India's G20 Presidency: How the country is using its economic clout to bridge North-South divide

India is using the G20 presidency and its growing economic clout to take up global issues and is turning into a credible voice to bridge the North–South divide on wide-ranging issues such as accelerating SDGs and reform of multilateral development banks  

Delhi seems to be in a state of anticipation. Renovation work is being carried out at a frenetic pace across the city—roads and pavements are being repaired, LED lights are being installed, gardens, fountains and sculptures are being put up at prominent traffic islands and a state-of-the-art international exhibition-cum-convention centre has been built at Pragati Maidan at a cost of Rs 2,700 crore. The centre, inaugurated by Prime Minister Narendra Modi on July 26, will host world leaders such as US President Joe Biden and British Prime Minister Rishi Sunak at the G20 Leaders’ Summit on September 9-10. The event will mark the culmination of India’s year-long presidency of the G20. 

The beautification of the capital may seem superfluous, but the bigger tangible gain for India this year has been the ability to showcase itself as an emerging economic superpower, with recent data and reports hailing it as a force to reckon with. 

For instance, Morgan Stanley has upgraded India to ‘overweight’ and strategists at the brokerage believe that India is at the start of a “long wave boom” even as China may be ending one. S&P Global expects India to grow 6.7 per cent per year from FY24 to FY31, catapulting GDP to $6.7 trillion from $3.4 trillion in FY23.   

And India seems to be combining this growing economic clout with its G20 presidency to make its tryst with history as it takes up difficult and urgent issues that require global attention. Countries across the world are trying to repair the damage from the twin shocks of the Covid-19 pandemic and the Russia-Ukraine war and move to a new normal of slower growth, higher inflation, widening socioeconomic disparities and extreme weather-related events.

As of today, G20 constitutes more than 80 per cent of the global GDP. So, these are the
most important countries in the world in terms of output

Suresh Prabhu
Former Union Minister and
India’s former Sherpa to the G20

“We are at a very interesting time. India has done exceptionally well and in doing exceptionally well, there are certain learnings India can share with the world and that is elevating India’s presidency to a new level,” veteran banker K.V. Kamath, Chairman of the National Bank for Financing Infrastructure and Development (NaBFID), tells Business Today. (To read his column, turn to page 76.) 

He points out that during the Covid-19 crisis that led to problems in the financial sector, and then amid the problems in Europe, India is one economy that quickly tackled these challenges and returned to normalcy without imposing significant pain on the system. 

An Agenda for Development

But what is so special about the G20 presidency, given that it is a rotating one? The importance of this grouping lies in the very fact that it consists of the 20 most powerful economies in the world, which got together for the first time in 1999 after the East Asian financial crisis to discuss global economic and financial issues.     

Over the years, its mandate has expanded to take up all possible issues in the world such as climate change and energy, says Suresh Prabhu, former Union Minister and former Sherpa for India to the G20 and G7. “As of today, G20 constitutes more than 80 per cent of the global GDP. So, these are the most important countries in the world in terms of output,” he says. While economic issues will be the most important, every host country has the prerogative to take up any priority issue at the G20 forum, says Prabhu, a veteran of these talks.   

Not surprisingly, the G20 agenda that India has set up for its presidency includes many topics rooted in its own national developmental priorities such as technological transformation and digital public infrastructure (DPI); progress on sustainable development goals (SDGs); green development and LiFE (Lifestyle For the Environment); and women-led development. It has also not shied away from taking up more challenging but pertinent issues such as reforming multilateral development banks (MDBs) and speedier resolution of debt stress faced by many vulnerable countries.

India has vast experience on many of these themes. For instance, it has been tackling economic issues such as leakages in subsidy distribution, financial inclusion and Covid-19 vaccination through innovative solutions based on DPI, including Aadhaar, Co-Win and the Unified Payments Interface (UPI). It believes these can help both the developing and developed countries.   

Kamath of NaBFID feels India Stack can become a model for the world. “UPI is a global settlement system and is much more modern and nimbler [than its peers],” he says about the digital payments system that is finding takers in Singapore, the UAE and France.   

“A major impact of India’s G20 presidency is the recognition that digital public infrastructure is an inclusive and efficient way to provide public service delivery. And India has demonstrated that using DPIs, countries can provide world class services at a fraction of the existing costs. There are many developing countries, especially in sub-Saharan Africa, that can tremendously benefit by customising DPIs to their domestic context,” says Deepak Mishra, Director and Chief Executive of the Indian Council for Research on International Economic Relations (Icrier), a think tank.   

As per the road map of the Digital Public Goods Alliance—a multi-stakeholder UN-endorsed initiative that facilitates the discovery and deployment of open-source technologies—India is a world leader in developing and deploying digital public goods (DPG), with as many as 42 developed and 49 deployed DPGs. While India leads the list of G20 nations using DPGs, it is followed by the US, per Icrier.   

At the Global DPI Summit, held in Pune this June, India signed MoUs with four countries—Armenia, Sierra Leone, Suriname, and Antigua and Barbuda—on sharing the India Stack. This will enable successful digital solutions implemented at population scale. The fourth in-person meeting of the Digital Economy Working Group and the Digital Economy Ministerial is scheduled later in August in Bengaluru, where greater traction is expected.

A major impact of India’s G20 presidency is the recognition that digital public infrastructure is an inclusive and efficient way to provide public service delivery

Deepak Mishra
Director and Chief Executive 
ICRIER

Towards a Greener Future

Sustainable development is another area that has seen huge strides under India’s presidency. The country has been successful in delivering an action plan to accelerate progress on SDGs; the plan reiterates the commitments of member states to deliver on the goals. 

Similarly, the theme of energy transition is also finding many takers, given the urgent need to fight climate change. As the world’s third-largest renewable energy producer and with initiatives such as production-linked incentives for electric vehicles and a National Green Hydrogen Mission, India has paved the way for meaningful discussions.     

While the G20 Energy Transitions Ministerial meeting did not end with a joint communiqué, the outcome document did speak of expediting the production and use of hydrogen generated from zero- and low-emission technologies, as well as adopting biofuels. “Under the 2015 Paris accord, all the signatory nations are committed to the SDGs that primarily involve a steady transition from fossil fuels and reduction of carbon emissions to mitigate the increasing climate risks and their impact on the global economy,” points out Suman Chowdhury, Chief Economist and Head-Research at Acuité Ratings & Research.     

Several meetings of the Energy Transitions Working Group have taken place where the priority areas include low-cost financing for energy transition and development of diversified supply chains. “Any tangible progress in this area with enhanced access to global funds will have positive implications for India’s own ambitious green financing programmes and the green goals set for 2030,” says Chowdhury.   

Amitabh Kant, India’s Sherpa to the G20, tells Business Today that the goal of India’s presidency is to bring the G20 nations together as problem-solvers to tackle cascading and interlinked crises for a resilient, sustainable, and inclusive world. “We will aim to drive a broader consensus on a majority of our outcomes during these meetings,” he says, adding that a wider consensus has already been achieved on topics such as green development, SDGs, climate finance and tech transformation. (For the full interview, turn to page 44.) 

Many of these future-forward themes are also being taken up by business leaders to discuss strategies on how to shockproof their own sectors. The B20 or Business 20 which is the official G20 dialogue forum involving the global business community has, this year, adopted the theme of RAISE, which stands for responsible, accelerated, innovative, sustainable, and equitable businesses.   

It has set up seven task forces on themes including inclusive global value chains for resilient global trade and investment, future of work, skilling and mobility, digital transformation, financing for global economic recovery, financial inclusion for economic empowerment, energy, climate change and resource efficiency and lastly tech, innovation and R&D.   

The B20 Summit India 2023, scheduled to be held in Delhi in late-August, will witness the capital hosting some of the biggest global and Indian industry leaders including Shantanu Narayen, Chair and CEO of Adobe; Michael Miebach, CEO of Mastercard; Arvind Krishna, Chairman and CEO of IBM; Dilhan Pillay Sandrasegara, ED and CEO of Temasek; Sunil Bharti Mittal, Chairman of Bharti Enterprises; and T.V. Narendran, CEO and MD, Tata Steel. N. Chandrasekaran, the Chairman of Tata Sons, is the B20 India Chair. 

A New World Order 

But that is not all. India has also taken up other meatier issues during its G20 presidency that would help define the new world order.   

One of the most important issues that India chose to tackle during its presidency is the reform and strengthening of MDBs. The G20’s Independent Expert Group (IEG) led jointly by former US Treasury Secretary Lawrence Summers and N.K. Singh, Chairman of the 15th Finance Commission, recently presented the first volume of its report, which among other measures, has prescribed a triple-funding method through a Global Challenges Funding Mechanism that will allow for tapping into private sector investments that can help raise an additional $20 billion for annual lending. At present, the two funding mechanisms are negotiated equity contributions from sovereign shareholders and discretionary trust funds. The second volume of the report is awaited.   

Many of the global shared challenges playing out today—climate change, energy transition or supply chain diversification—cannot be solved by countries in isolation

Deepa Kumar
Head
Asia-Pacific Country Risk S&P Global Market Intelligence

“India’s G20 leadership has opened new debates, brought new ideas and created new vocabularies on global issues. For example, the previous expert group on MDBs focussed primarily on the capital adequacy framework. But after the publication of the Singh-Summers Committee report, ‘The Triple Agenda’, there is a recognition that reforming MDBs will have to be carried out along three dimensions: expanding their mandate, tripling their finance and creating a third financing mechanism,” explains Mishra of Icrier. The think tank and the Washington-based Centre for Global Development have been appointed policy advisors to this IEG.   

“Expanding the MDB reform agenda from one to three dimensions reflects the level of India’s ambition,” says Mishra. “Kudos to Finance Minister Nirmala Sitharaman for showing that India will not shy away from taking up some of the most difficult challenges facing the world economy and finding their solutions. This is the manifestation of a new India, a confident India and a global India.”   

Experts believe that India is a credible voice that can facilitate dialogue between the Global North and South and that further aids its G20 presidency. Deepa Kumar, Head of Asia-Pacific Country Risk at S&P Global Market Intelligence, says that the country is seeing itself as a bridge between advanced economies and emerging economies. “Many of the global shared challenges that are playing out today—climate change, energy transition or supply chain diversification—cannot be solved by countries in isolation. The pandemic co-operation showed the world that you need to be able to work together. But what it also showed is that there is a divide in how you work across the Global North and South.” India is realising that it is at the cusp where it can not only represent the challenges of the emerging economies, but can also work with its partners in the West—who are bullish about the country—to bridge that gap and make sure that there is some kind of consensus on how to approach global challenges, she adds.     

Trying to bridge these differences, the Indian presidency is working to include the African Union as a member of the G20. Nagesh Kumar, Director and Chief Executive of the Institute for Studies in Industrial Development (ISID), says that if this takes place, it will be an important and lasting legacy of the Indian presidency. “That will dramatically enhance the inclusiveness of this grouping,” says Kumar of the New Delhi-based think tank, adding that it will make the G20 much more representative and inclusive than it is now.   

India is also trying to reach a consensus on financial sector issues such as a global framework for regulating cryptocurrencies, as well as addressing debt vulnerabilities in low- and middle-income countries in an effective, comprehensive and systematic manner, which are amongst the key issues highlighted by Finance Minister Sitharaman.

A Work in Progress

The third G20 finance ministers’ and central bank governors’ meeting in Gandhinagar in July saw endorsements on many of these issues including the reform of MDBs and the Financial Stability Board’s recommendations for the regulation and oversight of crypto-asset activities and markets. But, with the ongoing Russia-Ukraine war, the meeting ended without a consensus due to a lack of common language and only an outcome summary was released.   

In fact, all eyes now are on whether a communiqué will be issued at the Leaders’ Summit in September, which would make India’s presidency of the G20 truly successful. Policy watchers are, however, optimistic that given India’s diplomatic ties and its role in the previous Indonesian presidency, a communiqué at the Leaders’ Summit is still very much possible.

Madan Sabnavis, Chief Economist of Bank of Baroda, points out that G20 talks are all works in progress, which sometimes lead to an optimum solution. “To expect all 20 countries to agree to everything will not happen. But we need to have these kinds of discussions so that we can have consensus on at least some issues,” he says.   

Kumar of ISID, however, notes that there was a serious question mark on last year’s Indonesian G20 presidency coming up with a communiqué. But India came to the rescue. “Everybody had written off the Bali Summit as a failed one [that would] not come up with the communiqué. The Ukraine war was really a hot issue at that time. I think Prime Minister Modi’s intervention helped to bridge the differences and find a language acceptable to all. This helped the communiqué to be agreed [upon] and adopted. So, even as a member of the troika and not the host country, India was able to help in finding a common ground. There is no reason why such a step will not be attempted this time around,” he says, adding that the PM’s charisma and personal rapport with leaders of other G20 nations will help him to bring them around. The G20 troika consists of the current, previous and incoming presidencies, which work together to ensure consistency and continuity of the agenda. Italy held the presidency in 2021 and Indonesia in 2022. 

But whatever be the final outcome, India has managed to set the agenda and get world leaders thinking about a new future. In the pages that follow, delve deeper into India’s agenda for its G20 presidency and the progress made thus far.