Global South Is Looking To India To Find Ways To Deal With Debt Crisis

Global debt and recession are two major challenges afflicting many parts of the World, particularly the global south. India, which heads G 20 this year, has a great responsibility to work with member countries to find a solution to these problems. In this connection, India’s G20 Sherpa Amitabh Kant is right in suggesting the group, which accounted major chunk of world trade and income, should stay “non-political” if it had to focus on development and global challenges. Kant made this remark ahead of the crucial meet of G20 countries in the backwaters of Kumarakom, a scenic place in God’s own country, Kerala. On challenges around global debt and recession, Kant was candid in saying “one issue can’t hold back other things,” apparently referring to Russia-Ukraine war.

There certainly appears to be double standards among the European countries and United States by attempting to treat European problem as world problem and linking development and global challenges to war through sanctions , as per their whims.. Russian-Ukraine war has turned out to be a sticking point with advanced economies comprising G7 countries. But India however wants G20 to remain an economic and development forum. India has found support from Indonesia as well as Brazil. South Africa, a special invitee to the forum, too supported this viewpoint.

According to a top bureaucrat, V Srinivas, who has written a book on the roadmap to Indian Presidency of G20, sixty per cent of the low income countries are facing unbearable debt burden. “This is an extraordinary challenging macroeconomic environment.” Srinivas is of the view that it is likely that G20, under India’s presidency this year, come together to establish new rules and timelines for a common framework in this regard.

Srinivas elaborating on the issues confronting humanity, said climate financing, digital assets and capital flows are likely to continue to feature in the G20 agenda.

National Payments Corporation of India MD and CEO, Dilip Asbe, said G20 was a good platform to start conversations on taking UPI and other remittances and payments solutions globally. RBI and monetary authority of Singapore collaboration recently showed the way how digitally bank account transfers and fund transfers be done in two different countries in 20 seconds with all compliance and settlement. He was speaking at the Digital Public Infrastructure session ahead of G20 sherpas meet at Kumarakom.

India has done a pioneering work on digital payment system and this could be replicated in many developing countries so that overdependence on advanced economies payment system do not act as an impediment, especially during a crisis or sanctions.

India’s G20 presidency commenced from December 1, 2022. For a nation deeply committed to multilateralism and democracy, the G20 presidency represents a very significant moment in history. The G20 has been in the forefront in battling financial crisis and it represented 90 per cent of World GDP, 80 per cent of global trade and two-thirds of the world population.

Prime Minister Narendra Modi has said India’s G20 presidency will be inclusive and action-oriented. World is looking to India with hope and priority will be given to women led development. In the light of this approach, the utilisation of high quality digital connectivity for financial inclusion and digital transformation would be presented. A session by Asbe was one such event.

According to Srinivas, India’s G20 presidency will seek to showcase the nation’s strengths in digital infrastructure, direct benefit transfer, digital health and pharmaceuticals.

In fact, India’s former Prime Minister Rajiv Gandhi, had said in 1980s that if one rupee was provided by the Government to the poor, only 16 paise reached the actual and poor beneficiary. At that time digital revolution had not happened, the money used to get siphoned off at various points enroute. The introduction of direct benefit transfer in India, first conceptualised by former Prime Minister Manmohan Singh and later effectively implemented by Modi, has revolutionised the payment system and transfer of money directly to poor beneficiaries without any leakage enroute. This has also curbed generation of black money.

Prime Minister Narendra Modi has called on G 20 to promote transparency and integrity citing India’s zero tolerance policy on corruption and black money. He had also spoken of the need of greater international cooperation for return of illicit money to the country of origin. He emphasised on addressing the barriers of excessive banking secrecy and effective counter terrorism financing tools.

Many countries in global south did face this problem. Corruption is rampant, siphoning of scarce resources and stashing them abroad by influential people and authoritarian regime was common phenomenon resulting in majority of the population remaining poor, oppressed and living in abject poverty.

At the G20 Sherpas meeting, Kant said there are several issues put forward as deliverables for all G20 countries and they should work together on issues of development. Essentially it’s a forum for growth development and progress. “We want every country to work towards the developmental agenda for the World and that is what we will strive for.”

If the G20 summit in New Delhi later this year is able to find a solution to debt burden, particularly of global south after Covid, and introduce digital payment system to plug leakages in money transfer to the poor, India would have contributed greatly in tackling two major challenges confronting the poor countries. (IPA Service)