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India’s stand at forthcoming G-20 Brisbane Summit
On coming 15th to 16th November 2014 when the G20 leaders will be congregating in Brisbane, Australia for their annual Summit meeting, the challenge before them would be to impart a renewed sense of purpose and urgency to the group.
Formed in 1999 in the aftermath of the Asian financial crisis, the G20 was more focused and provided great hope to improve cooperation and consultation on matters pertaining to the international financial system. It attained high significance through Summit meetings during the height of global economic meltdown in 2008. But, thereafter, the group seems to have lost its main focus and become more of a rhetorical platform. The decline has been more apparent in last three years.
A lot of blame for that will invariably go to member countries (currently standing at 19 plus the European Union) as most of them are at odds with each other thereby hobbling the true potential of a grouping that commands almost 85% of the global economic output and manages 75% of global trade.
The net impact of the differences between member countries is that G20 may actually never be able to replace its more cohesive and exclusive cousin – G8. Barring Russia, the G8 largely speaks with one voice and purpose.
At Brisbane, therefore, when the G20 leaders will meet, the world will be watching and expect them to focus on more pressing issues which today concern the global economy.
Foremost would be to ensure that the economic recovery across the world remains on track. Falling inflation rates, both due to tight monetary policies and cheaper commodity prices, has created a false sense of optimism that the worst is over, which may not be true. Recent economic data from the Eurozone and China indicate deflationary tendencies.
If deflation sets in, it will suppress demand and economic activity and push more governments to adopt protectionist policy response. A sustainable economic recovery calls for creating transparent processes and institutions where developing economies take part as a stakeholder and not as back-benchers.
That would obviously require addressing the concerns of developing countries like India. For long, New Delhi and other like-minded developing countries have demanded a reform of global financial institutions like the International Monetary Fund and the World Bank without any success.
In fact, U.S. Congress has blocked reforms which would have given more say to developing countries. Not surprisingly, it has pushed some of these developing countries to look for their own solutions like the development bank proposed during the BRICS summit in Brazil.
New Delhi has also pitched for channeling surplus global funds into infrastructure development, which could spur job creation and push sustainable growth. The idea, if it gains currency within the group, could benefit India as it is going to be the single largest market for infrastructure.
The positive is that Australia is on the same page with India on infrastructure development as a key driver of growth. Likewise, India has pitched for removal of impediments to movement of services within G20. Although G20 has vowed to remove trade barriers, but nothing concrete has come so far.
India, in particular, is keen to see a reduction in the cost of remittances and an increased sharing of information to prevent tax evasion. India occupied the top spot with $71 billion in remittances in 2013, according to World Bank records.
From an Indian point of view, it is important that its concerns vis-à-vis food security may not get ignored. There is an apprehension that the U.S. and Australia may raise food subsidy issue at the Summit. The Western countries take the position that food subsidy and support price for farmers on food grains are ‘trade distorting measures’ that need to be phased out immediately or make members liable for penal action.
India and other developing countries, on the other hand, continue to insist on finding a permanent solution to food security without attracting penalties or penal action. They also insist that action be taken on countries like US and members of (EU) that continue to dole out huge farm subsidies bracketed as ‘non-trade distorting in nature’ in WTO. Western countries blame India for blocking the multilateral trade deal.