India called for a thorough overhaul of the global system of financial oversight and regulatory mechanisms to save the developing world from an economic crisis not of their making.
Addressing the World Bank-International Monetary Fund (IMF) Development Committee, Finance Minister P. Chidambaram also asked the global community to consider immediate steps to reverse the unconscionable increases in food prices.
These increases threaten to negate the benefits to the poor nations from aid, trade and debt relief, he said as the two day IMF-Bank Spring Meetings came to a close.
Noting that "the origin of the present turmoil lay in the sub-prime mortgage crisis in the US", Chidambaram said: "As in the case of global warming, developing countries are threatened by a crisis, not of their making and one for which they have not been responsible in any way.
"While the effects of the turbulence are still reverberating across the entangled financial systems of the world, they have clearly impacted markets in several developing countries as well."
With developing countries too showing early signs of a slowdown after higher than expected growth rates in 2007, "we now need a thorough review and overhaul of financial oversight and regulatory mechanisms through the entire global system," he said.
The dramatic rise in the price of crude oil and food is adding to the woes of the developing world, Chidambaram said asking the producer nations to seriously contemplate the management of production and pricing policy.
Noting that the unprecedented increase in food prices has come on the back of high energy and fertilizer prices and an increased use of food crops for bio-fuels, he asked the developed countries to cut off subsidies on food crops for bio-fuel production.
"In a world where there is hunger and poverty, there is no policy justification for diverting food crops towards bio-fuels," he said. "Converting food into fuel is neither good policy for the poor nor for the environment."
Chidambaram welcomed the shift in focus in the proposed "New Deal for Global Food Policy" from traditional food aid to a broader concept of food and nutritional assistance and on medium- to long-term efforts to boost agricultural productivity in developing countries.
Donor countries must also increase funding to the World Food Programme (WFP) and the United Nations' Central Emergency Relief Fund (CERF), he said asking for immediate support to poor countries in their efforts to alleviate hunger.
"It is becoming starker by the day that unless we act fast for a global consensus on the price spiral, the social unrest induced by food prices in several countries will conflagrate into a global contagion leaving no country - developed or otherwise - unscathed," Chidambaram said.
On the Doha Round of world trade talks, he said the sensibilities of the developing countries should be key in the run-up to its conclusion.
Agriculture must continue to remain the focal point of the negotiations since the livelihood concerns of more than a billion resource-poor farmers depend on it. But the fact that the manufacturing and service sectors would contribute to the bulk of the GDP growth in the post-liberalised economic order pointed to the need for a balanced final Doha outcome, he said.
On voice and representation in the global financial institutions, Chidambaram said it needs to be addressed in terms of three principles of enhancing mutual accountability, enhancing Bank legitimacy and credibility and enhancing Bank competitiveness.
Seeking a review of the fundamental formula for International Bank for Reconstruction and Development (IBRD) shares, he hoped that by the Annual Meetings in 2008, the Bank will come up with a firm, concrete and credible proposal.
Turning to issues of climate change, Chidambaram said, while it's an over-arching global phenomenon, which impacts every one, it does not change the primary developmental objective of the Bank - 'A World Free of Poverty'.
"No model for addressing climate change would be acceptable, in which some countries continue to maintain high carbon emissions while the development options available for other countries get constrained," he said.
The global compact for addressing climate change has to be based on the well- established principle of common but differentiated responsibility articulated in the UN Framework Convention on Climate Change, Chidambaram said.
Expressing concern at lack of progress on the Millennium Development Goals (MDGs), a set of eight globally agreed goal with a target date of 2015, related to maternal and child mortality is disturbing, Chidambaram said: "Good governance and an effective delivery mechanism could ensure an improved performance across MDGs."