Benefits of G20 India

The G20 initiative was announced at the G7 summit in Cologne in June 1999. It was legally constituted at the G7 Finance Ministers’ conference on 26th September 1999, with an initial meeting in Berlin on 15–16 December 1999. The first chairman was former Canadian finance minister Paul Martin, and former German finance minister Hans Eichel hosted the inaugural meeting.

The G-20 initiative is a group of the world’s most powerful economic forces, comprising 19 countries plus the European Union (EU), whose primary purpose is to improve global economic and financial cooperation and decision-making. The G-20 has evolved to become one of the most influential international organisations, accounting for 85% of global GDP, 75% of global trade, and about two-thirds of the world’s population.

The G-20 was formed in 1999 when the finance ministers and central bank governors of 20 powerful nations convened to examine the fallout of the Asian Financial Crisis. The inaugural G-20 summit was held in 2008 in Washington DC, United States. The G-20 platform has increased in importance since then, and in 2009, world leaders decided that the G-20 would replace the G-8 as the most powerful club of rich nations.

On 4-5 September 2016, the G20 summit was held in Hangzhou, China, with the theme ‘An Innovative, Invigorated, Interconnected, and Inclusive World Economy.’ Given India’s status as the world’s fastest-growing major economy, its involvement in bringing the summit’s theme to life will be important.

Some of the significant takeaways that are beneficial to India’s interests are as follows:

• Terrorism and wars, according to the G20 communiqué, affect the global economic picture. With terrorism being the most pressing security worry for the Indian establishment, its inclusion in the G20 communiqué demonstrates acknowledgement of Indian concerns. India also praised the G-20 initiative to curb terrorist financing.

• Initially, the statement requested that the Paris Agreement on Climate Change be ratified by 2016. However, because India and other developing countries are still in the early phases of economic development, they are unable to implement the Paris Agreement fully. Poverty alleviation is as important as environmental conservation. As a consequence, despite pressure from the United States and China, the final draft dropped the 2016 deadline in favour of ratification by member governments as soon as possible.

• The communiqué, likewise, made no mention of a date for the end of gasoline subsidies. Liquefied Petroleum Gas (LPG) receives the bulk of India’s fuel subsidies, and it is used as cooking fuel by the majority of the country’s middle and lower class citizens. Although global gasoline prices are constantly lowering, any rapid termination of fuel subsidies might undermine India’s food security.

• The G-20 initiative restated its resolve to desist from competitive devaluation, which leads to volatility and chaotic exchange rate movements. Currency depreciation is adverse to the growth of Indian exports.

• Innovations will determine future growth, but they will also create new growth drivers. Innovation is critical for propelling India’s economic development, which has not hit the 7% level in recent years. The G-20 communiqué affirmed the G-20 Blueprint for Innovative Growth as a new plan to comply with each nation’s circumstances.
• The G-20 resolved to work together to combat base erosion and profit shifting (BEPS). India has aggressively advocated for steps to curb BEPS in non-G-20 nations. BEPS refers to tax avoidance methods that use loopholes and mismatches in tax legislation to move earnings too low or no-tax jurisdictions.

Why should these policies be implemented?

Although such a laundry list demonstrates that each country has a plan for economic recovery, these commitments tend to be heavy on formality and light on implementation due to their nonbinding nature. Even the most laudable intentions have been made ineffective by the G20’s lack of enforcement methods and the local political hurdles to change that affect individual member states. 

In summit preparations, Suresh Prabhu, India’s representative, rightly insisted that the G20 must further liberalise services trade. India has a comparative advantage and has the potential to unlock exponential global GDP growth far greater than the benefits of freer trade in goods.

The 2030 Agenda for Sustainable Development establishes a bold, revolutionary, and global framework for sustainable development activities. The G20 initiative is well-positioned to contribute to its execution and optimise its collective effect, including consideration of the following procedures:

• Respond to the requirements of LIDCs (Low Income Developing Countries) and development stakeholders by establishing a more systematic conversation, building on the initiatives of the Turkish Presidency in 2015. This can be beneficial.

• Ensure that the G20’s development priorities are responsive, relevant and visible.

• Encourage direct involvement with LIDCs, notably through experimental programmes described above.

• Assisting in the development of tax competence and abilities

• Align the G20 development plan with the 2030 Agenda, and contemplate joint action. The G20 initiative will add value.

Conclusion

The G-20 initiative is a coalition of the world’s most-powerful 19 economies plus the EU. It was founded in 1999 and comprises the economies that account for 85% of the world’s GDP, 75% of the global trade, and over two-thirds of the world’s total population. The G-20 has been a collective, non-hierarchical body and played a key role in promoting world trade.