Opinion The Express View on Delhi’s G20 test: India has its task cut out

That the first meeting of the G20 Finance Ministers and Central Bank Governors (FMCBG) in Bengaluru could only release a “Chair’s Summary and Outcome Document” instead of a communique owing to a lack of consensus in the wording of the text indicates that the Ukraine war is likely to shadow Delhi’s G20 presidency. Russia and China opposed the paragraphs in the communique that condemned Russia’s war on Ukraine that started a year ago. The summary and outcome document has instead kept the words of the G20 Bali Leader’s Declaration regarding the war. However, the meeting covered a lot of ground on issues relating to international financial architecture, sustainable finance and infrastructure.

The summary note points out that even as the global economic outlook has improved modestly, risks to growth persist. It notes that the continuing persistence of high inflation and tighter global monetary conditions “could worsen debt vulnerabilities” of many economies. The G20 has recognised the need to address the “debt vulnerabilities” of many low and middle income countries. To ensure relief for indebted countries coordination is required between various agencies including multilateral agencies and private creditors. The group is hopeful of a quick conclusion on debt treatment of countries like Zambia, Ethiopia, Ghana and Sri Lanka. Another area where progress is being made is on the contentious issue of crypto currencies. The G20 has welcomed the work by the financial stability board to ensure that the crypto ecosystem is subject to “robust regulation, supervision and oversight to mitigate potential risks to financial stability”. The board is expected to finalise its recommendations by July 2023, following which along with the International Monetary Fund, it will jointly submit a paper on the issue in September. Considering that countries the world over are grappling with issues concerning the crypto ecosystem which range from regulation to oversight, this would perhaps be a step towards developing an international governance architecture.

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The Ukraine war has sharpened the geopolitical divide. With the Russia-China axis and the US-Europe bloc pulling in different directions, building a consensus on any big ticket initiative aimed at tackling high inflation and tightening financial conditions in the post pandemic world is not going to be easy. With the G20 foreign ministers set to meet later this week in Delhi, India has its task cut out. The visiting German Chancellor Olaf Scholz hinted as much when he referred to India’s G20 presidency and said, Delhi has “a very responsible task at a difficult point in time”.