November 18, 2014 12:08:40 am
It isn’t surprising that Russian President Vladimir Putin’s abrupt departure pleading “lack of sleep”, following warnings by Western powers over his country’s alleged transgressions in Ukraine, was the most eventful part of this year’s G-20 meet. The world is today a divided place and that explains why the sense of unity, purposiveness and even idealism seen in earlier summits was missing this time at Brisbane. The G-20’s heydays were probably during 2008-10, when it managed to mount a coordinated fiscal and monetary stimulus to restore growth in the aftermath of the global economic crisis. The outcomes from the summits, then, mattered — whether these had to do with seeking improved regulation of global over-the-counter derivative markets or quota and governance reforms at the International Monetary Fund to give greater voice to emerging economies. The Brisbane conference, by contrast, achieved little, apart from an empty pledge by leaders to lift the G-20’s GDP by an additional 2 per cent by 2018.
The reason for the G-20’s reduced effectiveness stems not only from geopolitical divides, especially manifested in tensions in Ukraine and the South China Sea. It also reflects the fact that the problems facing different economies today aren’t uniform, unlike in 2008, when the collapse of Lehman Brothers threatened to drag the entire world down. For Europe and Japan — which are already in recession — and also the US and China, the priority is clearly to avert any further risks of slowdown. But for India, Brazil, Russia, Argentina and Turkey, the risks are as much from inflation as slowing growth. This effectively rules out the scope for any coordinated national macroeconomic stimulus programmes; the Reserve Bank of India and the European Central Bank are bound to have totally differing perceptions now when it comes to inflation and interest rates. And that only makes any commitment by G-20 leaders to add $ 2 trillion to the global economy seem more like motherhood and apple pie.
The reality today is that most economies have to largely fight their own battles and this applies to India as well. Improving the country’s investment climate, whether through ushering in a nationwide goods and services tax regime or fast-tracking land acquisition and green clearances, is something this government must independently do if it wants to bring back growth and job creation. While the G-20 leaders’ communiqué has welcome references to prevention of cross-border tax evasion and instituting common reporting standards for automatic exchange of information among countries, one should again refrain from exaggerating their importance. The fight against black money, like other economic problems, is no less domestic than global.
📣 The Indian Express is now on Telegram. Click here to join our channel (@indianexpress) and stay updated with the latest headlines
- The Indian Express website has been rated GREEN for its credibility and trustworthiness by Newsguard, a global service that rates news sources for their journalistic standards.