India at G-20 summit: As trade war threatens to derail global growth, this is what Centre is targetting

The 13th annual summit of Group of 20 (G-20) in Argentina capital Buenos Aires, to be held in November end, is important for emerging economies like India as it comes at a time when trade war is threatening to derail global growth and the imbalance arising in the world economic order.

Key agendas will be job creation, infrastructure development and removing hunger which is critical and vital for emerging economies like India. However, disruptive trade war and increasing protectionism by advanced economies are expected to take centre stage.

India will press for the need to stabilise the surging global oil prices and rein-in currency volatility in the face of appreciating dollar due to monetary tightening by the US Federal Reserve.

With global trade witnessing a sharp decline and estimates suggesting a shave off of $2 trillion in global trade, 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 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 will participate, 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 an increased flow of funds for infrastructure development particularly from pension funds and insurance, which are flush with funds and waiting for an opportunity to make long-term investments.

With China growth slowing, India becomes an automatic choice for investments in infrastructure. The IMF quota reforms too will occupy the centre stage.

The 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.

Rajasthan Board of Revenue Chairman, V Srinivas, a senior IAS officer, who has served in the finance ministry and IMF, succinctly explained how G-20 has become an effective multilateral body to deal with emerging issues through the 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,” he said. But when asked whether it has done enough to tackle jobless growth that followed 2008 crisis, Srinivas admitted this remained a challenge though some efforts have been made.

Former economic affairs secretary Shaktikanta Das, who is currently India’s Sherpa to the G-20, said it was precisely for this reason jobless growth is a major agenda item at the summit to be held from November 30 to December 1.

The summit will also take up the issue of cryptocurrencies, which has increasingly posed problems to G-20. There cannot be a single regulator like a central bank for sovereign currencies as cryptocurrencies transcends borders and managed by those who do not believe in sovereign rule of law. Currently, it is used by people who do not believe in any authority. 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 had fallen to $6000. 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.

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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 10 years ago to save the global financial system after 2008 global crisis.