By K R Sudhaman
The Group of 20 (G-20) summit in Argentina in November end could not have come at a more opportune moment as the world’s top 20 nations can sit across the table to resolve the global turmoil arising out of US-China trade war that is expected to become full blown in the next few months if not already.
This meeting is critical for emerging economies like India as it comes at a time when the world economic order is threatened despite the fact that the global economic growth is picking up.
Trade war does not figure in the three agenda priorities, which are job creation, infrastructure development and eradication of hunger, but the trade war is likely to dominate the proceedings as it is a major threat to rule-based multilateral trading system as envisaged by the World Trade Organisation.
But the three agenda items too are critical and vital for emerging economies like India as jobless growth and crony capitalism are major issues despite the economy clocking the fastest growth in the world this year.
India will also press for the need to stabilise the surging global oil prices and rein in currency volatility in the face of the appreciating dollar due to monetary tightening by the US Federal Reserve.
With global trade witnessing sharp decline and estimates suggesting a shave off of $2 trillion, India, China and other emerging economies are likely to spearhead the efforts to preserve globalisation that has helped in taking millions of people out of poverty the world over in the last couple of decades.
The 2018 G-20 Summit in which world leaders, including US President Donald Trump, Chinese President Xi Jinping and Indian Prime Minister Narendra Modi are participating, will discuss among other things the future of work (jobs), Infrastructure for development and sustainable food future.
A country like India needs at least $1 trillion investment in infrastructure in the next five years and the summit could evolve ways to ensure increased flow of funds for infrastructure development, particularly from pension funds and insurance, which are flush with funds and waiting for opportunity to make long-term investments.
With China slowing down growth as part of its efforts to cool down, it is India which becomes the automatic choice for investments in infrastructure. The IMF quota reforms too will occupy the centre stage.
G-20 is composed of 19 countries (Germany, Saudi Arabia, Argentina, Australia, Brazil, Canada, China, South Korea, United States, France, India, Indonesia, Italy, Japan, Mexico, Russia, the United Kingdom, South Africa and Turkey), as well as the European Union. Host, President Mauricio Macri of Argentina will preside over the summit.
As crypto currencies increasingly posed problems to sovereign currencies G-20 is likely to take up the issue of finding ways to regulate this fast growing menace. There cannot be a single regulator like a central bank for sovereign currencies as crypto currencies transcend borders and are managed by those who do not believe in the sovereign rule of law.
Rajasthan Board of Revenue Chairman, V Srinivas, a senior IAS officer, who has served in the finance ministry and IMF, succinctly explains how G-20 has become an effective multilateral body to deal with emerging issues through formulation of policies in which India had a pivotal role.
“G-20’s singular success has been in tactfully tackling recession during the last one decade. But when asked whether it has done enough to tackle jobless growth that followed 2008 crisis, Srinivas, who has done research on the role of G20 in putting global economy back on track after the 2008 financial crisis, was candid in admitting that this remained a challenge though some efforts have been made. Former Economic Affairs Secretary Shaktikanta Das, who is currently India’s sherpa to the G20, said it was precisely for this reason that jobless growth is a major agenda item at the summit to be held from November 30 to December one.
Crypto currency, seen as a bubble by some, is used at the moment by people who did not believe in any authority. It is a community governed by a protocol for transactions. It is very volatile. The only earning in crypto-currency is capital gain. Bitcoin started with a value of just $400 in 2009 and went up to $20,000 and now it has fallen to around $6,000. So gains and losses come from its value at a given point of time.
Former RBI deputy governor Usha Thorat, who was in-charge of currency in the central bank, warned crypto-currency has several pitfalls. That’s why many countries like India are wary of it. Crypto-currency has security concerns and money-laundering issues. It can also be used for terror funding, havala transactions, smuggling and other nefarious activities, including tax evasion and avoidance.
Crypto-currency transcends boundaries and hence there cannot be a single regulator. This meant that the regulatory framework has to be redrawn, she said, adding it is one of the major items on the agenda of G-20 summit in Argentina.
Former G-20 sherpa and erstwhile Planning Commission deputy Chairman Montek Singh Ahluwalia is right in saying G-20 needed to repeat the performance to save the world trading system as it did ten years ago to save the global financial system after the 2008 global crisis. As an antidote to trade war, heads of governments in G-20 should make concerted effort to ensure rule-based multilateral trading system becomes the pivot of the world economy.
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