Developing world should not be hit by Greek solution: PM

The Indian government made it clear at the opening day of the G20 summit in Cannes that any bailout for the eurozone distressed economies should not hurt developing countries who could see their cost of capital increase through a levy of a tax on the financial sector.

In his address to the summit, prime minister Manmohan Singh said although India supported the role of International Monetary Fund in restoring stability in Europe, the liquidity requirements of developing countries should not be lost sight of as they ''are not at the centre of the crisis but may nevertheless be adversely affected as innocent bystanders''.

The EU and IMF had last week announced plans for provision of a €22-billion safety net to prevent a Greek sovereign default on its bonds next month.

Briefing journalists, Montek Singh Ahluwalia, deputy chairman, Planning Commission, and India's guide to G20, said the IMF had about $250 billion in resources that were free and the multilateral lending agency should ensure that when it lent to one country, it also had resources for other countries. 

That India's concerns did not exactly align with the top cream, dominated by crisis-ridden Europe, became clear when Singh said an integrated world, needed implementation of common standards simultaneously in all jurisdictions, to avoid a race to the bottom.

''Otherwise, financial activity will migrate from the tightly regulated sectors to less regulated jurisdictions. It is, however, important that the developmental needs of developing countries are kept in mind in these regulatory reforms.''