India’s presidency of G20 is off to a good start. Around 30 meetings in 20 locations have already taken place. The first meeting of finance ministers and central bank governors was successfully held in Bengaluru, and the first foreign ministers’ meeting is due to commence shortly. The outcomes of these meetings will feed into the summit scheduled in New Delhi in September.
G20, which took its current shape in 2008, is seen as an effective global governance forum and an increasingly influential voice in the world economy. Its relevance is evident when compared to existing global governance institutions that are unequal to the challenge of tackling contemporary geopolitical tensions and crises such as climate emergencies.
As G20 completes 15 years of existence, it faces the task of reviving and sustaining global growth in the face of the devastation wrought by the double whammy of the pandemic and the Ukraine war. The persisting threat of recession across geographies, the debt crises in developing countries and contestation in trade and technology complicate the task.
Accelerated economic growth is key, given the fear of recession. In December, World Bank stated that at the end of 2021, external debt of the heavily indebted poor countries totalled $9 trillion. It blamed rising interest rates and slowing global growth for the debt crisis, adding that about 60% of the poorest countries were already at high risk of debt distress or already in distress. This certainly makes a case for inclusive and resilient growth – one that will cushion the shocks of business cycles, future black swan events, the vagaries of the climate crises and geopolitical tensions. As G20 president, India will look to focus on areas where it can bring in structural transformations, propelling greater growth, prosperity and equity.
One key ingredient is increased trade. Expanding protectionism and trade barriers had already impacted the world economy before the pandemic roiled supply chains. The Ukraine war only exacerbated these stresses with fuel, fertiliser and food shortages. Against this backdrop, the need of the hour is a strong signal favouring transparent, fair and rules-based trade. Underlining G20 support to the World Trade Organization will be key to this. India believes that the rules-based multilateral trading system is a force of good, helping big and small countries, including developing ones. Increased trade will achieve inclusive growth, sustain innovation, create jobs and help make progress in sustainable development goal targets.
The New Delhi G20 summit will be a good opportunity for India to showcase its public digital platforms that can be modified and scaled up or down to help governments provide essential public services to citizens. The world over, there is a realisation that digital technology is a driver of economic growth and empowerment across sectors. The world needs new, knowledge-driven and innovative approaches to tackle complex challenges, and digital technologies present us with the tools to deal with some of them.
Another ingredient for accelerated growth is the increased integration of micro, small and medium enterprises (MSMEs) in world trade. World Bank data shows that small and medium firms play a critical role, especially in developing countries. They represent about 90% of all businesses and are responsible for 50% of employment worldwide. Many are vital cogs in international supply chains and are often the most dynamic businesses. However, they face constraints such as access to finance that stymies growth. Access to resources is imperative and India supports the need for international financial institutions to be more receptive to the funding demands of MSMEs. Indeed, the reform of multilateral financial institutions, to make them more responsive to the requirements of the Global South, will be high on the agenda of the presidency.
Just like trade, investment too is a driver of global growth. A prerequisite for attracting investment is a conducive climate that takes into account the needs of businesses and workers and creates a win-win situation for investors and the entire economic ecosystem. The pandemic resulted in the loss of jobs worldwide, pushing millions into poverty. India, too, faced a difficult situation which resulted in the government formulating the Code on Social Security, 2020. This was seen as a radical piece of labour reform, mandating social protection for all workers, including new-age gig and platform workers (India had 476 million such workers in 2021) for one of the world’s largest and youngest working populations. India’s implementation of this measure could serve as an example for other countries. Skilling and reskilling of workers to make them future-ready for a new job market is also a major challenge. International collaboration is the most likely answer as India and the world adapt to the increasing demand for a workforce adept at utilising emerging technologies.
If the Ukraine war showed us that commodities such as food and fertilisers are vulnerable to shocks, so did the climate crisis. The Bali G20 Declaration called for an accelerated transformation towards sustainable and resilient agriculture, food systems and supply chains. It also committed to protecting the most vulnerable from hunger as food and fertiliser prices spiked.
India will aim to expand on this commitment during its presidency. India supplied foodgrains to countries in its near and extended neighbourhood during the pandemic in the spirit of its G20 presidency’s theme of Vasudhaiva Kutumbakam – One Earth, One Family, One Future. To cope with the impact of climate shocks on farming, India promoted climate resilient varieties of crops, specifically millets. Acting on India’s proposal, the United Nations declared 2023 as the International Year of Millets. India could also use the G20 platform to highlight some measures it took to further the economic well-being of its farmers.
India’s G20 presidency comes at a very critical juncture. There is an expectation that India, the fastest-growing large economy in the world, which has implemented some of the most innovative and far-reaching measures to improve governance and living standards, will be in a position to contribute solutions to the global challenges of the day. As a bridge between the developed and developing worlds, India stands ready to share its experiences for the good of the world community.
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