Inflation cited as big concerns at Davos Summit
Davos: Rising prices are a cause for concern not only in India, but globally, with CEOs and economists gathered here for the annual World Economic Forum meet warning that spiralling inflation and unemployment could hurt global economic growth.
Though Russian President Dmitry Medvedev will formally open the five-day annual meeting later this evening, the business sessions began early today.
"The recent rise in inflation (in several countries) reduces the disposable income and creates social and political problems," said Nouriel Roubini, a Professor of Economics and International Business at New York University.
Participating in the opening session, Wipro Chairman Azim Premji shared Roubini`s concern and said, "Inflation is really our key priority and (I) hope that we don`t get a knee-jerk reaction."
With food inflation at 15.52 per cent during the week ended January 8 and the overall price rise pegged at 8.43 per cent in December, 2010, the Reserve Bank of India (RBI) has been tightening key short-term interest rates, sending shivers through the industry.
Inflation, in a way, is not restricted to India, as several other countries, including China, are grappling with the problem. The issue captured the attention of the global policymakers and CEOs who have gathered here at the Swiss skiing resort in the Alps.
India, the second-fastest expanding economy in the world after China, is fielding its biggest-ever delegation at the event, including 125 CEOs and senior ministers like Home Minister P Chidambaram, Commerce and Industry Minister Anand Sharma, Urban Development Minister Kamal Nath and Heavy Industries Minister Praful Patel.
In addition, India Inc stalwarts like Azim Premji of Wipro, Mukesh Ambani of Reliance Industries, Sunil Bharti Mittal of Bharti Enterprises and Kiran Mazumdar Shaw of Biocon are involved in the discussions on the "new economic reality", the future of employment and making growth over-arching.
The Geneva-based WEF is playing host to 1,400 delegates from the top 1,000 companies around the world, 30 heads of state or governments, renowned academicians, artists and faith leaders, including the head of the Chinmaya Mission in New Delhi, Swami Nikhilananda Saraswati.
The masters of the corporate world, government, intellectual and spiritual worlds are meeting in Davos in the backdrop of a global economic environment that is yet to fully recover from severe setbacks suffered in 2008 and 2009.
While developing countries seem to have put the crisis behind them, with the recovery largely driven by domestic demand, the state of the Western economies is considered quite fragile.
The common refrain at the summit here was that besides inflation, rising public and even private debt in some European countries like Greece and Spain pose risks to the global economy, which managed to overcome fears of double-dip recession in 2010.
With high unemployment — close to 10 per cent in the US, for instance — the clich? of `Inclusive Growth` has caught on in frontline economies as well. Creating jobs along with maintaining growth is the main challenge of 2011.
The Davos discourse is sure to highlight the role of Asian powerhouses like China and India in achieving this common task. China`s economy is growing at over 10 per cent, while India is experiencing the second-fastest expansion rate of around 8.8-9 per cent.
Though the World Bank has forecast that the world economy will grow by 3.3 per cent, challenges like rising food inflation have surfaced, particularly in countries like India.
More and more countries are resorting to export controls on food articles, which can make things worse.
The common message sought to be conveyed at the WEF Summit will be "sharing". The WEF, which has been organising the annual event in freezing temperatures at this `village` for the last 40 years, has chosen an apt theme this year.
Seeking to capture the global mood, the WEF has given the summit a theme of "Shared Norms for the New Reality".
"The theme is founded on four interconnected pillars — responding to the new reality, the economic outlook and policies for inclusive growth, supporting the G-20 agenda and building a global risk response mechanism," it said.
When it comes to India, given the lid being blown off several scandals and scams back home in the past few months, the Indian team will have to face certain unsavory questions on corruption and the "governance deficit".
"We cannot hide, we will answer all these questions honestly," CII Chief Hari Bharatiya said. Since corruption is a worldwide menace, the WEF has scheduled a full-fledged session on the subject.