Context
- On December 1, India assumed the presidency of the G20 forum, taking over from Indonesia. Prime Minister Narendra Modi called it a “huge opportunity for India”
- In this context, this edition of the Burning Issue will talk about the G20 grouping and India’s presidency of the grouping next year.
About G20
- What: The Group of Twenty, or G20, is the premier forum for international cooperation on the most important aspects of the international economic and financial agenda. It brings together the world’s major advanced and emerging economies.
- When: The G20 was created in response to both the financial crises that arose in a number of emerging economies in the 1990s and to a growing recognition that some of these countries were not adequately represented in global economic discussion and governance.
- Who are the members? The G20 comprises Argentina, Australia, Brazil, Canada, China, EU, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, UK and USA.
The objectives of the G20
- Stability: The Group was formed with an aim of studying, reviewing, and promoting high-level discussion of policy issues pertaining to the promotion of international financial stability.
- Fiscal responsibilities: The forum aims to pre-empt the balance of payments problems and turmoil in financial markets by improved coordination of monetary, fiscal, and financial policies.
- Universal Support: The forum seeks to address issues that go beyond the responsibilities of any one organization.
- Policy coordination between its members in order to achieve global economic stability and sustainable growth.
Origin and Evolution
- The G20 was created in response to both the financial crises that arose in a number of emerging economies in the 1990s and to a growing recognition that some of these countries were not adequately represented in global economic discussion and governance.
- In December 1999, the Finance Ministers and Central Bank Governors of advanced and emerging countries of systemic importance met for the first time in Berlin, Germany, for an informal dialogue on key issues for global economic stability.
- Since then, Finance Ministers and Central Bank Governors have met annually. India hosted a meeting of G20 finance ministers and central bank governors in 2002. G20 was raised to the Summit level in 2008 to address the global financial and economic crisis of 2008.
Organizational Structure of G20
- The G-20 operates without a permanent secretariat or staff. The chair rotates annually among the members and is selected from a different regional grouping of countries.
- The chair is part of a revolving three-member management group of past, present and future chairs referred to as the Troika.
- The preparatory process for the G20 Summit is conducted through the established Sherpa and Finance tracks that prepare and follow up on the issues and commitments adopted at the Summits.
- The Sherpas’ Track focuses on non-economic and financial issues, such as development, anti-corruption and food security, while addressing internal aspects such as procedural rules of the G20 process. The Sherpas carry out important planning, negotiation and implementation tasks continuously.
- The Finance Track focuses on economic and financial issues. The Sherpa and Finance track both rely on the technical and substantive work of a series of expert working groups. Additionally, the thematic agenda is developed through the organization of several Ministerial Meetings, such as the Joint Meeting of Finance and Development Ministers, and the Labour, Agriculture and Tourism Ministerial meetings.
Significance of G20
- Together, the G20 members represent 2/3rd of the world population, 85% of the global gross product, 75% of international trade, 80% of global investments in research and development.
- These figures have remained relatively stable while the corresponding rates for Group of Seven (G7) nations, a smaller group of advanced democracies, have shrunk, as larger emerging markets take up a relatively greater share of the world’s economy.
- The G20’s membership is still more representative of the current international balance of power than blocs of countries formed earlier, such as the G7.
Economic significance of G20
- Include developing countries also: G20 is a platform where the Leaders committed to work with developing countries, particularly low-income countries to support them in implementing their nationally driven policies and priorities which are needed to fulfil internationally agreed development goals, particularly the Millennium Development Goals (MDGs) and reaffirmed their standstill commitment.
- G20 provides policy coherence, analysis and practical tools to support growth and development. This helps G20 members to better target their cooperation with developing countries and can help amplify development efforts on the international agenda. It promotes inclusive societies and opportunities for all.
- Coordinated work associated with G20 on human resources has helped many job-seekers with employment opportunities. The G20 members have and will continue to have, important implications for growth and development in Low-Income Developing Countries (LIDCs).
- G20 plays a critical role in creating an enabling environment for inclusive global growth and development. Its work on ensuring financial stability, promoting growth and avoiding and managing crises is critical in supporting opportunities.
- In turn, the increasing integration of developing countries into the global economy contributes to the G20’s objective of strong, sustainable, balanced and inclusive global growth.
- The 2030 Agenda for Sustainable Development also sets an ambitious, transformative and universal agenda for sustainable development efforts. The G20 is well-placed to contribute to its implementation and can maximize its collective impact.
Achievements of the G20 Group
- It brought increased participation of emerging countries in global issues. It helped provide a platform for developing countries to interact with developed nations and become part of the global decision-making process.
- The improvement in the regulations of the economies whose problems led to the crisis and the creation of safety nets to prevent problems in the future.
- The G20 also specifically helped to provide emergency funds during the 2008 crisis and plays an important role in financing development.
Shortcomings of the Group
- No permanent secretariat: Simultaneously, the informal structure of the G20, with a rotating chair and no permanent secretariat, means that agendas are determined each year by the chair and so can swing widely, and formal mechanisms to monitor follow-through on countries’ public commitments are weak.
- Considered Bias: The G20 is composed of 20 large and important economies. This creates a situation in which small countries have to follow their big brothers, in order to survive.
- Failed to live up to the expectations: Finance ministers and heads of state now come to the table with their hands tied, their positions determined in advance by their governments and a formal script that precludes meaningful and creative compromises.
- More showoff and less efficient: Meetings have become talkfests and photo opportunities. The willingness to come together in the hostile environment of late 2008 and early 2009 has entirely dissipated. The G20 agenda utterly fails to break with the tired, broken policies of the free market.
- Lack of consensus: At recent summits, countries have struggled to reach a unified consensus—the hallmark of previous iterations of the conference—as the interests of high- and low-income economies continue to diverge.
Bali G20 summit, 2022
Indonesia has focused on three key pillars in its presidency of G20 presidency:
- Global health architecture: president of Indonesia Joko Widodo talked about a global contingency fund for medical supplies, building capacity in developing countries to manufacture vaccines and the creation of global health protocols and standards.
- Sustainable energy transition: as part of its roadmap to reach net zero by 2060, Indonesia had slashed the coverage area of forest fires sevenfold. The country has restored peatlands and rehabilitated 50,000 hectares of mangrove forests.
- Digital transformation
Opportunity for India: 2023 G20 India Summit
- India’s presidency of the G20 grouping next year arguably the sole remaining effective forum for global governance presents an enormous opportunity to accelerate sustainable growth within India, in the emerging world, and beyond.
1] Underlining the need for a new framework
- Redefining common concerns: First, the presumed equality that we are all in the same boat, recognized in the case of climate change, needs to be expanded to other areas with a global impact redefining ‘common concerns’
- Second, emerging economies are no longer to be considered the source of problems needing external solutions but a source of solutions to shared problems.
- Ensuring adequate food, housing, education, health, water and sanitation and work for all should guide international cooperation.
- Principles of common but differentiated responsibilities for improving the quality of life of all households can guide deliberations in other fora on problems that seem intractable in multilateralism based on trade and aid.
2] Collaboration around science and technology
- The global agenda has been tilted towards investment, whereas science and technology are the driving force for economic diversification, sustainably urbanizing the world, and ushering the hydrogen economy and new crop varieties as the answer to both human well-being and global climate change.
- A forum to exchange experiences on societal benefits and growth as complementary goals would lead to fresh thinking on employment and the environment.
3] Redefining digital access as a universal service
- Harnessing the potential of the digital-information-technology revolution requires redefining digital access as a “universal service” that goes beyond physical connectivity to sharing specific opportunities available.
- For global society to reap the fruits of the new set of network technologies, open-access software should be offered for more cost-effective service delivery options, good governance and sustainable development.
4] Collaboration in space technology
- Space is the next frontier for finding solutions to problems of natural resource management ranging from climate change-related natural disasters, and supporting agricultural innovation to urban and infrastructure planning.
- Analysing Earth observation data will require regional and international collaboration through existing centers that have massive computing capacities, machine learning and artificial intelligence.
5] Collaboration in the health sector
- Public health has to learn from the COVID-19 fiasco with infectious diseases representing a market failure.
- A major global challenge is the rapidly growing antimicrobial resistance which needs new antibiotics and collaboration between existing biotechnology facilities.
6] Avoiding strategic competition
- Overriding priority to development suggests avoiding strategic competition.
- Countries in the region will support building on the 1971 UNGA Declaration designating for all time the Indian Ocean as a zone of peace and non-extension into the region of rivalries and conflicts that are foreign to it.
7] Reviving Global Financial Transaction Tax
- A Global Financial Transaction Tax, considered by the G20 in 2011, needs to be revived to be paid to a Green Technology Fund for Least Developed Countries.
Conclusion
- The role of G20 has become more and more fierce and integral. A comprehensive and collective endeavor is a need for an hour for the institution to live.
- Also, India’s presidency next year must leave the grouping with the agility and energy to respond to new realities, and it must create a future-ready multilateralism through a novel and robust institutional architecture.
- It is said that “Those who hold the pen, write the rules”. The time has come for India to both hold the pen and write the rules for more equitable global economics and governance.
