In 2022, India will be host to the G20, or Group of 20 nations, the world’s most influential economic multilateral forum.
The current G20 leaders-level dialogue came into being during the western financial crisis of 2008, when the G8 countries invited the leaders of the large developing economies, including India and China, to help power their way out of the crisis.
For countries like India, the G20 is a unique global institution, where developed and developing countries have equal stature. Here, the latter can display their global political, economic and intellectual leadership on a par with the world’s most powerful countries. It is the agenda-setting body that guides the international financial institutions and global standard-setting body that develops and enforces rules of global economic governance.
The G20 has a rotating presidency and secretariat, ensuring that no country dominates the agenda. Instead, the G20 host sets the agenda for the year, wielding vast direct and indirect influence. Managing this process from inception to fruition showcases a country’s talent and administrative ability.
This holds both opportunities and challenges for India: the opportunity to set the global economic governance agenda and make it inclusive, and the challenge of taking on the massive task as G20 President in 2022.
Is India ready for this leadership? Does it have a clear global positioning in place to lead an international financial agenda? Does the country’s top political leadership have the capacity to lead the G20 year intellectually, financially, managerially and administratively?
At some levels, India is ready. Indian business and industry is becoming a noteworthy competitor globally. The country’s domestic economy is starting to pick up, thanks to serious structural economic reforms undertaken. The central government is economically stronger, and the states are starting to learn about economic independence. This means they will pull their own weight more, making them contributive and structurally more aligned with their global counterparts.
Geopolitically, India is more internationally engaged. But it is less engaged geoeconomically, with a narrow focus on the World Bank, IMF and WTO issues. The country has much to contribute beyond these multilaterals, and that effort can commence with preparations for the G20 Presidency in 2022. In addition to the established themes of financial regulation, trade, and other topics, India can lead on several issues, most notably on reform of the Bretton Woods institutions, reconfiguration of global financial regulations, design of a new framework for trade in services and digital economy, and establishing better cross-border standards for transparency in financial flows.
It is organisationally that India will have challenges, where the country has an infrastructure, management and intellectual gap.
First, a G20 presidency brings together several global leaders, their attending delegations and independent experts. Unlike the Olympics and more like Davos, this effort is focused on a small, but powerful group which expects good airports, accommodation, conference facilities, and communications infrastructure all year round.
Second, the president of the G20 is tasked with leading and managing the global economic agenda for the year. These are typically undertaken by the finance ministry and foreign ministry of a country, and a special appointee such as G20 Sherpa, and they together act as the secretariat to the G20 Presidency. In India, the ministries have fine officers with this knowledge, but they are overworked and limited by their short tenures in the departments.
‘Global economic governance’ is almost no one ministry’s mandate, but in fact involves many. For example, the ministries of commerce, energy, agriculture, have deep stakes in the emerging global economic architecture. The banking and securities regulators – Reserve Bank of India and Securities and Exchange Board of India – play a crucial role in contributing to the formulation of global financial regulations. They all have to work as one.
Third, the logistical exercise is monumental, and unprecedented for India. While the country has developed the capacity for organising conferences like ‘Vibrant Gujarat’ and ‘Pravasi Bhartiya Divas’ once a year, the G20’s all-year requirements are equally intense, but more subtle and sophisticated. It needs an energetic secretariat to organise over 170 high-level ministerial, sub-ministerial and sub-forum meetings through the year; and at least 50 task forces (including those of the sub-forums, such as those for think tanks or business). Then there are content management, negotiation and feedback processes and developing and executing the year-long agenda to culmination. The closest experience for India was in 2016, when, as chair of the five BRICS countries, the ministry of external affairs and finance ministry together organised over 100 meetings, with uneven success on the presidency year.
Fourth, intellectually, India is constrained on capacity. There are virtually no think tanks or academics which specialise in this subject, except some, like Gateway House, which has focused on this since the early days of the G20. It requires deep inter-disciplinary research on issues of the international monetary system, global financial architecture, global trading system, cross-border use of energy and resources and global climate and sustainability commitments.
This constrains India to be a passive rule-taker, not rule-maker or designer of global economic rules. Consequential economic decisions are then driven by the West, and increasingly by China – neither of which are suitable for an India that should be a leading thinker of the new global economic rules.
Hosting a successful G20 Presidency in 2022 then, is a welcome challenge and a fitting aspiration. Preparations must begin now, with an immediate upgradation of domestic intellectual, administrative and physical infrastructure. This will directly benefit the domestic economy through enhanced human capital and increased international economic engagement via trade, business, and finance. The government will have to work together with think tanks, business and other civil society organisations to develop an agenda for 2022.
India is a growing emerging economy, but it leads no global economic forums. As former Reserve Bank governor Raghuram Rajan said at the inauguration of the first Gateway House-led Think20 (an official sub-forum of economic think tanks of the G20) in 2015, “Those who hold the pen, write the rules.” The time has come for India, heading into the 75th year of its independence, to both hold the pen and write the rules for a more equitable global economics and governance.
Akshay Mathur is former Director, Research and Analysis & Fellow, Geoeconomic Studies, Gateway House.
A version of this article was originally published in the Indian Express.
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