India can spearhead G20 on digital economy

Efforts will be made to bring ‘Digital India’ to the world through large economies that are G20 members. This plan has a good chance of success, given that several countries have shown interest in replicating the UPI system. Health is another area, which, reports say, will be given primacy during the presidency.

Challenge: As many as 200 G20 events are planned to be held all over India. ANI

Sushma Ramachandran

Senior Financial Journalist

India assumes the G20 presidency amid critical geopolitical developments. With the Ukraine war still in full swing, energy wars continuing around the globe, inflation rising to record levels and many countries still recovering from the pandemic, the world is in a state of flux right now. It is at this time that the role of the G20 could become pivotal in trying to bring about greater economic and social stability.

Yet, there is another very real possibility that it will remain a symbolic talking shop with most of the major players remaining aloof without any serious engagement. This prospect looms large as several key players are in an antagonistic mode over the Ukraine conflict.

The success or otherwise of India’s presidency — a rotational tenure — of this important global grouping will largely depend on the way this country negotiates the minefield of members’ varying national interests. Right now, there is considerable enthusiasm for taking over the role from Indonesia in December. It is also significant that the troika of the past, present and the future presidencies will be developing countries for the first time: Indonesia in 2021, India in 2022 and Brazil will take over this mantle in 2023. Whether these emerging economies will be able to steer the 19-member grouping into productive areas will have to be seen over the next year during which as many as 200 G20 events are planned to be held all over India.

Other members of this wide-ranging group, which accounts for 85 per cent of the world’s GDP, are the US, the UK, the European Union, Russia and China. The focus of the G20 was originally on macro-economic issues and its formal title remains the “Summit on Financial Markets and the World Economy”. But it has now shifted focus and the brief is to discuss any contemporary issue.

While it may not be possible to discuss or reach a compromise on contentious political issues like the Ukraine war, some areas in which India is seeking cooperation have more global developmental resonance. The first is in the field of climate change, encompassing many elements, including an initiative seeking change at the ground level by people rather than merely evolving broad policies to promote climate change.

With emerging economies at the helm of G20, it should be possible to give a greater impetus to the key issues of both financing and technological support to achieving climate goals in poorer countries. This has been one of the critical areas discussed at both the previous Glasgow COP conference and the ongoing one in Egypt. A big step forward has been taken at the current COP with an agreement to discuss a mechanism to compensate poor countries for climate disasters. This is a proposal that can be taken forward by India at the G20, which has heft in terms of representing the world’s leading economies.

The second area where India’s leadership of the G20 can potentially lead to concrete gains is the digital economy. With India having become a trendsetter in many areas, including online finance, the prospects of creating a global digital architecture become much brighter. Even multilateral financing agencies like the International Monetary Fund and the World Bank have recognised that the online direct benefit transfer system here has provided support to the poorest segments of society in a seamless transparent manner. It is now being viewed as a model for other emerging economies to use for more effective targeting of beneficiaries of subsidy programmes.

The world has already begun seeking to learn and adopt from the Unified Payments Interface (UPI) that has enabled financial inclusion for millions of those outside the formal banking system. The IMF has carried out studies on the India Stack, the multilayered digital identity, payment and data management system. Among the key elements of the stack are digital identity through Aadhaar as well as the UPI, which enabled even those without bank accounts to receive funds through digital wallets.

It is in this sector that India has already declared that efforts will be made to bring ‘Digital India’ to the world through the large economies that are G20 members. This plan has a good chance of success, given that several countries like Singapore and France have recently shown interest in replicating the UPI system.

Health is yet another area, which, media reports say, will be given primacy during the India presidency. Here too, the digital aspect of the way in which this country dealt with the pandemic and achieved the gigantic task of vaccinating the entire 1.4-billion population is a learning experience for other countries. No doubt, of course, there were numerous weaknesses in the handling of the pandemic such as stringent lockdowns that affected migrant workers and the inability of health infrastructure to tackle the destructive second Covid wave. These failures cannot be wished away, but on the plus side India was able to gear up industry to manufacture PPE equipment within months and its vaccine manufacturers were able to meet the challenge of supplying vaccines both domestically and to the world. For emerging economies, even India’s failures on the health front are a salutary lesson to build up health infrastructure sufficiently to meet the needs of the poorest of the poor.

While these are expected to be the core areas of concern and discussion, there are a whole host of other issues where the G20 is already engaged, including multilateral reforms and women empowerment. The biggest task of the troika, however, is to ensure that western nations, which have arrayed themselves against Russia owing to its invasion of Ukraine, engage productively to bring about sustainable outcomes. And, this has to be achieved in the current geopolitical climate when countries are looking inward to grapple with issues of energy shortages, high prices, soaring inflation and rising interest rates. It will thus be a task of Himalayan proportions for both India and the other troika members to ensure positive outcomes in areas that continue to be of deep significance for those at the bottom of the pyramid around the world.