MBA Aspirants are expected to know the happenings around globe which might affect Indian economy and foreign policy, thus impacting all of us. Today, you will read on: India at G 20
This year, the G 20 Summit was held at Constantine Palace in Saint Petersburg, Russia, from September 5 to 6, 2013. This was the eight meeting of the G 20 heads of government.
G 20 refers to the group of twenty finance ministers and central bank governors, and the members of G 20 include South Africa, the United States of America, Canada, Mexico, Brazil, Argentina, China, Japan, South Korea, India, Indonesia, Russia, Turkey, the European Union, Germany, France, the United Kingdom, Italy, Saudi Arabia, and Australia.
During the summit, Indian Prime Minister Manmohan Singh focused on the current economic crisis and called upon other member countries to work on their monetary policies.
Since the beginning of 2013, the Indian economy has not seen light – the rate of inflation has been soaring, the current account deficit of the country has been widening, and the rupee has been depreciating at an alarming rate against the US dollar. Considering these economic problems, Japan joined hands with India to expand a bilateral currency swap facility from Rp 950 billion (US$15 billion) to Rp 3,168 billion (US$50 billion).
This will enhance the financial backing for the Indian currency, which has been hit hard by the prospective reduction of ultra easy US monetary policies. In addition, BRICS, comprising Brazil, Russia, India, China, and South Africa, committed a corpus of Rp 6,336 billion (US$100 billion) for emergency funding.
The G 20 Summit proved to be beneficial for India as it managed to get access to contingent pools of foreign exchange. This way, India need not depend on foreign credit lines to bring the exchange rate of the rupee back on track.
India and other emerging economies will benefit as long as money keeps flowing into developing countries; once developed countries such as Japan, the United States, the United Kingdom, and the European Union reverse such monetary policies and stop pumping money into developing countries, the world will once again face economic turmoil.
To prevent stress on the economies of developed countries, leaders at the G 20 Summit, particularly the developed nations, urged emerging economies not to depend heavily on developed nations. They made it clear that India, and other developing countries, should take responsibility for their own economies.
This discussion has opened India’s eyes, and now, the Indian government is clear as to how much foreign aid it can expect. In the G 20 Summit, developed countries gave assurance that they would inform developing countries in advance before turning off the liquidity tap. This way, emerging economies will not go into a state of shock and will have ample time to make the necessary monetary adjustments.
The G 20 Summit was not just a platform for countries to garner international support but a platform to inform the world on developments taking place in every member country. So, India took the opportunity to inform G 20 members about its infrastructural programme, including the Delhi-Mumbai Industrial Corridor to connect the national capital and the commercial capital with high speed rail and roads.
In addition, the G 20 Summit provided a platform for India to inform the world that it will be developing two ports in West Bengal and Andhra Pradesh with investments amounting to Rs 15,820 crores. By making these developments known to the world, India is one step closer to attracting more investors to the country.
Overall, the G 20 Summit proved to be a success for India - India not only managed to announce its development plans to the world but attained clarity on the amount of foreign aid it can expect for the growth of the country.