Explained: What is the G20, of which India becomes president later this year?

What is the G20?

The G20 was formed in 1999 in the backdrop of the financial crisis of the late 1990s that hit East Asia and Southeast Asia in particular. Its aim was to secure global financial stability by involving middle-income countries. Together, the G20 countries include 60 per cent of the world’s population, 80 per cent of global GDP, and 75 per cent of global trade.

Its prominent members are: Australia, Brazil, China, France, Germany, India, Japan, Republic of Korea, Russia, Saudi Arabia, South Africa, Turkey, the UK, the US, and the EU. Spain is invited as a permanent guest.

The presidency of the G20 rotates every year among members, and the country holding the presidency, together with the previous and next presidency-holder, forms the ‘Troika’ to ensure continuity of the G20 agenda. Italy, Indonesia, and India are the Troika countries right now.

How does the G20 work?

The G20 has no permanent secretariat. The agenda and work are coordinated by representatives of the G20 countries, known as ‘Sherpas’, who work together with the finance ministers and governors of the central banks. India recently said ex-NITI Aayog CEO Amitabh Kant would be the G20 Sherpa after Piyush Goyal.

“On the advice of the G7 Finance Ministers, the G20 Finance Ministers and Central Bank Governors began holding meetings to discuss the response to the global financial crisis that occurred,” the G20 website says. Since 1999, an annual meeting of finance ministers has taken place.

The first G20 Summit took place in 2008 in Washington DC, US. In addition to Summits, the Sherpa meetings (that help in negotiations and building consensus), and other events are also organised throughout the year. Each year, the presidency invites guest countries.