India wants EU to make carrot & stick package - Hindustan Times
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India wants EU to make carrot & stick package

Hindustan Times | By, New York
Sep 21, 2011 09:32 PM IST

New Delhi will ask stronger European economies like Germany or France to collectively introduce a financial package to wriggle the euro zone out of its current crisis. At the same time, it will also like to see commitments from the trouble-makers like Greece and Portugal to adhere to strict financial discipline and introduce reforms. Saubhadra Chatterji reports.

New Delhi will ask stronger European economies like Germany or France to collectively introduce a financial package to wriggle the euro zone out of its current crisis. At the same time, it will also like to see commitments from the trouble-makers like Greece and Portugal to adhere to strict financial discipline and introduce reforms.

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Finance minister Pranab Mukherjee told Hindustan Times in New York, "There should be a collective approach to solve this problem. The wealthier states must come out with a solution. A financial package is required and we would like to see that happening."

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New Delhi is also advocating that the stronger economies will unleash stimulus measures to boost growth in the region. "Our approach will be short term fiscal stimulus followed by a long-term fiscal consolidation process," said a top finance ministry official.

The Manmohan Singh government, which is keenly following the developments and response of the European Union, however, feels that a concrete solution may not come easily during this annual fund bank meeting in Washington during which the G20 and G24 countries are also slated to meet.

Mukherjee is also slated to meet his Greek counterpart in a bilateral meeting on Thursday.

In the internal assessment of the UPA government, internal dissentions have emerged within the European Central Bank with Germany — its largest member — strongly opposed to purchases of sovereign bonds of the defaulting nations like Greece or Portugal.

As Germany faces elections next year, New Delhi also feels "it is strongly opposed to such a course of action as it involves cross border fiscal transfers, which would not go down well with the German electorate," the internal assessment report said.

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