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.
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.
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.
India will 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.
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.
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: “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. 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.
K R Sudhaman is a freelance journalist.Views are personal.