WEF meet begins, co chairs debate on crisis

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Updated: 28/01/2009 | 10:14 PM IST

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WEF meet begins, co-chairs debate on crisis

Press Trust of India

Wednesday, January 28, 2009 (Davos)

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The five-day annual meeting of the World Economic Forum got off on Wednesday with one of the co-chairs warning that resolution of current global financial meltdown will take long if drastic actions are not taken.

Anand Mahindra, co-chair from India, said the unsavoury Satyam episode was evidence of materialism and greed complementing the last few years of growth and this kind of evidence can be seen everywhere and not just in India.

Highlighting the need to continue with reforms, the co-chairs said capitalism should be transformed towards values but not towards "isolationist era".

"The (global economic) crisis is getting worse. Values of real economy are still going down. It is going to take great drastic action to turn around, if it (the global situation) can be turned around.

"I believe it will take quite a long time. We must be realistic about where we are," News Corporation Chairman and one of the co-chairs Rupert Murdoch said in the inaugural press conference here.

Looking at Satyam debacle as an opportunity, Mahindra, the Vice-Chairman and MD of Indian corporate house Mahindra & Mahindra, said, the (Satyam) episode has a silver-lining that it gives all of us an opportunity to realign our role models, realign our priorities and to reroot capitalism.

"We in India are convinced that the Satyam episode was evidence of materialism and greed that complements the last few years of growth. And that kind of evidence is manifested not just in India but everywhere," Mahindra said, adding, "I believe capitalism has some flaws... It needs to be rooted in values, and that is avowed goal of this forum," he said.

HSBC Group Chairman Stephen Green said the clock cannot be turned back to more isolationist views of the world. "We have to continue the process of reforms," he said.

The world community has to realise that the global economy needs re-balancing, Green said. The rich economies spent too much, saved too little, and emerging economies now need to spend more and save less, he added.

"So that kind of re-balancing needs to take place," Green said.

Maria Ramos, co-chair from South Africa, said it is interesting to see Keynesian economics back after being out of fashion for 20 years. "It is interesting to see that we are now Keynesian's."

Mahindra hoped that multi-stakeholder solutions will emerge to deal with the crisis. "You have to know and have a consensus where you are heading. The endgame has to be a new world, so you have to collectively define it and then only you start growing together."

There has been a lot of a speculation over the last few months about whether India and China could decouple and toe the boat of world to safe harbour, he said.

"The answer unfortunately is no. I think it is correct that nobody of any significance is decoupled," Mahindra said.

However, India is in a better position to provide a little bit of momentum to the world than otherwise expected, he said.

"Lot of it is to do with certain omissions of our past. We never moved quickly on our banking reforms and were criticised for that. But that is precisely why our banking sector is well insulated. Today, our banks have the highest capital adequacy ratios," he said.

He said India was always behind in export game, which means it is not suffering any severe whiplash from markets melting down.

The real strength that India has is its agriculture that is truly decoupled from the rest of the world, Mahindra said.