India assumed G-20 Presidency at a juncture when the fear of pandemic is looming large, economic uncertainty is increasing and Ukraine got an additional $1.85 billion military assistance from the US. PM Modi while taking over the Presidency from Indonesia stated that the challenges of climate change, terrorism, macroeconomic stability etc. can be solved amicably if the world economies cooperate.
HISTORY OF G-20
G-20 was formed in 1999 following the South Asian economic crisis. In fact, the finance ministers and central bank governors of G-7 countries viz. Canada, France, Germany, Italy, Japan, the UK, and the US after a meeting in Washington D.C. agreed to rope in the emerging economies to share the burden of mitigating the financial crisis of 1997-98. The G-20 comprises Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, the Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the UK, the US, and the European Union. Now G-20 is one of the strongest forums with members from developed as well as the developing economies contributing over 85% to the global GDP, nearly 75% to the global trade and almost 90% to the global patents. The first meeting of G20 took place in 1999 and it was elevated to the level of heads of government/state in 2008. G-20 Summit is held annually under a rotating Presidency, which rests with India for 2023. The group does not have a permanent secretariat like SAARC and the Presidency is supported by the previous, current, and future holders of the post. Initially G-20 dealt with the matters related to macroeconomics, but over the years, its agenda has expanded to cover issues relating to trade, climate change, sustainable development, health, agriculture, energy, and environment.
The process under G-20 is divided into two parallel tracks – the finance track and the Sherpa track. Finance track is led by finance ministers and central bank governors of member nations, who used to meet throughout the year. Contrary, Sherpa, who are personal emissaries of leaders, lead the Sherpa track. They also hold overseas negotiations all throughout the year, discussing agenda items for the summit and coordinating the substantive work of the G-20. Working groups designed around specific themes operate with both the tracks. These include representatives from relevant ministries of member countries and invited/guest countries too. Various international organisations such as the UN, IMF, and the Organisation for Economic-Cooperation and Development also participate in working groups.
Recently, the G-20 Sherpa meet took place in Udaipur to shape the agenda for India’s G-20 Presidency. We openly propagated our vision to the world that is Vasudhaiva Kutumbakam which means one earth, one family, one future and LiFE viz. Lifestyle for Environment. With this philosophy in mind, we declared that “India’s G-20 Presidency will work to promote the universal sense of oneness.”
CHALLENGES AND OPPORTUNITIES
The challenge before us is to walk the talk at both the domestic as well and at the international level. On the domestic front, the credibility of our philosophy depends upon creating a society and a political structure which is based on equality for all as the Constitution of India declares “irrespective of caste, creed or sex.” It is based on the delivery of justice – social, political, and economic to all citizens. Social injustices against women, Dalits, adivasis, and marginal sections need to be weeded out fully. Constitutional guarantees of democratic rights and civil liberties need to be strongly enforced. Communal polarisation based on vicious campaigns of hate, terror and violence can destroy the foundations of the philosophy laid down by our Prime Minister.
At the international level, nearly 70 low income and a dozen emerging economies of the world were under huge debts before the onset of the pandemic. These economies further enmeshed themselves into the debt trap with high inflation (due to Russia-Ukraine war) and strong dollar thereby making it extremely difficult to repay the borrowed amount. Short-term respite is being offered to such economies with great difficulty under Debt Service Suspension Initiative and the G-20 Common Framework which is hardly of any use. As a mouthpiece of such economies, India should take such steps that could help in restructuring the debt in a way that debt distressed economies may feel offloaded to a considerable extent.
Similarly, an effective solution and implementation to the problem of stashing profits to the tax havens by multinational enterprises can also offer a respite to the fund starving economies by increasing their tax collection. Countries like Ireland, Singapore, Cayman Islands etc. impose much lower taxes than most other countries. Multinational enterprises succeed in transferring their profits to the tax haven countries either through copyright and trademarks or making use of similar other loopholes in the taxation systems. Accordingly, the countries remain underfunded in terms of corporate tax and to make it good, individual income tax payers are taxed more, thereby spoiling the consumption led ecosystem. Studies have pointed out that in relative terms, lower-income countries also stand to lose the same amount as much as developed countries. OECD countries have agreed that multinational enterprises will be subjected to a global minimum tax rate of 15%. If implemented, it will see countries including India, raising approximately $150 billion annually.
By addressing such issues in the favour of the member countries in general, and countrymen in particular, can we celebrate the success of our Presidency in real terms.