G20 Summit | Grand show, no deal

To make the best of the G20 presidency, India decided to showcase it more for the domestic constituency. The 200-odd G20-related events were used to drive home the point that the world was listening to India’s civilisational ethos and leadership.

India’s presidency delivered the consensus G20 New Delhi Leaders’ Declaration on the first of the two-day summit on September 9, and ushered in the African Union as a member of the G20.

India rustled up and announced two new international alliances — the India-Middle East-Europe Economic Corridor (IMEC) and the Global Biofuel Alliance.

India produced the longest-ever Leaders’ Declaration with 83 paragraphs and 39 annexed documents running into thousands of pages. However, there is no single ready-to-implement agreement/actionable point in it.

Did India’s presidency put up in a grand show, but could not get a single deal?

G20 exists to find solutions for major global economic and financial issues

The G20 Summit at the president’s/prime minister’s level was borne in the global financial crisis in 2008 to co-ordinate immediate rescue of the international financial system, and find durable solutions for its stability to generate sustained economic growth.

In the last 15 years, the G20 succeeded in delivering at least three major real deals.

First, quick, and functional co-ordination smothered the global financial crisis and spawned new institutions and rules to bring about better financial stability.

Second, the G20 built consensus on major taxation reforms, ushered in the Multilateral Convention on Base Erosion and Profit Shifting (BEPS-MLI), and agreements on minimum taxation of multinational corporations and taxation of digital economies.

Third, it did thrash out deals for infusion of capital in the World Bank and the International Monetary Fund (IMF).

The G20 Leaders’ Summit, however, got diverted into numerous other tracks — growth, taxation, trade, global warming, financial inclusion, infrastructure, digital economy, terrorism, money laundering, and everything under the sun.

Instead of finding solutions for the big and pressing economic and financial problems, it degenerated into a body that produced a lot of verbiage.

The character of G20 has fundamentally changed

The United States was the most powerful economy in 2008 with $14.6 trillion GDP. China was a fast-growing, but relatively smaller economy with a $4.5 trillion GDP. In 2023, with GDPs of about $26 trillion and $19 trillion respectively, the US and China are the two biggest and equally powerful economies.

The US-China trade war since 2018 and the Ukraine-Russia war since 2022 have upended the global supply chains and created two rival camps in the G20. The US decision to impound Russian foreign exchange reserves and the US-EU decision to impose sanctions has converted the G20 into solid two blocs with US-Europe on one side and China-Russia on the other.

The G20 now mirrors more trade, financial and currency competition, and confrontation than co-ordination and co-operation.

Dysfunctional G20 explains no deal

The US regional banking system was in crisis in early 2023 impacting the global startup eco-system. India’s presidency did not bother to co-ordinate and find solutions.

In line with the G20 ethos, India also picked up its priorities for its presidency. There was no real deal on any of these priorities. India’s push for expanding the commitment on phasing down coal to phasing down hydrocarbons had to be dropped. Progress on climate finance commitment of $100 billion remained stalled.

On re-capitalisation of the multilateral development banks (MDBs), the Larry Summar-N K Singh duo produced a report recommending the inclusion of global public goods as the third mandate for the MDBs and tripling of finance. The G20 communique merely leaves it to them to deal with the recommendations as they please.

India thought of playing a good Samaritan in finding a solution for the bilateral debt of low-income countries (LICs). Beijing has a big chunk of it and refused to play ball.

New Delhi wanted India’s UPI accepted as the global best practice of digital public infrastructure (DPI). As the payment systems of many G20 members run more on credit cards and QR codes, India’s suggestion was good, but it was refused. On cryptocurrency, the status remained where it was when India’s presidency began.

The failure to cut any new deal or make any significant breakthrough was not on account of any lack of effort by the Indian negotiators. The very nature of the G20 and its increasingly dysfunctional character explains the surfeit of words and the absence of action.

The establishment of new powerful China-led MDBs — like the Asia Infrastructure Investment Bank (AIIB) and the New Development Bank (NDB) — and alternative global development assistance frameworks — like the Belt and Road Initiative — will further divide the G20. It has already transformed from an action forum to a formal forum. In times to come, it might further lose its edge and even cease to exist.

India showcases

To make the best of the G20 presidency, India decided to showcase it more for the domestic constituency. The notion of Vasudhaiva Kutumbakam, converted into a catchy logo ‘One Earth, One Family, One Future’, and many other events were used to drive home the point that the world was listening to India’s civilisational ethos and leadership.

The 200-odd meetings of G20 ministers and working groups organised in many cities across India, with roads and buildings decked up and visitors treated with the best of Indian cuisine and travel, showcased the G20 to the Indian masses.

India did create a big buzz around its presidency. There was no deal though.

(Subhash Chandra Garg is former Finance & Economic Affairs Secretary, and author of ‘The Ten Trillion Dream’ and ‘Explanation and Commentary on Budget 2023-24’.)

Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH.