Upcoming Presidency Allows New Delhi to Showcase Newfound Role in the Emerging World
Image Courtesy: CGTN
Article Courtesy: Firstpost
On 1 December 2022, India will assume the presidency of the G20, and in 2023, the G20 Summit will be held in India for the first time. The G20 is the world’s most influential economic multilateral forum. It acts as a global agenda-setting body that guides international financial institutions, develops and enforces rules of global economic governance. India’s G20 presidency and hosting it in the UT of Jammu and Kashmir would be a watershed moment in history.
The G20 was formed in 1999 in the wake of the Asian financial crisis to unite finance ministers and central bankers from 20 of the world’s largest established and emerging economies, from Australia to India in forging a common quest for global economic stability.
A decade later, in the wake of the global financial crisis of 2008, the United States, which held the G20 presidency then, elevated the meeting of the finance ministers and central bank governors to heads of state, resulting in the first G20 Summit.
The first three summits were held in Washington, DC London and Pittsburgh, respectively, setting the stage for some of the most durable global economic reforms such as blacklisting states in an effort to tackle tax evasion and avoidance; provisioning stricter controls on hedge funds and rating agencies; making the financial stability board an effective supervisory and watchdog body for the global financial system; proposing stricter regulations for banks and helping avert a shift to protectionism in the aftermath of the 2008 financial crisis. Since then, the G20 has reinvented itself by widening its agenda to include issues such as climate change, health security, food security and nutrition, tourism, digital economy, education, employment, energy, migration, anti-corruption and Sustainable Development Goals (SDG).
The importance of the G20 can be gauged from the fact that, collectively, its member nations account for 85 per cent of global GDP, 75 per cent of international trade, and two-thirds of the world’s population. However, despite such significance, the G20 as a body does not have any permanent secretariat or headquarters. Instead, the G20 president is responsible for bringing together the G20 agenda in consultation with other members and by taking cues from developments in the global economy.
In terms of structure, the presidency of the G20 rotates every year among members, and the country holding the presidency together with the previous and next presidency holder form what is called the “Troika”. This mechanism is to ensure continuity of the G20 agenda. Currently, Italy, along with Indonesia and India, constitutes the Troika countries.
The G20’s agenda is driven by two channels: the Financial Track and the Sherpa Track. The Financial Channel consists of finance ministers and central bank governors from all G20 member countries, specifically to address a number of issues related to the financial sector. The Sherpa track, on the other hand, addresses other issues that are outside the purview of the financial sector as well as prepares various documents to be discussed at the summit. Therefore, “sherpas” are generally appointed directly by the heads of government of the member countries and are seen as their personal representatives at various G20 meetings.
G20 and India’s importance
As a founding member of the G20, India has always used the platform to raise issues of vital importance, including those that impact the most vulnerable around the world. This is an opportunity for New Delhi to push the Indian narrative. India’s achievements in sectors like consent-based digitisation, digital payments, led vaccination efforts championing vaccine equity, digital public goods, digital empowerment and demonstrated success in the field of open-source applications like COWIN, and open-architecture digital payments through UPI. The resilient health infrastructure, among several others, has been phenomenal. Such unique stories need to be told to a global audience.
India has been rapidly growing and is seen as a key player in the global economy. It is soon to be among the third largest economies in the world with several transformational changes: phenomenal growth in terms of digitization where our digital payments are today more than what the US and China transact together. New Delhi has carried out a huge amount of work in terms of infrastructure and connectivity, including pushing the limits as far as social infrastructure through electrification and providing water with an emphasis on sanitisation to the community. These are growth stories and lessons from India’s rise.
The critical challenge that the world faces today is ‘growth with sustainability’. This puts “climate adaptation and its mitigation” at the heart of growth rate and development. Here, India can contribute and complement the efforts of other countries by participating in the G20.
It should also be noted that the G20, in addition to accounting for approximately 85 per cent of global GDP and 75 per cent of global trade, also accounts for nearly 70 per cent of global population. Therefore, India brings a lot to the table. India is a very critical player in the global economy today, and it will be very difficult for the global economy today without India. The IMF has predicted India to grow at a rate of 7.4 per cent, which puts New Delhi as one of the fastest growing economies. Hence, in many ways, the global engines of growth are connected with India’s growth. The critical challenge that the world faces today is ‘growth with sustainability’. This puts “climate adaptation and its mitigation” at the heart of growth rate and development. Here, India can contribute and complement the efforts of other countries by participating in the G20.
It is also worth noting that India is the only country among the G20 to have achieved its Nationally Determined Contributions (NDCs) target. NDCs are at the heart of the Paris Agreement, which requires each country to outline and communicate their post-2020 climate actions. India has already achieved 38.5 per cent of installed capacity from renewables, and when the renewable capacity under construction is also accounted for, the share of renewables in the installed capacity goes well over 48 per cent, which is way above the commitments made under the Paris Agreement. Adding another feather, all these were achieved 9 years ahead of schedule, which is nothing short of significant progress made by India.
The G20 also has various engagement groups such as the Business 20, Civil 20, Labour 20, Science 20, Think 20, Women 20, Youth 20 etc. and it is important to make all these groups stakeholders in the G20 agenda. The G20 communique usually takes input from these working groups that come in from the engagement groups. These engagement groups are also very critical because they represent an opportunity for engagement of civil society, startups, business leaders, etc. This forum can also act as a catalyst and driver to push and showcase India’s soft power potential. In the 200+ planned meetings, it can be converted into a unique Indian experience from the point of arrival to the point of departure for about a hundred thousand visitors set to arrive for the meetings.
Another opportunity that India should not miss is the 200+ meetings that are set to take place. These 200 meetings are to be held across the country at nearly 56 locations, aiming to make the G20 meetings a pan-India affair spread across all states and UTs in both the Tier-1 and Tier-2 cities rather than focusing on a few major metros. All seven northeastern states, Lakshadweep, and the Andaman and Nicobar Islands will also be hosts for the meetings, which is notable. This move also ensures the involvement of all the states and UTs, showcasing their talents and potential to the global audience.
G20 and global growth
The global economy is undergoing recessionary pressure. These are due to challenges posed by the Russia-Ukraine tensions; China’s recent aggression against Taiwan; and the consequent global supply chain disruptions that have inflicted a state of flux on global trade. What was once bright and promising, which had enabled the world economy to grow and to lift vast segments of the population above the poverty line, has now slowed down.
Slowing economic growth is also pushing up global debt levels, especially in emerging markets, according to the Institute of International Finance (IIF), which also warns of a significant rise in corporate bankruptcies ahead. Without global debt, it is challenging for countries to grow rapidly, coupled with the constraints imposed by climate change and global warming that necessitate “growth with sustainability”. Therefore, the climate targets for “Net Zero Emissions” by 2050, and in India’s case, it is by 2070, present huge opportunities as well as pose challenges.
The outcome of the upcoming G20 summit would be to derive a consensus on the goal of rapid growth. This necessitates a rethink and course corrections by the post-WWII designed developmental financial institutions. Such corrections make them relevant by tailoring them for the ‘Post COVID Post Climate Era’. This requires new methodologies of financing, clauses for first loss guarantees, low interest rate regimes, etc., which enable developing countries, including India, to grow sustainably. Multilateralism can prove to be a crucial lynchpin in promoting global growth.
The East Asian financial crisis made the G7 countries realise that it was impossible to tackle the crisis without involving other countries of the world, and that led to the G7 expanding to the G20. The other reason that led to the formation of the G20 was also because of the shortcomings of the G7 in finding solutions to the then prevailing problems in the global economy.
In a way, the G7 and the UNSC today are reminders of the world order that prevailed after the Second World War. The present matrix of the G20 reflects a mix of developed and developing countries coming together on an equal platform, which in a way also remains as a template for multilateralism and cooperation. This multilateral body also assumes significance due to the prevailing challenges of economic and social order. Addressing key challenges to growth, accelerating the pace of SDG goals, climate change, the work of developmental financial institutions, etc. are to be delivered by the G20.
Despite the G20 being a symbol of a multilateral model of cooperation, the present stark realities of the world make one wonder if a new model of international cooperation is needed.
Vision and challenges
Although ambitious in substance, the challenge before New Delhi would be in forging a consensus. This includes bridging the emerging divide due to geopolitical realities. Despite the G20 being a symbol of a multilateral model of cooperation, the present stark realities of the world make one wonder if a new model of international cooperation is needed.
With the rise of China and its governance model, more questions are being raised about the functioning of institutions such as the UN, WTO, and other multilateral bodies of the post-World War II world order. The need of the hour is institutional innovation, commitments on aid and a new model for donor and recipient countries.
The post-COVID world has shown this pandemic will not be the last, so the need is to ensure cooperation in terms of financing and preparing for future pandemics as part of “health security”.
Although education looks lucrative, the learning gaps imposed due to disruptions imposed by the pandemic are still a bottleneck as learning outcomes are severely impacted.
Concerns about implementing the SDG goals remain among member countries, in addition to long-standing issues in financial regulation and cross-border financial transparency.
While investments are always a feature of every season, innovation and S&T take a back seat. This upcoming G20 will be a test for India on how it collaborates in the areas of S&T. S&T is a sine qua non for India’s economic diversification and development.
To conclude the UN is too large and busy addressing pressing issues of global concern and the G7 is seen by observers as elitist. It is the G20 that offers a mix of the right substances through its constituent matrix. Now, the onus is on India’s part of how it showcases her newfound role in the emerging world order.
(Mr. Balasubramanian C is a Senior Research Officer at C3S. The views expressed are those of the author and does not reflect the views of C3S.)