The G-20 summit was held in Hamburg, Germany. And Indian Prime Minister Narendra Modi attended the summit. There were numerous issues which were discussed in the summit.
At the summit, the international body acknowledged steps taken by India on structural reforms, sustainable as well as inclusive growth and India’s moves supporting the global economy.
What is the G20?
The Group of Twenty, commonly known as G20, is an international platform that brings together the world's 20 leading industrialized and emerging economies.
The total GDP of the G 20 countries accounts for 85 per cent of world GDP and two-thirds of its population.
Much of the important business takes place on the sidelines and in informal meetings.
G 20 was established 17 years ago, that time the finance ministers and central bank governors of members used to attend the summit.
The G20 has no permanent staff of its own and its chairmanship rotates annually between nations divided into regional groupings.
In 2016, China held the chairmanship and this year Germany hold the chairmanship. In next year chairmanship will be hold by India.
In 2009, when the UK held a special spring summit, former Prime Minister Gordon Brown orchestrated a deal in which world leaders agreed on a $1.1 trillion injection of financial aid into the global economy. The “historic” deal was widely viewed as a success.
India’s Stand at G20
During the G20 summit, Prime Minister Narendra Modi stated numerous issues and reasons. He stated that demonetization move started by his government had been akin to a big blow against corruption.
The Prime Minister also said that the demonetization drive widened and enlarged India’s formal economy and even boosted digitization of the economy.
He also talked about the Goods and Service Tax addressing the leaders of BRICS nations in the backdrop of the G20 summit.
Some of these reforms mentioned by the G20 report are:
1) India has done a good job to m popularize the derivative instruments on exchanges
2) The international body observed that India has done a good work in labor reforms in order to boost workers’ security, and increasing female participation in the workforce.
3) India has initiated startups to facilitate external borrowings by promoting innovation and easing of doing business.
The Indian government has indicated that what it wants to see the G20 do more of:
1) India wants creating a strong partnership in skilling and up-skilling of the work force
2) India wishes to encourage manpower mobility in a manner in which it would help the host nation as well as the source nation
3) Promote digitization in order to strengthen labor markets and to improve delivery of services.
Challenges in from G 20
1. Global Productivity
It has been observed that over the last decade, globally, there has been a significant decline and stagnation in industrial productivity levels. There has been stagnating real wages across manufacturing sectors in both developed and developing countries.
On other hand, there has been advancement in technological innovations such as in the field of artificial intelligence and automation. These innovations are redesigning the manufacturing process globally, the measurement of productivity and its impact on the process of upward income mobility for employees warrant greater international scrutiny.
There are no short remedy for emerging economies like India, China, Brazil, or Turkey in addressing structural domestic problems of slowing stagnating industrial productivity, job creation, and deflating export prices unless they seek greater economic cooperation with countries in Europe, the US and Canada.
A good platform is provided by the G20 summit to address such kind of problems. One important area on cooperation in this regard is related to reassessing the traditional metrics of productivity assessment.
2. Coordination on reducing discriminatory taxation
In this area, the G20 members have already made some progress during the recent couple of years, but more effort needs to be made in reducing disproportional, nationalized tax systems that inadequately affect global capital movements and affect interest rates.
In recent times, a disproportionate tax structure, promoting bigger firms to invest trans-nationally in such markets. Rationalizing the direct-indirect tax structure in member nations and ensuring a parity in credit requirements shall ensure a more competitive market structure with easier entry and exit of firms.
The balance in capital requirements steered by coordination in international taxation policies will help central banks of G 20 countries to monitor real interest rates with minimum volatility in currency markets and capital flows.
Unless soft multilateral organizations like the G20 can successfully deliberate and cooperate on some of the above areas of economic cooperation, It is hard to put any faith in the effectiveness of such multilateral forums in the future.
3. Climate change
After Trump’s withdrawal of the United States from the Paris climate agreement, a new strategic focus has been put on climate change and ways to tackle rising heating of the planet.
G 20 leaders have said they will pursuade Trump to rejoin the Paris agreement. The European countries have shown much commitment to the cause of limiting global warming to a maximum of 2°C.
In recent times, more and more terrorist attacks have been reported around the world. In G20 summit India raised the seriousness required for tackling terrorism around the world.
G20 leaders also deliberated on ways to eliminate channels of terror financing and improving exchange of information.
5. Reducing corruption
Under the German Presidency, the G 20 focused on measures to improve public sector integrity and the common search for ways to fight corruption in particularly susceptible areas such as wildlife trafficking. Due to the rampant increase in the global corruption, the governments are aiming at achieving transparency and accountability to get public approval.
6. Increasing cooperation with African states
This G 20 summit reflected its intention of creating an ‘enabling environment for investment and infrastructure development’ and encouraging cooperation with African states is on the Summit agenda.
The summit was concluded with "some progress on financial stability issues like debt, transparency and taxes". It indicates the need for making concerted efforts to tackle tax evasion, corruption, and avoidance.
On such matters, specific actions are of more importance than general promises.
This is particularly so for the developing countries which are estimated to be losing annually at least $1.0 trillion because of related malpractices.
Meanwhile, the adoption of the G20 Hamburg Action Plan and the Group's 'expressed' support for the Operational Guidelines for Sustainable Financing are welcome; such moves are purported to encouraging member-countries of the G20 "to pass stronger regulations" on both responsible lending and borrowing.
Likewise, the initiative for launching a $325m fund to support female entrepreneurship in developing countries, as was announced by the G20, together with the World Bank, in Hamburg last Saturday, is a positive one. Hopefully, actions will now follow to operationalize it at the earliest.
However, the Hamburg Summit of G20 leaders has left the key issues about the future of rule-based multilateral trade, open economy, course and direction of globalisation etc., largely unaddressed for all practical purposes. Neither has there been any substantive change in the US policy on climate change, though 19 other G20 countries have reiterated their commitment to Paris Climate deal, pledging to fully implement it in an "irreversible" way.
Yet then, it would be quite unfair to discount the outcome of this year's G20 Summit in Hamburg, considering its contextual difficulties at a time when the post-World War-II global order is at a crossroads.
Its outcome should rather be considered positively, in view of some sort of unity that is reflected in its declaration, notwithstanding its some 'face-saving' traits.
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