India’s chief economic advisor (CEA) V Anantha Nageswaran said the objective of the Indian G-20 Presidency would be to focus on how to deal with food and energy insecurities that have taken place due to under-investment in energy infrastructure and near-term geopolitical developments.
“As we have heard multiple times that the global economic environment is subject to multiple headwinds. We are not dealing known unknowns, we are dealing with unknown unknowns. Under these circumstances, the objective of the Indian Presidency will be to focus on key issues of macroeconomic vulnerabilities in the near term, which deal with food and energy insecurities which have arisen partly because of long standing under investment in energy infrastructure but also because of near term geopolitical developments,” Nageswaran said at ICRIER’s 14th Annual International G-20 Conference on India’s G20 Presidency.
Beginning December 1, 2022, India would be undertaking the G20 Presidency till November 20, 2023.
The G20, or Group of Twenty, is an intergovernmental forum that has the major developing and developed economies as members. It includes 19 countries, including, Italy, Japan, Republic of Korea, Argentina, Australia, Brazil, Germany, India, Indonesia, Canada, South Africa, Turkey, UK, USA, China, France, Mexico, Russia, Saudi Arabia, and the European Union (EU).
India In G20 Ecosystem
India is currently a part of the G20 Troika (current, previous and incoming G20 Presidencies) which includes Italy, India, and Indonesia. During India’s presidency tenure, Brazil and Indonesia would make up the troika. For the first time, the troika would be having three developing nations and emerging economies, providing a strong narrative to the concerns of these economies.
“We know the circumstances under which India will assume the Presidency of G-20. One of the necessary requirements to ensure that we do a good job of the presidency is to be able to improvise and be flexible as circumstances emerge in the global economic and political landscape,” Nageswaran said.
Nageswaran also said that it would be important to observe how, going forward, multilateral institutions could be strengthened, both in terms of governance as well as the capital they command to be able to serve development needs of countries on one hand and global challenges on the other, which affect smaller and lower income countries more than it affects others.
“So in that sense multilateral financial institutions must cater to global public goods as well as continue to engage in development financing as they have been mandated to do at the end of World War II as well. And of course in this regard, this is not just about capital adequacy they have but also about additional capital they may need for which today’s developed countries would have to take a call on how they will contribute to that,” he said.
The entire idea of India’s Presidency would be to identify a consensus-based solution, accelerating the scale and scope of the response of the global community, trans-boundary challenges such as regulation of virtual assets, dealing with cross border remittances, and also the issue of global capital flows and how to create buffers and safety nets for developing countries that get affected by spillovers from developed countries policies.
“The answers are not going to be easy to come by. At the same time, considering the rapidly evolving and shifting nature of geopolitics, India remains flexible to recalibrate its agenda as may be necessary,” CEA said.
India And Climate Response
As part of the climate agenda, the quantum of climate finance, availability, the terms on which such finance is made available, blended – whether it’s public and private – all these issues and disclosure standards would be key elements of the climate finance discussions.
“It is not just about securing money. It is about the various terms and conditions paraphernalia that go with it. For example, the International Sustainability Standards Board came up with its draft sustainability standards and climate disclosure standards in June. The requirements are so comprehensive and onerous and may even be beyond the capabilities of well funded, well capitalised large corporate entities in developing countries.
Nageswaran said that several financial institutions have even left the Glasgow Financial Alliance, the GFANS, because the information requirements were very onerous. “So you can imagine what would be the information requirements for developing countries and smaller businesses. And if that information is not provided, the flow of funds will be affected… These disclosure standards have to take into consideration the principle of common but differentiated responsibilities and respective capabilities.”
There is a need to balance the growth aspirations and climate considerations for many developing economies because the pandemic, the commodity shock, and the monetary tightening in the developed world have all derailed the growth path that many countries would have expected at the beginning of this decade, the CEA said.
“In all these discussions on climate finance, we forget that ultimately economic growth is the most important insurance and source of resources for them to be able to invest in these longer term considerations and priorities which are important for today’s developed world… but many developing countries are not in that position. And therefore, to balance growth and climate considerations, it is important to recognize that carbon mitigation, for developing countries, relatively speaking a future problem. We also have to make sure that we account for the atmospheric carbon that already is there,” Nageswaran said.
He also said the emphasis on mitigation and carbon pricing is a very important mechanism on the part of international organisations and developed nations but they have to be balanced with the recognition of legitimate growth aspirations for developing nations.