In many ways, deliberations in groupings like the G-20 can be more effective than in large and unwieldy bodies.
Elated at assuming the presidency of G-20 for the year 2023, India has been quick to draw up an exhaustive list of agenda items for the 200 odd deliberation-sessions that culminate with the Summit meeting in New Delhi next September. Local officials have raised hopes of delivering substantive and sustainable outcomes on a diverse range of issues. They hope many of these will have a positive impact for India, including on the Indian economy, which has stuttered of late in dealing with the pace of GDP growth, employment levels and the burgeoning trade-deficit.
By virtue of its new role, there should surely be a strong rub-off effect on India as it interacts closely on a variety of contemporary issues with different blocs of influential countries—these include the developed G-7 nations (the US, UK, France, Germany, Italy, Canada and Japan), the entire 27-nation European community via the European Union’s membership, the fairly developed nations of Russia, China, Saudi Arabia, South Korea, Turkey and Australia, and the larger developing countries of Brazil, South Africa, Argentina, Mexico and Indonesia.
Benefits should include giving India greater awareness of best practices in economic matters in better-off countries, greater cross-border cooperation, and locating sources and markets for expanded trade in goods and services. While the structured meetings would provide the setting for addressing broader common matters, it will be the meetings on the sidelines between the heads of governments at the year-end summit, or between ministers and other functionaries around the year, that will be more effective in resolving the several pending bottlenecks in India’s bilateral relationships with the other 19 members.
Many of the current global and Indian economic challenges are the products of the recent geo-political happenings, particularly the war in Ukraine, the disruptions caused in key global supply chains emanating in China, and the extreme climate change events. In mitigating these headwinds, the G-20 can certainly play a central role. The body derives great heft from the influence of its members—together, the G-20 accounts for 85% of the world’s GDP, 75% of global trade, and 65% of the planet’s population. Its expansion in 1999 from G-7 to G-20 with several larger developing countries being included, as well as elevating it from Finance Ministers and Central Bank Governors to now Heads of Government convening, has meant that the Group’s stand on various international issues has become more impactful.
With the personal status of Prime Minister Narendra Modi in the international community soaring, and both sides in the ongoing Ukrainian conflict not disinclined to India’s intervention, the forum of G-20 under Modi’s Presidency could be amenable to India playing an influential role. Ending the war would help address both the global energy and the food crises. With a consequential recession looming in industrialised countries, the annual world trade growth, which has shrunk to under 1%, should start rising once again. This would help revive Indian exports and lower our import bill, which has been increasing on account of sharp increases in prices of crude oil, natural gas and fertilisers.
In fact, in many ways, deliberations in groupings like the G-20 can be more effective than the large and unwieldy bodies of the various organs of the United Nations and multilateral banks where prepared texts are usually delivered, with no worthwhile exchange of ideas or negotiations on important issues. Apart from ending the Ukraine war, the impasse seen in climate-finance and financial collaborations on energy efficiency at COP-27 in Glasgow, can also be more capably addressed in the smaller and more cohesive group of G-20. Reaching consensus on setting national targets for energy intensive improvements and aligning on collective global actions for responsible energy consumption can also be first attempted in the rounds of G-20 that would precede the next COP.
Addressing foreign trade concerns is another area where the G-20 could come in handy. India’s pending Foreign Trade Agreements (FTAs) are, almost all, with the developed countries of the UK, the US and the European Union, with Canada the recent addition. While on the reduction or removal of import duties on most products, there is generally some early agreement, the common areas of contention remain in fields of data protection, IPR, movement of personnel and the export of agri-products. Many such “disaffections” of the developed nations are also applicable to other developing countries, both in the G-20 as well as outside. Resolving these through formal sessions, as well as the sideline-meetings between senior functionaries of the involved governments, can help reduce the differences and expedite the conclusion of the accords. Similarly, the countries of the “Global South” in the G-20 can band together to make a strong case for Western nations to give them market-access to their products and services, and persuade them to refrain from any sudden hikes in duties on imports from them or arbitrarily decide to end the Most Favoured Nations (MFN) status, as had happened during the Trump Administration in the US not too long ago.
Given the reality that the operations of most other international multilateral institutions like the IMF, World Bank, WHO and FAO are deeply influenced by its dominant donors—all of whom are in the G7—developing nations such as India, Brazil, Indonesia, and South Africa would do well to seek the streamlining of their lending-functions. Local problems require local solutions, and not necessarily the open market-based approaches that are usually insisted upon by such lenders. It is increasingly clear that recommended solutions that are often suggested by professionals at the IMF and World Bank as a pre-condition to extending assistance to less developed countries, such as wholesale industry restructuring, need to be eschewed. The unique comparative advantages and disadvantages of the borrower-nations must necessarily be the determining-criteria rather than the practices which might have worked in the citadels of capitalism. The proposed G-20 conversations in India must remain cognizant of these in their deliberations.
At the end of the day, the G-20 meetings in India may not directly address the economic concerns of any particular country, including India. However, these could create ample opportunities to help resolve the global disruptions and explore possible collaborative solutions that would impact individual countries. The year-long deliberations amongst the hundreds of involved officials and ministers will no doubt be of consequence. Given the elaborate preparations being made by India as the host country, as well as our already growing standing on the global stage, most countries should be sympathetic to India’s concerns.
Dr Ajay Dua, a development economist by training, is a former Union Secretary.