indian Ministry of Finance discussed EU and India macroeconomic situation, fiscal and monetary policies, capital flows to emerging market economies, and jobs lost in the crisis.
An in-depth discussion took place on common challenges the two economies are facing, including
• how to face fiscal consolidation,
• how to revitalise the labour market, severely affected by the crisis.
Finance Secretary Chawla was confident that the Indian economy had overcome the worst of the crisis. Although India was hit via trade, equity and capital flows, policy response has been vigorous. The timing of exit strategies will most likely differ in the EU and India, since the central bank of India has already started to rein in some of its stimulus measures.
Similar to the EU, India faces huge challenges for its labour market and fiscal sustainability. Also macro-economic challenges for India and EU are similar and will lead to further bilateral exchange of views, mutual understanding, and devising common strategies notably in the G20 framework.
During bilateral meetings with think tanks and market participants, it became obvious that additional downside risks and major bottlenecks remain. Monetary policy challenges and exchange-rate management facing capital inflows were seen as a major issue, potentially requiring exchange rate coordination at regional or global level.
The lack of financial intermediation to channel savings, the extent of poverty and the lack of infrastructure were seen as potentially hindering medium-term growth prospects.
India and the EU - next steps
Both sides recognized the EU-India macroeconomic dialogue helps enhance mutual understanding. It has established itself as a useful platform for cooperation on macroeconomic issues and to underpin exchanges in international fora.
Mr Buti, Director General, invited the Indian counterparts to hold the 4th EU-India macroeconomic dialogue next year in Brussels. In between, both sides will continue to informally exchange views and information at international meetings, such as ASEM and the G20.
The Indian side, which included officials from the Ministry of Finance and the Reserve Bank of India, was led by the Finance Secretary, Ashok Chawla. Director General for Economic and Financial Affairs, Mr Marco Buti, led the EU side. ECB Board Member Tumpel-Gugerell represented the ECB.