The Origin of G20
The 1990s witnessed significant debt crises across the world – the Mexican peso crisis (1994-94), the Asian financial crisis (1997-98) & the Russian financial crisis of 1998. In a rapidly globalizing world, it was realised that G7 and Bretton Woods were unable to provide financial stability the world needed. Thus, to bring the large economies of both, the developing and developed world together, the G20 (The Group of Twenty) was established in 1999 at the initiative of G7. The forum includes 19 countries and the European Union, and accounts for 85% of the world GDP, over 75% of global trade and about two third of the global population.
Evolution of G20
Originally G20 was conceived as a forum of the Finance ministers and central bank governors of the member economies, which would meet to discuss financial and macroeconomic issues.
Against the backdrop of the 2008 Financial crisis, the status of G20 was elevated to include the head of member states, and in 2009, it was designated as ‘the premier forum for international economic cooperation’. At present, the agenda of G20 includes health, agriculture, environment, climate change, energy, trade and sustainable development among other things.
For convenience, the workstreams of G20 have been divided into 3 tracks i.e. Sherpa track, finance track & engagement groups.
Sherpa track: Through this channel, several working groups and initiatives meet to discuss various developments in the sectors like agriculture, education, employment, culture, tourism etc. These working groups discuss priorities and make recommendations. The representatives for the working groups include officials from relevant ministries and experts in the domain.
Finance track: Through its meetings of finance ministers, central bank governors and their deputies, the discussions are held on the global economic outlook, risks, reforms, financial infrastructure, taxation etc.
Engagement groups: These groups comprise non-government participants from member economies. These groups also provide recommendations to G20 leaders and contribute towards policymaking. The verticals in engagement groups include business20, civil20, startup20, SAI20 etc.
Apart from these 3 workstreams, other economic and political issues may be discussed at G20 Summits, where the heads of state participate.
The Indian Presidency
Every year, one of the member countries of G20 is designated as the president of G20. The presidency hosts the Summit and other meetings of G20, and is also responsible for bringing together the G20 agenda.
The G20 group does not have a permanent secretariat. To ensure continuity, the presidency is supported by troika, made up of the current host, the previous host and the next one e.g. current troika consists of Indonesia (2022), India (2023) & Brazil (2024)
It is the first time that India will be the G20 president and host the Summit. While the presidency brings new opportunities for India, to present itself at a global level, and to shape the agenda of a major world grouping, there are challenges that India faces in a world divided on multiple fronts.
Challenges before India
One of the primary challenges India will face as the G20 president is the task of leading the global economic recovery in the aftermath of the COVID-19 pandemic. The pandemic has severely impacted economies worldwide, causing job losses, business closures, and disruptions in international trade. Covid has also created disruptions in economies of the developing nations and exposed the gaps in their health infrastructure. India claims to represent the interests of the Global South and thus, navigating complex discussions on fiscal policies, debt sustainability, and coordinated efforts to ensure a robust and inclusive recovery for all countries will be a major challenge before India.
The Ukraine crisis remains unresolved after more than a year has passed. Along with crude oil, the region is also a major supplier of fertilizer-related chemicals for the whole world. Thus, the war has serious implications for the food and energy security of the world. The discussion related to the war proved tough at the Bali summit last year, and how diplomatically India is able to handle the situation, will test its leadership.
Another significant challenge for India’s G20 presidency is addressing climate change and promoting sustainable development. The ambit of G20 has increased to include climate change as one of its priorities. And as one of the largest carbon emitters, a country highly vulnerable to climate change impacts, and the voice of the global south, India plays a crucial role in shaping global climate policies. While G20 has made a commitment to achieve carbon neutrality by 2050, making a plan for ground-level changes will not be easy. The presidency provides an opportunity to rally G20 nations towards ambitious climate targets, promoting renewable energy, sustainable agriculture, and climate resilience measures.
India will face the challenge of advocating for a fair and inclusive global trading system amidst rising protectionism and trade tensions. Balancing the interests of developed and developing nations, addressing trade imbalances, and fostering a rules-based international trade regime will require diplomatic finesse and negotiation skills.
Opportunities for India
Although riddled with challenges, G20 presidency also presents several opportunities for India. As already mentioned, it is for the first time that India is hosting the G20 Summit. India has adopted the theme of Vasudhaiva Kutumbakam – one earth, one family, one future. While the presidency presents an opportunity to push the agenda of India and the interests of its allies, several track 1 and track 2 meetings spread spatially and temporally also present a chance to increase India’s brand awareness.
India’s prowess in information technology and innovation positions it well to harness the opportunities presented by the digital economy. As the G20 president, India can promote digital literacy, financial inclusion, e-governance, providing health care and exploring ways to leverage technology for sustainable development. While the UPI has been a big domestic success, through various government and non-government forums, the presidency presents an opportunity to push the platform to a global level, apt with India’s rising clout.
India’s G20 presidency presents a unique opportunity to prioritize global health systems and enhance international cooperation after the pandemic. India, being a major supplier of generic drugs and a hub for vaccine production, can contribute significantly to discussions on equitable access to healthcare, strengthening health infrastructure, and building resilience against future health crises. Along with serving the global health cause, any progress on the issue will help the Indian economy.
Tourism’s share of world GDP is approximately 6.1%. And although India is one of the most diverse nations in the world, India ranks much lower in various global tourism rankings. The G20 presents an opportunity for India to promote itself as a major tourist destination. By promoting its attractions, facilitating partnerships, advocating for necessary infrastructure development, and fostering international cooperation, India can harness its actual potential in tourism.
India is assuming the G20 presidency while it has just completed 75 years of its independence. It is the time that the largest democracy, rather the ‘mother of democracy’, throws off its past image of an under-developed, poor and non-aligned nation and assume the role of global leadership.
The world needs a leadership it can trust, while the United States wants to be done away as a global policeman, no nation wants to trust an authoritarian regime like China and Russia. Thus, it appears that the world has no better option than India.