G 20 Summit

Why in the News?

The 17th G20 Heads of State and Government Summit will happen in November 2022 in Bali, Indonesia.

• In 2023, India will assume the G20 presidency for the first time.

Key Points:

About

G20 Summit

• G 20 was formed in 1999 as a politico-economic alliance in the backdrop of the financial crisis of the late 1990s that hit East Asia and Southeast Asia in particular.
• It brings together the world’s major advanced and emerging economies.
• The first G20 Summit took place in 2008 in Washington DC, US.
• Aim: To secure global financial stability by involving middle-income countries.
• Spain attends the G20 Summits as a permanent guest.
• The Presidency can also invite representatives of regional organisations and guests to the G20 Summit.

Members:

• Argentina, Australia, Brazil, Canada, China, Germany, France, India, Indonesia, Italy, Japan, Mexico, and Russia.
• Saudi Arabia, South Africa, South Korea, Turkey, the UK, the USA and the EU.

Objectives of the G20:

• Policy coordination between its members in order to achieve global economic stability, and sustainable growth.
• To promote financial regulations that reduce risks and prevent future financial crises.
• To create a new international financial architecture.

Functioning of G-20:

• The G20 has no Permanent Secretariat.
• Setting the Agenda: The G-20 agenda depends heavily on the guidance of Finance Ministers and Central Governors which is finalised by a unique system of ‘Sherpas’, who are special envoys of G-20 leaders.
• Its summits are also attended by representatives of the International Monetary Fund (IMF) and the World Bank (WB).

Why does the G20 matter?

• Together, the G20 countries include 60 per cent of the world’s population, 80 per cent of global GDP, and 75 per cent of global trade.
• These figures have remained relatively stable. The corresponding rates for Group of Seven (G7) nations, a smaller group of advanced democracies, have shrunk, as emerging markets take up a relatively greater share of the world’s economy.

 Limitation:

• No Follow up: Since there is no G20 secretariat, no follow-up action can be expected on the issues discussed during the summit.
  • The only hope is that the member states carry forward some of the decisions in their own national policies.
• Legal Sanctity: G -20 Declarations are based on consensus and thus not legally binding.

India & G-20

• India’s participation in the G20 process signifies that as a major developing economy India has a vital stake in the stability of the international economic and financial system.
• India has been active in the G20 processes in the Sherpas and Finance Track.
• Its support for global cooperation, inclusive development, economic stability, and sustainable growth is in line with its national goals and the values espoused by other leaders of the G20.

Conclusion:

• The G20 cannot be a panacea for global problems. But over the decade, the G20 has emerged as an important forum for international cooperation.
• The G20 summits hold a special significance as they deal with the global political economy at a critical moment in the wake of post-pandemic recovery.