 Okay, welcome, ladies and gentlemen. We'll start this next session. My name is Bill Powell. I'm the Asia Editor and China Bureau Chief for Fortune Magazine as well as a senior writer at Time Magazine. Let me introduce our panelists. As you saw from the previous session, you know well a familiar figure, the Minister of Commerce, Industry and Textiles here in India, Minister Anand Sharma. The voice is a bit low. Sorry, I've got to speak closer to the microphone here. To Minister Sharma's immediate left is Mary Michael Nagu. She is the Minister for State Investment and Empowerment from Tanzania. To her left is Balasubramanian Muturaman. He is the Vice Chairman of Tata Steel, and he is perhaps more importantly at this session, of course the President of the Confederation of Indian Industries, the co-sponsor of this conference and thus our host here in Mumbai this week. At the far end we have the Minister of Agriculture from Mozambique, Mr. Jose Pacheco. To his immediate right is Avril Gupta. Avril holds the Michael Dingman Chair of Global Strategy and Entrepreneurship at the University of Maryland, and he is a widely published both author and columnist. And to my immediate left is Anup Singh. Anup is the Managing Director for Asia-Pacific at the IMF from Washington. The IMF I imagine is a pretty busy place these days. The theme of our panel this afternoon is South-South Trade. It is the extent to which the developing world, and in particular India and its trading partners in Africa, are able to decouple, as the common expression has it, from the rest of the world, keep increasing trade and capital flows, even in the teeth of extraordinary global economic headwinds. We all know about the situation in Europe. We all know about the situation in the United States, which perhaps in slightly better shape than Europe at this point is also struggling to generate meaningful growth. Yet it's a critical fact to remember, and I think it sets the template for this discussion, that the so-called BRIC countries, Brazil, Russia, India, and China this year will add roughly $2 trillion in nominal GDP to the global economy. $2 trillion is the equivalent of one Italy. So at a moment when the Italian economy is teetering, and journalists like me all over the world are focused intensely on the crisis in Europe, in the BRIC countries, growth continues and indeed is adding the functional equivalent of the third largest economy in Europe this year. Minister Singh, excuse me, Minister Sharma, my question is to you. And it's simple. Can this continue? Will it continue? It will. It's because of the priorities that our countries have identified, recognizing also the potential, both of the industry as well as our people, and the imperative for our countries to maintain high growth rates, not for years, but for decades, to ensure that the benefits of economic growth get redistributed. And all sections of society benefit from it. We cannot create that possibility without ensuring that the economic growth is faster. And if you do not have the resources, the redistribution cannot take place. It becomes a zero sum game that if you grow and do not give it back to the people, to the society. Now, when we look at the world in the backdrop that you have described, yes, there are concerns. We cannot say that we are insulated. I said in the previous session from what is happening in America, what's happening in Europe. But that should not lead to a panic reaction also. We have shown resilience in the past. Our economy is rebounded quickly in 2008, 2009 crisis. That is continuing. In fact, the recession as such is still very much there. Now, when we also look at the larger picture globally, there is a shift that is taking place. The economic activity and the economic output more and more is coming from the developing countries and the emerging economies. The big countries which you refer to, which we belong, account for 48% of the global GDP. And the developing countries as such, it's 90%, 85% of the world's population, lives in our countries. There is, besides the opportunities and the potential, there's also richness of resources in some of our countries, human resources which are integral to any country's growth, any institution's forward movement. Now, in the global context, you see that the changes that are taking place, Asia, Africa, Latin America has shown dynamism. And in two years from now, what is projected that the economies of Asia, Europe, and the Americas will be equal sized. So we're talking of two years. The rest, of course, is how the growth momentum is sustained. That will keep on changing the picture when it comes to the share in the global GDP. To refer to what it is today, I have no doubt in my mind that it will grow many fold in the coming years. Mr. Mutaraman, from the private sector's standpoint, what are the growth opportunities, particularly the theme of the panel, South-South Trade? What are the growth opportunities that you see as the vice chairman of TATA in the southern countries? We tend to focus on the BRICS, Brazil, Russia, India, China. But there are an increasing number of success stories in Africa these days. Vibrant growth in many countries across the African continent, are you seizing those opportunities? There are, I think, two good reasons why the trade between emerging economies will grow even faster in the future than what it has grown in the past. There are two good reasons for it. The reason number one is, if you look at the Western world, what has happened over time is, apart from the current financial crisis due to the high debt burden on many countries, which is also, of course, the result of consumption-based economy, what has happened in Western countries is they have been gradually becoming uncompetitive for many products. Of course, commodities, they are already uncompetitive. For even the medium and low technology products, they are uncompetitive. So except for some very high-tech items, a large part of the Western economy is uncompetitive. And we must remember that, irrespective of what laws you have, what administrative mechanisms you have, the fundamental competitiveness of a nation is what is going to determine how trade is going to flow and between who and who. So the reason number one is the lack of competitiveness in the Western countries. The second reason why I think the trade between emerging economies will grow even faster is because you'll find that as the Western economies over time have become increasingly uncompetitive, what is happening in the developing world is that the developing world for a long time have been just, shall we say, manufacturers using low labor cost arbitrage. So from being centers of manufacturing and centers of services purely based on labor arbitrage, over the last 10, 15 years, they have actually become centers of consumption also. They have become very powerful centers of consumption. And their large populated economy is quite a number of them, including India and China. And while the costs in these countries are also going up, they are still very heavily competitive. So in terms of whether it is capable, and they are building capabilities over time. So you have a mix of two things happening. You have on the one hand, the Western economies, uncompetitiveness is going to force them. If you see the actual numbers, I don't know the numbers exactly, but I'll give you some rough numbers. The trade between India and emerging economies, if you look at the exports, only 10 years ago, in the year 2000, it was, I think, some 30 odd percent. Today it is in excess of 50% of the total exports of India. And if you look at imports, 10 years ago, it was about 47%, 48%, less than 50%. And today it is marginally higher than 60% in the total imports of India. At the same time, if you look at the same similar figures for the EU and the North America, actually there is a decline of about between 5% and 10% over the last 10 years. And I do believe that this is going to go on, because there is a need for the emerging economies, they are upgrading their skills, they are upgrading their technology, they are making manufactured products, they are becoming better in services, and they continue to be competitive in many of the products. And if you are to ask me whether it will make up for the loss of growth that may the Western world will experience, I am not so sure whether it can make up in the short time. Perhaps for another 10, 12 years, it is perhaps not going to make up. And beyond that, I think it will make up. Minister Nagu, I turn to you and ask simply, those are fascinating numbers that we just heard. Those statistics are even more impressive than I had realized. How do they evidence themselves in Tanzania? Do you see the evidence of the economic shift that Mr. Muturama was talking about in Tanzania, both in terms of exports, both real and potential to India, as well as imports from India? I will talk of Africa and then come to Tanzania. If we look at the statistics, one will tend to see that the share of Africa's trade in the global trading is very small, hardly 3%. And that of Tanzania is hardly 0.03%. So, you will see that Africa is lagging behind. And it is lagging behind not because it is not trading. Africa is trading, but mainly in commodities, in their raw form. And countries do compete on productivity. And the productivity of Africa is low because of the low technology use and because of very little value addition and products are exported raw. And on the other hand, we import goods of very high value. And you will find that kind of imbalance. And that imbalance is not only good to Africa, it's not also good to the global trading and therefore the economy of the globe. So Africa has to pull up its socks. We have to see to it that we add more value to our products before they are exported so that at least we reduce that imbalance. And the globe, I think, has a role to assist Africa to achieve that. And what Africa is doing now is to increase trade, regional trading, and also to increase trade between Africa and the emerging economies. A country like India, for example, for its proximity to Tanzania and to Africa, you will find the cultures are also not very different and therefore trading is partnership. And partnership is easy and very convenient for cultures that are not very different. So we look upon the emerging economies to enhance their trade with Africa, but not to continue with commodity trading. But instead of commodity trading, we should really put more emphasis. Africa has comparative advantage on agriculture and we are faced by food crisis in the globe and therefore everybody has to look to Africa. But then we also have to see to it is more than farming, Africa has to undertake agro-processing, agribusiness as a way of adding value so that at least that imbalance that exists between Africa and the rest of the world, and I do believe the emerging economies have a role to support Africa because at the end, both will benefit from the trading. Minister, I want to come back to you about specifically the ways in which the developed world and the rapidly growing developing countries like India can specifically help Africa, but on the point of agriculture, it's a natural segue to Minister Pacheco. From your standpoint, how rapidly are the opportunities to trade with India, with China, with rapidly developing Southeast Asia? Do you see it on the ground? What are the opportunities and also what are the challenges these days? Thank you, Mr. Moderator. Let's look to the south-west cooperation, the area where there is no problems. We are on the area, on the region where we have challenges. Number one, we do have a comparative advantage on the natural resource, generally speaking. If you look to the world crisis today on food shortage, on the water shortage, in southern hemisphere, we do have a comparative advantage. What we need is to use, in a sustainable way, to move from the aid cooperation to business cooperation, to economic cooperation. If you look at the locations of India to Africa, we share the same ocean. Maybe there was a big earthquake millions and millions ago that split the two, but in fact the trade between Africa and India is already there for many years. Number two, we are learning to be competitive around the world. Let's use the competitiveness skills we are having as another comparative advantage so we can consolidate, we can improve the business. The third issue, the south-west cooperation, we have to strengthen the building of the team as one to come together to share our views, to share our resources in a win-win situation so we can overcome our problems, the challenge, and we can compete in the international market as one and to use our comparative advantage. Professor Gupta, how should multinational companies in India look at developing Africa? Strategically, how important can emerging Africa be to multinationals in India? Part of a slightly broader issue, so I just look at the broader issue and then come to the role of multinationals, which is that in terms of south-south trade, that story is very clear to add to Mr. Muthuraman's data that south-south trade or emerging-to-emerging trade in 2000 was about 14% of world trade and today or last year was about 25% of world trade. I'm pretty confident that in another 15 years, actually that will be more than half of world trade. I think the numbers are there and the trend line is there but I think structurally if you look at the nature of the south-south trade, it differs quite significantly from the nature of, say, developed-to-developed country trade, which is that the south-south trade is largely either raw materials or finished goods, whereas developed-to-developed trade is much more in intermediates. So you have much more integrated supply chains, integrated value chains and that's where the role of the multinationals and so I think that what needs to happen in my view in terms of south-south trade is that not just looking at trade but also actually looking at investment, because the linkages between India and Africa are not just trade linkages, they're also linkages in terms of investment and the investment linkages right now are much weaker than trade linkages and that's where the role of the multinationals particularly and Indian multinationals which are phenomenally capable at running distributed global enterprises including in Africa I think is going to be huge. Anup Singh from the IMF's perspective, you said that earlier as we were talking before the panel that you think there are lessons to be learned in India from the China experience and particularly the demographic transitions that the two countries are now undertaking, why don't you address that? Okay Bill, thanks very much. I think this is an important point, the previous speakers have spoken about the importance of trade for growth and I think this is particularly important now for India and for virtually all the other countries in south-south. India is going through a demographic transition. It is incredible. It has started years ago but if you look ahead to the next 30 years not just India but in other countries in south-south too but in India one quarter of the increased globally of working population will be in India. One quarter. And this is a demographic transition that China has gone through. China is tapering off, India is consolidating. So we're going to have people at the working age we're going to have 300 million more people in the working population in India in the next 30 years. So the reason I bring this up is it's good for economists to say from a factor point of view we'll have more labour. We've seen in other regions at not good enough, we need jobs and what we know from China is China went through this demographic transition what did China do? It did so many things but at least one thing it did it fundamentally increased its trade integration around the world. It boosted export oriented industries that had the jobs and that's what China did. If you look at research available it bears out what Minister Shama had just said research points out looking at India's experience too that it is trade integration that really gives you the productivity increases you need to create jobs to create markets. So the point I'm seeing is India is going through a remarkable demographic transition. India is going to have a huge number of new people working in the working age population and the research tells us and China tells us that nothing is as important as international trade integration and this applies across south south. Minister Shama I want to follow up with you referring to a point that Professor Gupta made about how we need not just increased south south trade but increased south south investment, direct investment to build the supply chains that he was talking about. Do you expect that to happen? Is it happening and as a subset of that question China as we all know has been very aggressive through its state-owned companies investing in Africa. India a bit less so. Do you think we're going to see a shift at all toward increased outbound Indian investment toward Africa? You see first of all let me briefly sum up the trade issue. What other analysts have spoken, the south south trade is increasing. It's true that the quality may be different from as Mr Gupta was saying from the quality of the developed countries trade but it is changing constantly and among the developed countries if the trade in the last decade has increased four times the countries of the south it has multiplied ten times. Also when I look at the numbers for example India's engagement we do not have as it used to be many centuries ago India being a major trading country of the world the largest to be precise. Today I share in merchandise trade it is little over two percent and all put together services and merchandise trade close to four percent little over four percent that is not adequate because we are 1.2 billion people but of the trade that we have 600 billion dollars we crossed last year two-way trade more than 50 percent 315 or 320 billion is India's trade only with the developing countries and it is increasing. So this major shift that is taking place not that we are not engaged with the traditional markets or the destinations particularly the developed countries. The second issue is about the quality and how value chains are created Africa, Asia and South America are getting more and more integrated with the global value chains. Another important aspect which has been underscored repeatedly as Mr. Loup Singh also said is about the population and that is in Africa too the large number of young people same here for that matter in Asia this is where the future is third at the resources I do not say that we are not clearly following what are the trends in Africa but we work with Africa very closely as Mr. Mari Nagu had said she was absolutely correct that we understand each other we are not strangers in history we have shared similar challenges we have also the same past of missed opportunities when our countries were left behind after the harnessing of the steam power which transformed Great Britain and then the industrial revolution and all the technologies which came today we have straddled that divide the new wave of technologies which came we moved fast enough to acquire global leadership positions now consumption production patterns are different in China it is different in India it is different in Africa it is different but Africa also is moving very fast towards regional economic integration when you look at the REX in Africa whether East Asia community whether SAKU whether ECOVAS and we work therefore in understanding with them it is true that China and India do not have we have resources but we do not have the same resources for all the resources that we need for our development particularly when it comes to energy security or some of the precious metals and minerals where Africa and South America they have abundance of those resources but what India is doing I do not want to use the word aggressive it is intense engagement because what our philosophy is to be truly a friend and partner in Africa's progress so over decades when India did not have enough resources to address the monumental developmental challenges in our own country to invest in education to invest in economy we did share our resources our experience with our brothers and sisters in Africa tens of thousands of African students have come from 60s onwards on Indian scholarships to join our professional institutions to go back as teachers, as doctors, as engineers now that has increased 2008 we had the first India Africa partnership summit in New Delhi and the second one was in Addis Ababa this May we have a focus on capacity building in Africa our companies both the public sector and the private sector are very much conscious of the ethics to create jobs there to empower people by training and this capacity building embraces all sectors from agriculture to education to manufacturing investments are also taking place Indian investments in Africa when I look at it the figures are very difficult sometimes to get because the corporates have multinational character today many of the Indian companies they have their investing arms in different countries and locations but also what directly goes from India in Africa it could be anywhere between 35 and 40 billion in recent years the Indian investments have gone in and I know for a fact that many of the proposals are in the pipeline so you will see that this investment is growing and that is also in the long run will ensure that the quality of trade changes because Africa will be able to provide gainful employment to its younger people and what is manufactured out but value addition is already taking place it's not only the raw material sometimes of course it's a two-way process what a country has and what a country needs because India also is exporting what we have another important area as I conclude is about the food security energy I did refer to because that is a challenge which has resurfaced again with the very high global prices with commodity and food the same level as 2008 and the food inventories are very low so agriculture again Africa is very fertile soil many of the countries have including Tanzania and Mozambique and other countries and we are engaged therefore in agriculture in a big way in diversification, in irrigation so it's disengaged and another enabling thing which India has been doing and we have now increased that our own economy has grown and we had more resources than to share with our friends in Africa that is our lines of credit so it is 5 billion dollars that was in 2008 another 5 billion dollars in now 2011 which is available for developmental projects to our friends in Africa so if you look at what is America's engagement with Africa that's different what is China's engagement that's different what is India's engagement it has it's own character, it's philosophy so I will say it is distinct and different and it's a relationship which is based on trust and confidence I want to come to Minister Pacheco in a minute to follow up on the agriculture point but first to Mr. Muturaman just quickly how would you wearing your CII hat how would you characterize your memberships attitudes and views toward the possibility of outbound direct investment to the south are we going to see that clearly a trend already is it going to intensify? yeah well answering the question I also want to add to what my minister said you know there is as I said earlier there is going to be even more increased trade between India and the south south between India and the emerging economies similarly there is also going to be increased investments between these between these economies one is seeing it already India has Indian companies in my view have some inherent advantages one is unlike what's happening in with some of the countries we are not going to Africa just to remove the raw materials away and bring it home we are not going there for that we are going there to participate in that country's growth for example I know of cases where Indian companies have gone to say south Africa for a coal mine but with the promise to establish a park plant there so there has to be a win-win situation for both the countries if you go with an approach of you lose and I will win that relationship is not going to last long and over time I think Indian companies have established this credibility in not only in south Africa but also in a few other countries so I believe that investment will actually grow secondly there is a point that is being made about the south south the trade has been entirely on raw materials and not yet on finished products and my minister made also valuable comments on that I just want to add it really does not matter it really does not matter at the gross level as to what you export but the country should worry about what it is exporting at a gross level it really doesn't matter the reason for that is you know all countries are not in the same stage of development if you want to convert raw material into the next level of product there is a skill required there is an investment required there is a technology required if you want to convert it and value it even more you will require even more skills even more skilled people even higher research even higher technology so there is a natural progression of a country's development and what it exports or what it imports need to fit into that natural progression some countries can move on that progression fast so I am not particularly against an underdeveloped country or a country which is just on the first one or two legs of that journey to be exporting raw material as long as it realizes quickly that it needs to do something on the fronts of skill and technology and research and so on to get into the next stage of manufacturing but I can tell you the investments and as well as trade between these south-south countries between the emerging economies is going to increase several fold and what has happened in the global as a result of the global economic and financial crisis in the last couple of years is actually going to accentuate that Minister Pacheco do you want to follow up on the comments specifically about agriculture the numbers are obvious we have 1.3 billion people where I live in China there is 1.2 billion people here in India those are a lot of mouths to feed you have global food shortages we've had generally speaking rising prices there aren't more there aren't many more critical issues globally than increasing agricultural productivity is that happening in Mozambique and to what extent are foreign multinational agro businesses not just from India but from the United States as well how active are they investing in your company in your country and trying to drive up agricultural productivity levels look for the agriculture if you look to Africa we have we are not using enough we are using around 30 percent in average of Mozambique we are using 10 percent of our land and that 30 percent around 10 percent of Mozambique the productivity is very low on the land we are using so there is a room to increase the productivity plus there is a big room to use the remaining land available in Africa in the case of Mozambique we we are promoting and attracting investment on agribusiness to increase productivity on the research side to do more research to adopt results that is already reached in the country like India, Brazil even due to the similarity of some agricultural conditions some technology can be adapted there I see company moving to Mozambique to investing and our goal is number one productivity and research play very key roles we have to educate more our research scientists in time if you go to research station they have solution for any agricultural problem you have they will show you they will make a fair but how this technology can be transferred to the farmers so the extension work the extension service should be in place to make sure the technology generated by research is going to be accessible to the farmers and the multinational company on site on agrochemical they are they can play a very important role we are having experience the tri trilangular trilateral cooperation Mozambique, Brazil and China Mozambique, Brazil and Japan I'm sorry if you look to the location of Brazil if you look to the development that is taking place in Brazil 30 years ago Brazil was facing shortage of food but now the job done by Embrapa Brazil now is one of the most playing a key role on the world food we are working with Embrapa they just opened an office representation in Maput I was talking with the Honorable Minister of Tanzania how can we Embrapa bring in Mozambique we can work together this is the kind of operation we can make to boost productivity in the land we are using and to use the remaining arable land that is not yet used in Africa water is there you know you have a situation that one month today the people claim about floods in 10, 15 days they will claim about drought but the rivers crossing is passing by so we have to use properly the water resource we are having to boost agriculture this is one area that we can explore we know that India have got quite a large experience on management of water for agriculture for industry and this is the rooms that come together as one to use the potential in a sustainable way I do believe if we do that we have to start today in fact we should start yesterday but we are already late better late than never if we don't start immediately we will end up on facing food shortage what are the other ways in which the rapidly growing countries in the developing world and for that matter the west can help Africa that is a very specific very interesting example the utilization of water resources in order to drive agricultural productivity levels higher what are other examples that come to mind from where you sit the potential of Africa and that of Tanzania lies in agriculture and therefore we place a lot of importance in agriculture first Africa itself is faced with food crisis we need to have food security in Africa we need to have food security in the world and Africa is a big potential and you cannot separate the importance of investment from trade or from industry and therefore where the south house cooperation can be enhanced in Africa is in investment and Africa is trying its best to attract investments not only from the developed countries but from the emerging countries which happen to be within the south cooperation I was talking about value addition I was talking about agribusiness and this is where the investment is required but Africa also has potential in many other areas like we have natural resources in the form of coal, iron and many other metals and we need investment in that area we are trying to reduce cost of doing business in Africa we are trying to create our own middle class because the effective demand has to start with Africa we have more or less the same population with India and China the only difference is the lack of effective demand the lack of entrepreneurship and if investment do come to Africa the Africans will tend to learn from the south-south cooperation in order to enhance trade in order to increase the share of trade for Africa in the global trading investment is very important in adding value in the exploitation of the resources which happen to be many but the ability of Africa to exploit those resources is not there the only thing that Africa is looking for is the win-win situation Africa cannot continue trading while it is losing it has to gain from trade and if the global economy is growing that of Africa has to grow as well and the tendency is there most of the African countries economies are growing and if the south-south cooperation is enhanced and the developed world is also brought into Africa the issue of global food crisis the issue of energy crisis will be kind of limited because Africa has that potential the only thing is Africa would not like to lose again within the global trading those are all very fair points I noticed you scribbling notes would you want us to get in here well Bill I think as we've heard from the speakers trade is growing south-south there's a lot of scope for it to happen but maybe I should just make one rather obvious point here where India is India is obviously in south Asia and as the minister just said India's trade across regions has grown if you look at India's trade with emerging markets and I guess south-south is a major component of that this has doubled in the last 15 years but if you look at India's trade in south Asia it has not increased in the past 15 years now maybe it can be measured in some other way third country trade but what I want to point out is some of the research I recently read on the way here they were trying to look at India and saying where is the greatest potential for India's trade to develop in the next 20 years and it's not surprising but the research tells us that the greatest potential to quadruple in the next one or two decades is within south Asia there are many ways to see this if you look at India's share of GDP in south Asia it's huge it's 80% you look where south Africa is in southern Africa it's as big you look at how much trade in southern Africa is with south Africa it's huge if you look at the percentage of GDP that is south Asian trade it's 10% and this is not a political point from all economic criteria the growth spillovers benefits to India and others of rising trade are undisputed so I would say the greatest potential we face is to raise trade in south Asia and I would make a final point we're talking about trade it's not only trade in most regions the adge mass financial remittances services knowledge so trade integration is just one aspect of total integration but surely the primary factor limiting south Asian trade is political no? it's geopolitical I would say equally for my point of view equally important are the economic benefits these are undisputed and we should focus on the economic benefits because that is what I think it's most important you know the point which Mr Rup Singh has made is very valid much is happening in our region it's not that the trade has not increased but it is well below the potential in south Asia we have taken a number of steps India being a large economy in the SAAC framework and the SAFTA that's the trade agreement of the south Asian countries Afghanistan has joined SAAC so Afghanistan is now part of the SAFTA process where India has adopted an approach asymmetry and reducing tariffs to a large extent giving access to Bangladesh, to Nepal, to Pakistan and there is a forward movement which is a very welcome development between India and Pakistan the trade within the region India's own trade is close to 17 billion but south Asia slowly is moving towards a realisation of the benefits of economic growth and trade because that alone will bring about stability when the younger people find gains of trade as well as economic development India is also very clear that as we are integral to the process of Asian integration as member of the east Asia summit that ASEAN plus 6 process India is very much there but south Asia also has to move towards integration and eventually be as a region part of this emerging picture of Asian economic integration which has taken place elsewhere in the world when we look at North America through NAFTA South Americas, the Marcosur in Africa therefore the steps that we have in mind will help us to achieve that objective we are also very clear that India does not want to race ahead on its own but take in a brotherly embrace the entire region for economic growth and shared prosperity so hopefully few years down the line when we discuss this subject it will be a different picture I remain optimistic about it there has been historical reasons for why it didn't happen earlier the the violence, the bloodshed that followed and the issue was also of trust and many of the countries of south Asia have been going through different kinds of upheavals you know Sri Lanka until very recently was violently destabilized you know the challenges in Pakistan which have been there the challenges which Bangladesh has faced or the turbulence in Nepal hopefully things are settling down and even in Nepal there is very positive developments recently and I am looking forward now to the next ministerial which Pakistan will be hosting we hosted the Pakistani commerce minister and the delegation I was told that that was the first visit unfortunately but happily so it took more than three decades for that visit to take place and they came with a big business delegation and there was discernible enthusiasm the business leaders of both the countries and I saw the same when we went to Bangladesh so my only message is that this region shall also change for the better that's a spot on point that you made Anup I want to is my mic on? I want to step back and broaden the lens a little bit since one of the points that we are to address on this panel is the extent to which the south-south trade and economic relationship can continue to build in the midst of what is globally a very parlous moment now I tend to be unfortunately a born pessimist some people are born optimist some people are born pessimist I'm in the latter camp I think Europe is a disaster I don't think the Euro or the Eurozone can survive in its current form I think what we see is what we get in the US in terms of growth for the foreseeable future if Europe falls into outright recession and the Eurozone doesn't survive in its current form and the United States continues to just plot along at 0-2% growth what are the implications for the developing world both South Asia Southeast Asia East Asia and Africa how badly will they be hit under a close to a worst case scenario I'll throw that to my friend from the IMF alright thanks a lot this is also a very crucial point just before I start in the last 3 years the global crisis hit us trade among emerging markets continue to increase it didn't fall but now let's look ahead to the next 5 or 10 years beyond what happens next week or next month I would say whatever happens here that emerging markets developing countries south-south we are not going to be able to rely on external demand from the US and Europe as you said that is a reality which we have to recognize but emerging markets India, China many south-south Brazil are leading the global economy right now so we have to understand the next 5 or 10 years trade and growth among emerging markets among developing countries within south-south that is going to be crucial not only for keeping the momentum of growth high in our countries but also in the global economy and therefore all this crisis tells us the time has come to rebalance ourselves to focus our efforts our investment and our targets of markets in other emerging markets so a little bit beyond relying just on Europe and the US for markets let me go to our audience and see if we have any questions for any of the panelists from the audience here we go I would like to highlight what you just said about things going on in Europe and the EU zone falling apart as well as being very stagnant over the next decade I would like to put this question to Mr Singh that not an economist but I think the major problem behind all this is the minimum wage rates which is making the western economies very uncompetitive so should not there be consideration regarding reducing minimum wages in the western countries I think the question is I understand it should the western countries the US and Europe lower minimum wages lower minimum wages in order to become more competitive alright we are looking at a very important point as we look beyond the current crisis taking place in financial markets debt markets and sovereign risk the most important factor for the advanced economy is to improve the growth outlook that means structural reforms which include better debt sustainability and a lot of the discussion that is now taking place in Europe is how do you establish the structural reforms that re-establish a growth outlook that is positive it's not just wages the broader structural reforms are being discussed they will be needed because both for the sake of Europe and for the sake of emerging markets we all need Europe coming back to a positive growth outlook we needed B you want to get in here yeah I had a comment on that you know the problems of Europe I'm not a economist or I'm not a finance guy but looking at it from a businessman's point of view the problems of the Eurozone or the problems of the US cannot be solved by financial restructuring alone which is what is just now being attempted there are far more fundamental structural reform that is required and one of the most fundamental reform is you know look the problems or because of human behavior they may look like financial problems or economic problems but they have behavioral problems behavioral problems in terms of consumption and behavioral problems in terms of savings these are two behavioral problems any country which is going to continuously consume more and more and more which creates cannot be a sustainable thing whatever financial restructuring that you may do so I do believe that that over time both Europe and the US to a lesser extent actually has to change the consumption behavior and then there is no easy solution to my mind for the current problem and that's a very painful thing and whoever attempts to sort of implement it is going to get sacked so you will find a lot of things are going to happen in those countries where you may have one term prime minister and one term presidents and he will try and she or he will try to implement something and he will become unpopular I see a journey of that nature Professor Gupta I think in terms of on the wage rates in the US particularly if I look at the US the reducing the minimum wage I think it's politically impossible because in any case over the last 20 years the divide between the rich and poor has increased so you have the Occupy Wall Street movement so reducing the minimum wages is out now that said I'm actually more optimistic about the US economy than many other people because when I look at for instance the trade picture for the US of course it's been running a huge trade deficit and one can look at it is it a problem on the export side or a problem on the import side and of course the US is a big oil importer and so that's a big contribution now if you look at some of the latest analysis on the oil situation Daniel Jurgen is kind of the world's number one expert and his recent writings are that the shale gas for instance and so the picture will change dramatically and the US will become far more US dependent on oil and gas than dependent on foreign sources and so if that were to play out it will have huge positive impact in terms of the trade picture for the US other questions right here gentlemen in the center right here there's a large group of health so the picture described by a number of the panelists Mr. Mutharaman and Mr. Gupta why can we not just simply assume that with Europe the US deleveraging consuming less you know there would be a new equilibrium by which the breaks plus Africa that's more than half the world's population with enormous pent up demand you know increase the trade and therefore the fact that a country like India or China might trade less with Europe and the US will not really be a problem be more than compensated by the increasing south-south trade it's not very clear yeah I'm sorry could you repeat or rephrase the point of the question the question is why worry so much about a decrease in consumption in Europe and the US which is going to happen anyway because the solution is in vastly increased south-south trade well and indeed sorry Mr. Minister yeah well I was just going to say that from where I sit I sit in China and indeed the fact is even though growth is slowing in China the pace of consumption or consumption share of the GDP albeit from a low level is increasing and it's increasing very rapidly similarly the trade surplus is despite all the stuff we hear about China bashers in Washington and the US and elsewhere obsessing about the current account deficit from the US standpoint it's down to 2% of GDP in China the surplus is coming down and the consumption is increasing so I think he makes a very valid point let me just make a very quick comment on that I think it is a reality if you go back to the last 20 years with China's growth it has come from investment infrastructure and other sectors China has a new 5-year plan they also have 5-year plans they have a 12-year plan and the 12-year plan objective raise consumption as Bill said, consumption ratio has begun to increase but you look back 10 or 15 years the ratio of consumption of GDP in China has fallen now as you look at the next 10-20 years it has to increase this is part of the rebalancing that is taking place from relying on external demand from the US and Europe to consumption in China just to add there is a pattern of growing consumption in the emerging countries and the developing countries it is true that because of the challenges that the US and Europe zone is facing there is going to be some stagnation and fall in consumption but the fact is that in Asia the total consumption is $7 trillion whereas the US alone the much less population $10 trillion of consumption now in the next decade if US will move to 15 Asia will move from $7 trillion to minimum $20 trillion of consumption and when we look at this country in India in fact our economic growth is driven by domestic consumption and domestic production I entirely agree with what both you have said and that China now has even in the meetings which we have conveyed with clarity that their emphasis will be on raising the level of domestic consumption and the same is happening when we look at Africa with the economic growth the domestic consumption is growing so it is in the context of the South-South it is very relevant sum it up when we look at the global picture $7 billion is the world's population where do 85% people live so they have to consume if their share of the global consumption is not even one third then this is a sad commentary and that is what has to change and which is changing I didn't like to say much but I wish to say a little about the consumption level it used to be in the past populations were liability but currently in the present situation population has turned to be an asset especially when it has the purchasing power if you look at the globe India China has more population than Europe and the United States and their progress is based on domestic demand and in the past I'm sure Europe and the United States were also finding potential in the population within the emerging economies now they are competing and if the productivities are not similar then of course the emerging world would be taking much of the effective demand and especially when it is from within their own countries and the model that has made the United States and the Europe become progress is not similar to the model that has brought progress to these emerging economies so I see that there is a lot to learn from each side we need to learn from Europe and the States and we need to learn from the emerging economies and especially when the reasons that brought about higher productivity and higher success when it comes to economic growth within the emerging economies is different from those which has brought progress to the United States and America and we have alternative now we have more we have more scope from where we can learn and hence the reason why we should increase cooperation within the south south and with that of course the global economic prosperity will have to increase also I think in the short term Europe matters because the banking system in Europe and the US is highly interlinked so if there is implosion in Europe it is going to severely affect the US and if you look at US Europe combined Asia is GDP right now and so therefore that is hugely important for everybody in the world but if you look ahead 10 years from now I think the picture will look very different because 10 to 15 years from now Asia's GDP will be equal to US and Europe combined and so at that point what happens in Europe will be relatively speaking more a regional challenge rather than a global challenge okay we are sadly right at the end out of time here and I must say that I am a person who is born pessimist I am somewhat assuaged by what I have heard on the panel this afternoon despite the near term turbulence that we are going to see in the developed countries the prospects for south south trade and continued economic integration are not only positive but frankly it is almost inevitable just as Professor Gupta said the world 10 years from now is going to look very different than it does now and fingers crossed it is going to look better not worse thank you to our panelists and thank you all for attending