How to optimise India’s role in G20

By Tara Kartha

Political gibing on ‘event management’ contrived to make India’s G20 presidency a controversial issue even before Delhi had got into its stride. That’s a pity. Leaders should ideally be sitting down to decide what India should be able to get out of the whole show, at a time when literally, every day counts. The government has to make every rupee count, to position itself on the world stage, even while making friends and influencing people. A lot has to come together within government for that to happen.

Foreign minister Jaishankar recently warned with this characteristic bluntness that India should expect turbulence and volatility in the short- to medium-term, and thereby the need for strong leadership. In terms of the first, look at the figures. India’s current account balance recorded a deficit of $ 23.9 billion (2.8% of the Gross Domestic Product) in the first quarter, up from a 6.6 billion surplus a year ago.. Foreign exchange reserves have fallen sharply from some $631.53 billion early in the year, declining to $529 bn by November as the direct hit of the Ukraine war, and the costs of stabilising the rupee. This position will fluctuate somewhat. What is worrying is also the sharp drop in Foreign Direct Investement (FDI), already under stress after the pandemic hit. Globally, FDI dropped 35%, due to lockdowns, with this fall notably skewed towards developing economies where FDI fell 58%. Investment rose sharply in 2021 as the world dealt with the pandemic, with this rise favouring only the developed world, with top multinational companies making record profits. FDI dropped again exactly in the second quarter of the financial year, testifying directly to the effect of the Ukraine war. The global economy is in trouble, but the interesting part of this whole mess is that there is still money to be made in certain areas. Apart from obvious ones like Saudi Arabia ‘s Aramco – top in terms of earnings – Apple, Big tech, and Chinese banks minted money. Qatar signed on some $28 bn in new contracts for natural gas extraction. More modestly, India’s agricultural exports went up by 25%, a rise depleted by heavy subsidies. In the midst of all this is the serious emergency of climate change. Again, that affects the developing world far more, in terms of more diseases, food insecurity and loss of livelihood. All in all, this is a triple whammy, that is likely to erode the best laid plans of governments. But there is a potential $56 trillion investment opportunity. As the G20 meets, government actions will affect individual incomes, health and life for the foreseeable future, which in turn means much for electoral futures. In short, an inflection point.

In 1999 there was another inflection point. That was the searing Kargil War, which brought out serious deficiencies in the national security management, the broad foundations of which had not changed since recommended by Lord Ismay and Lord Mountbatten. The Kargil Review Committee, headed by the not just brilliant, but gutsy K Subrahmanyam, urged a thorough and expeditious review of the national security system, observing that this should not be undertaken by an ‘over-burdened bureaucracy’ but by an independent body of credible experts, or a task force. The government heeding the seriousness of the situation, set up a Group of Ministers (defence, home, finance and external affairs) thus giving the whole exercise the necessary ballast, and preventing it from sinking into just another commission of inquiry. That whole exercise not only set up a new national security system, it also enabled government to know itself, and what it wanted, and then implemented most of it, in a rare across the government exercise. That’s quite something. In other words, the final responsibility was on the minister, not a career bureaucrat.

We are now at another inflection point. As can be seen there are severe dangers ahead, as also opportunities. Current decisions will mean the difference between a ship at full sail, and one sinking pitifully. But actions cannot be taken alone. Even powerful countries understand that the present crisis requires all to work together. The G20 is the platform of choice, bringing together major economies, who account for around 85% of global GDP, 75% of global trade and 65% of the world’s population. That’s systemic influence. Remember also that the G20 emerged out of the 1997-1999 Asian financial crisis causing double-digit fall in GDP in most developing countries. It equally affected the profits of the big economies in the G-7. Those leaders then advised central bank governors to begin holding meetings to respond to the crisis. That eventually led to the first formal summit of G20. The Prime Minister’s article spelt out the challenges of rolling back a global ‘zero sum mindset’ in the fight for resources, linking this to the Indian traditions of the panch tatva of earth, water, fire, air and space, and the absolute need for harmony among these elements — within and between us — for our physical, social and environmental well-being. That ticks the boxes the need to stop the war in Ukraine, deal with the climate crisis, water scarcity, agricultural challenges, in fact the whole lot. That needs working together on the ground, not just ‘passing the buck ‘exercises like COP27, when developed countries refused to shoulder a burden they created which will cost poorer countries between US$160-US$340 billion by 2030 in hard costs ; vested interests who refused to move decisively away from fossil fuels, and a host of crucial issues including trade and market access and health.

But to gain maximum traction inside the country, there is also a dire need to ensure that our archaic laws – like the Indian Telegraph Act of 1885 which though amended governs the telecom sector – or the arduous overlap in jurisdictions and interests – where an environment ministry ostensibly protects a tree, while the electricity department chops it– which prevents last mile delivery on the ground. Then there are issues like strategic road building or coal mining, where policy is at complete odds with professed climate obligations. But it’s possible to do both with technology and restructuring to allow ministries to pool, merge or give away powers to achieve a desired end. In sum, another Group of Ministers who will sit together for the national interest to deliver on the promise of the G20 and further. The Opposition could make their own public proposals. Either way this is an exercise that must involve all political parties from the very top, with the accountability inherent to it. Bureaucracy must only help implement. In a drive from the top, Ministers may just discover that it’s possible to both win elections and govern with greater monetary benefits.