Major nations struggled Thursday to break a deadlock on how to fix the global economy as President Barack Obama warned the U.S. cannot continue to be a profligate consumer on borrowed money.

Indian sources said notwithstanding the strong views held by the US and China on issues like currency valuation and trade deficits and surpluses, a consensus is evolving on the need for countries not to resort to competitive devaluation or undervaluation, a stand the G-20 Finance Ministers took at their meeting in South Korea just last month.

China has been strongly resisting attempts by the US to revalue its yuan, as a lower value gives it a tremendous export advantage over other countries.

But the US Federal Reserve’s decision to pump USD 600 billion into the sluggish American economy, effectively devaluing the dollar, has also not been taken to kindly by countries like Germany.

Notwithstanding Summit Spokesman Kim Yoon-kyung’s claim that major countries are deadlocked on issues, Indian sources said the outlook was not all that gloomy and a consensus document on many issues was likely to be hammered out during Summit proceedings on Friday.

Sources said the joint communique is expected to call for countries to desist from competitive devaluation, a point Prime Minister Manmohan Singh is expected to tell the Summit in the plenary session immediately after its inauguration on Friday morning.

The currency war and the US proposal for a 4 percent cut in the current account deficit, or surplus, have threatened to overshadow deliberations at the summit, which begins Friday amid tight security after several thousand protesters demonstrated in the host city, Seoul, and a woman tried to set herself on fire outside the venue.

China, whose yuan is widely believed to be undervalued, and Germany, whose economy is doing well, are not too happy with the US attempts to put a cap on the current account deficit or surplus.

Indian sources, however, said the final communique would take into consideration the concern expressed by the majority of the countries that there should be balance in trade and protectionism should not be resorted to.

US President Barack Obama, who last week faced severe electoral reverses, has sought to shore up the domestic economy, saying growth in America would spell good for other economies too, as it can act as a driver.

However, others like Germany and China fear such a move would bring back the imbalances that led to a global economic crisis in 2008.

The joint statement, Indian sources said, would also try to focus on long-term issues like development — which the host country, South Korea, wants to focus on as mandated at an earlier summit in Toronto — and to bring balance back to the global economy.

India would favour advanced countries with deficits following policies of fiscal consolidation against the backdrop of their individual problems to ensure debt sustainability over the medium term.

A major beneficial fallout of the Summit for India would be the approval of reforms in the IMF, which has decided on shifting the voting share in favour of countries like India and China.

The move would catapult New Delhi to 8th position in the IMF in terms of voting power, from 22nd position at present.

The Seoul Declaration will talk about reforms of the Basel III norms that would put checks and balances in place at financial institutions across the world to prevent a collapse similar to what happened in 2008.

The final communique would also take a common stand on a global framework for strong, sustainable and balanced growth and voice strong views against protectionism in any area, including trade and investment.

The theme of the current G-20 summit, the fifth since the one in Washington in 2008 at the height of the global financial crisis and the second this year, is ‘Shared Growth Beyond Crisis’ and world leaders are expected to review the global economic situation and the status of the world recovery, as well as the progress of implementation of past G-20 summit decisions.

Apart from Singh, US President Barack Obama, British Prime Minister David Cameron, Canadian Prime Minister Stephen Harper, French President Nicolas Sarkozy and German Chancellor Angela Merkel will attend the summit, to be chaired by South Korean President Lee Myung-Bak.

India attaches significance to the Seoul Summit, which is the first meeting of the G-20 in a non G-8 country and that too, in an Asian nation that has recently emerged as an industrialised country.

The US call for G-20 leaders to stand against economic protectionism and the Federal Reserve’s decision to pump USD 600 billion into the US economy seeking higher yields is expected to push up the value of the dollar at a time when Washington has complained against China undervaluing the yuan.

These issues have already generated so much heat on the eve of the summit that some feel host South Korea’s focus on development could be derailed.