Troika at the helm of G-20 | The Financial Express

Troika at the helm of G-20

India’s presidency should bat strongly for the global south

Troika at the helm of G-20
In this milieu, India’s G-20 presidency should voice the concerns of poorer countries as they bear the brunt of the “permacrisis”. (IE)

The conjuncture of three emerging economies, Indonesia, India and Brazil helming the G-20 in 2022-2024—with India taking charge in December—should be seized to flag the concerns of the global south. These countries are adversely impacted as the world economy is buffeted by headwinds due to the Covid pandemic, climate change, fall-out of Russia’s invasion of Ukraine on energy and food security that has triggered spiraling inflation and global recessionary fears. The advanced countries like the US are raising interest rates to combat inflation, triggering large and volatile capital flows, besides strengthening the dollar, which affect the trade and current account balances of poorer countries, many of which are debt-ridden. The G-20 grouping is perceived as being dominated by the richer countries, but it is definitely more broad-based as it has a clutch of emerging economies as members, accounting for 80% of global GDP and 59-77 % of international trade. The G-20 has seen better days when it played an influential role in steering the world economy out of the economic crisis of 2008-2010 but has failed to provide leadership in the fight against the Covid pandemic. Geopolitical tensions due to the Ukraine conflict have rendered it dysfunctional and threaten to split the world into “two trade blocks, two financial systems, two currency blocks, two payment systems and two separate world-wide webs”, according to former RBI Governor Duvvuri Subbarao’s article in the Times of India.

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In this milieu, India’s G-20 presidency should voice the concerns of poorer countries as they bear the brunt of the “permacrisis”—the new buzzword of 2022 according to Collins Dictionary—afflicting the world economy. The global south should not be forced to choose between the two systems. The need is for detailed deliberations on India’s watch as to how these countries can cope with the adverse spillover effects of the global turmoil, as has been rightly underscored by Union finance minister, Nirmala Sitharaman. The biggest spillover concerns food security of poorer countries, affecting 345 million people who have been impacted by the Covid pandemic and crop failures due to climate change and the Russian invasion of Ukraine. In this context, India has repeatedly highlighted how it has supplied food grain to many developing countries in need. Another is the prospect of large outflows of capital from emerging economies due to monetary tightening in countries like the US. The only exceptions to the resultant currency slide against the dollar among the G-20 are Brazil, Mexico and Russia. For the poorer countries, more funds are needed to cope with the ravages of climate change. India must urge the richer countries to make good on their unfulfilled promise of providing $100 billion annually in climate finance.

To be sure, there are other issues on India’s agenda as president of the G-20 like regulating cryptocurrencies and reform of multilateral institutions like the IMF, World Bank and UN. If the voice of the global south is to be given greater weight, it is a no-brainer that emerging economies and developing countries must be given more quotas and voting shares in the development banks that are currently dominated by the richer countries. To be sure, there has been some readjustment in quotas and voting rights but is far short of what is required. This is a long-standing demand that reflects their growing importance in the world economy.

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First published on: 04-11-2022 at 04:00 IST