Dining at the G-20

Written by Yoginder K Alagh 

November 24, 2014 

 

In ‘Sherpas and Coolies’ I argued that participating at such forums was only productive if India’s concerns on water, energy, nutrition and trade were being taken on board.

may burn half a billion and China more than two billion tonnes of coal. The Chinese have, of course, in a sense already decoupled and formed the G2 with the US.

India pursues three objectives at the G-20. The first is to seek stability to enable reform. The second is improvement in the global and national architecture to deepen financial markets in pursuit of inclusive growth. The third is concerned with how these two link to trade policy. India’s phased process of reform, with the ultimate goal being complete capital account convertibility, stated initially during my stint as planning minister in the Ninth Plan document, was to be protected from the wild swings of global financial markets, which were particularly evident after the East Asian meltdown. 

India wanted the rules to be clear and the paths to be flexible. At the G-20, India must constantly project the art of following its own interests and championing the growth of poor countries as two sides of the same coin. Having increasingly utilised the market in its larger economic policies, Indians tend to be appreciative of the consensus on formulating country-specific commitments for G-20 initiatives like the Mutual Assessment Process, leading to action plans for higher growth. 

At the measurement and operational levels, India correctly argues that commitments emerge from domestic policies, and the necessary global push is absent. It also has a somewhat realistic approach to the rebalancing doctrine, recognising the scales of the US and German economies but asking for creative institutional experimentation to encourage trade between the faster-growing developing economies. This is needed to avert global crises and push growth rates higher. However, uncoordinated rebalancing may make things worse.

Tax reforms and public sector reforms are also important areas of concern at the G-20. India’s central bank chiefs have always been involved in the pursuit of transparency and rules-based operations in global financial flows. Concerns over corruption and illegitimate money flows are shared globally. With a conservative banking system and strong regulatory central banking tradition, Indian central bank chiefs such as Y.V. Reddy and his successors are recognised names in the search for financial transparency. India must work to consolidate their reputation.

The writer is chancellor, Central University of Gujarat

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