Work in progress: How's India's G20 presidency is building consensus

This report has been updated to include a statement from the Department of Economic Affairs, Ministry of Finance
It was at the 2014 G20 summit in Brisbane where Prime Minister Narendra Modi made the initial pitch for hosting the annual event in India. “It was at the Brisbane event, when I was the Sherpa, that we first raised the possibility,” former union minister Suresh Prabhu told 'Business Standard' recently, referring to the role played by the personal representative of a head of state or head of government who prepares an international summit.

India’s wish took nearly a decade to fructify. As the heads of G20 states come together for a meeting in Delhi in September, it is useful to know why the Modi government was keen on being the bloc’s president and if it has succeeded in the role. A G20 annual summit is the only global forum where the leaders of states accounting for more than 80 per cent of the world’s gross domestic product (GDP) come face to face. Declarations are not mandatory but what the leaders agree or disagree upon matters to the world.

The Leaders’ Declaration after their meeting on September 9 and 10 will not be unanimous but progress on key issues is expected. The Indian presidency has identified 13 working groups and four initiatives under the so-called sherpa track to discuss issues and provide recommendations. The working groups included environment, energy, education, digital economy, health, and infrastructure, but none of them has managed to come out with an agreed communique. (see table)

India’ external affairs ministry has goaded most ministries, which led the conversations in working groups, to split communiques into two parts. One declaration, therefore, listed all the agreed upon themes and the other was the G20 chair’s summary about contentious paragraphs that were mostly about the language to be used to best describe the war between Russia and Ukraine. Though the war was not the core issue for any of the working groups, the split will help in narrowing differences for the meeting of the heads of state.

Key agreements

Other than the sherpa group, the key work stream of the G20 is the finance track that brings together finance ministers and central bank governors. We shall look at this later.

The energy group ran into differences beyond the war. The “role of renewables” does not appear as a subject heading in any paragraph of the group’s outcome document. It figures as a para in the chair’s summary instead as: “The role of renewables in the energy mix, as a solution contributing to universal energy access, and the need to enhance cooperation, collaborations, financing, capacity building, technical assistance, partnerships, and technology sharing on voluntary and mutually agreed terms, taking into account different national circumstances, are critical”.

In the language of global diplomacy, where a sentence appears and how it is framed is crucial. In this context, the relative back-pedaling of renewable energy (RE) is significant.

In comparison, there were not many significant differences in other working groups. The employment group recognised the role of gig workers in the global economy and need to give them social protection. It reiterated the target of reducing the gender pay gap by 25 per cent by 2025 and did not push any contentious issues into annexures.

The work of the group on digital economy stood out. For years, India had resisted any meaningful engagement in this sector at any multilateral forum. This time it left a strong imprint on the outcome document and as G20 president wrote about the need for a framework for systems of digital public infrastructure. It committed itself to maintain a global digital public infrastructure repository. Both positions sit well with New Delhi’s recent confidence. “For many years, the narrative about India, despite being a tech country with talented people, revolved around the issue of dysfunctional governance that failed to reach the people…when Digital India was launched, an architecture and framework for technology’s expectations and outcomes were introduced and understood,” said Rajeev Chandrasekhar, minister of state for skill development and electronics & IT.

The health group’s document marked India’s confidence too, endorsing “multi-country interconnected digital health ecosystem with health data modernization to strengthen healthcare systems, is again a data-led cross country step that also got written in. Its handling of Covid-19 has made the Modi government confident of supporting global plans to set up a connected health architecture: an idea India would have been reluctant to earlier.

The disappointment was the finance track group, as the war in the Europe affected its discussion. The outcome document was peppered with differences on a range of issues and its annexure listed 21 issues on which either the report from the concerned global body, like the International Monetary Fund (IMF), was yet to come in.

This was also because the first meeting in February had hardly got time to resolve differences. The second meeting on supposedly easy-to-build consensus like the InfraTracker 2.0 “to track planned infrastructure investments across G20 member economies using publicly available sources and transition it to an online tool” is work in progress.

Key issues got stymied and in an unprecedented step at least four finance ministers from G20 countries skipped the second meeting.

A bit of history

To get a sense of the outcome from G20, one has to consider how the group came up in 1999. It was formed as a group of finance ministers and central bank governors to deal with the impact of the Asian financial crisis on the world economy. The group’s finest hour came in 2008 when it was elevated to a meeting of the heads of states of 19 countries plus the European Union. The G20 structure helped in taking coordinated fiscal and monetary steps: a huge achievement in stabilising the global economy in a difficult year.

But once the hour or year passed it became difficult to decide what should such a powerful institution do. The world did not face a crisis for a decade to call for such lockstep coordination. That need came again in 2020 when G20 proved to be nimbler than the gargantuan United Nations (UN) in helping the World Health Organization (WHO) to gather resources to fight Covid-19. The sure-footed intervention in the health sector was surprising since the G20 is primarily an economic forum.

Since then G20 has flailed. It could not offer a coordinated response to the Covid-induced supply shock, even though it was an economic problem. And, worse, the Russia Ukraine war has almost torn it up. The sought for unanimity has vanished. In the Indonesian Presidency of 2022, in the Leaders Declaration in para 3, the operative clause was “Most members strongly condemned the war in Ukraine”. Not all.

With this background it will be remarkable, if under India’s presidency a unanimous Leaders’ Declaration is issued at the meeting of the heads of the state. This will be unfortunate as India has made a massive effort to make this edition of the G20 stand out. Globally the onrush of climate crisis leading to new supply shocks in food crops, the upsurge in the role of artificial intelligence and the peculiar combination of high inflation yet downturn in most global economies makes it essential that the G20 works to deliver significant outcomes.

The most significant outcome of the G20 meeting will be if Africa gets a larger role at the table. The continent is now represented by South Africa and through an observer status for the African Union. While a membership role for the African Union has been endorsed by US, France and China since last year and tacitly supported by most other countries, the Bali declaration of 2022 did not mention it. India has used its presidency to send a letter to all G20 members asking for supporting the proposal. If approved at the September meet, this would make the annual event, which now looms larger than the UN’s calendar on economic issues, becomes much more representative.

There is also no consensus on making the multilateral institutions, including the UN, more representative in decision making. In December last year, India had circulated a concept note called 'New Orientation for Reformed Multilateralism' for reforms. Among other things it argued for including more permanent members in the UN Security Council. This is a more difficult territory however. In the G20 finance ministers’ plenary at Bengaluru, a report to diversify the decision-making structure of the Bretton Woods institutions, World Bank and the IMF, written jointly by Larry Summers and N K Singh has only been taken note of. The report was commissioned by Finance Minister Nirmala Sitharaman, taking the opportunity provided by India’s presidency.

Working Group	Areas of difference	Key Areas of Convergence	How Groups performed
Energy	Role of Renewable energy is not a para heading in Outcome document. Figures more in Chair Summary—“taking into account different national circumstances, are critical”	Role of Hydrogen figures the most in outcome document. Plus appendix  “G20 High Level Voluntary Principles on Hydrogen	Agenda has changes from energy transition in in Istanbul, first energy dialogue to detailed study of fossil fuels
Finance	Sovereign debt restructuring discussions sees no consensus. Reforms of MDB is also work in progress	CBDC alignment & launch of pilot programme of the South Asia Academy in India for tax and financial crime investigation in collaboration with OECD	Some countries, for the 1st time did not send finance ministers—including France, Australia, citing domestic issues
Digital Economy	some specific debt instruments	Framework for Systems of Digital Public Infrastructure & India’s plan to build and maintain a Global Digital Public Infrastructure Repository	Most Indian positions adopted. Quite a change from G20 Osaka 2019 where India & Indonesia sat out from Digital agreement
Health	No major divergences	Multi country interconnected digital health ecosystem with health data modernization to strengthen healthcare systems	For 1st time recognises potential role of evidence-based Traditional and Complementary Medicine as part of adaptable, sustainable & inclusive medical countermeasures
Employment	No major differences; post Covid developments in labour market just noted	Social protection coverage of gig workers was the key outcome plus reduce the gender gap in labour force participation by 25% by 2025	Was notable for not having no annexures to push key differences there
Environment	Divergent views on clean energy transitions, including scaling up of renewable energy and on timelines for global peaking of emissions	Marine spatial planning, and circular economy issues in outcome department first time. By 2030 at least 30% of terrestrial, inland water, and coastal and marine areas should be effectively conserved & managed.	Most measures to be implemented on a voluntary basis, “based on national circumstances and priorities”, shows lack of ambition

Statement from the Department of Economic Affairs, Ministry of Finance

This rejoinder is in response to an article in the Business Standard online edition, published on August 22, 2023, titled “Work in progress: How’s India’s G20 Presidency is building consensus”.
 
As regards the G20 Finance Track meetings and their results, the article is factually incorrect.   In light of this, the Ministry of Finance would like to provide the right perspective on the work done by the G20 Finance Track in 2023.
 
According to the article, the G20 Finance Track was ‘peppered’ with differences on a wide range of issues. It states that the first meeting of G20 Finance Ministers hardly got time to resolve differences. This presentation is far from factual and the reality is quite the opposite. The first meeting of G20 Finance Ministers and Central Bank Governors (FMCBG) was held in February 2023 in Bengaluru. As per the standard G20 Finance Track process, the objectives of this meeting were to agree on the priorities and decide the work plans for the G20 Finance Track in 2023 under the Indian Presidency. This meeting achieved these objectives. All items of work proposed by the Indian Presidency were fully agreed upon. These have been listed in a 14-page G20 Chair Summary and Outcome Document read with its Annex, which was released on February 25 and made public (https://bit.ly/1st-FMCBG-Outcome). A notable feature of this outcome was that full consensus of G20 members was achieved on all content-related matters. Also, this meeting, under the leadership of India, for the first time successfully adopted the practice of releasing an Outcome Document in February 2023 which has since been followed by all G20 Ministerial meetings held this year. This ensured that the subject-specific content was agreed upon by consensus even though there were different views regarding references to the geo-political situation. Thus, it is also incorrect to state that the war in Europe affected the discussions.
 
Throughout the Indian G20 Presidency so far, the Finance Track has succeeded in all its endeavours. The sequence of various G20 meetings is explained here to correct the references in the article. The first G20 FMCBG meeting mentioned above was held in Bengaluru during February 24-25, 2023 which endorsed the priorities of the Indian Presidency in its Chair Summary & Outcome Document. The second G20 FMCBG meeting which was held in Washington DC during April 12-13, 2023, on the sidelines of the IMF/WB Spring Meetings, discussed the progress. The third G20 FMCBG Meeting was held in Gandhinagar during July 17-18 where a substantial number of the outcomes were agreed upon and delivered.  This fact has been missed in the article under reference which mentions only one outcome, namely, the Infratracker 2.0. which is referred to as an easy-to-build consensus outcome. The article has completely ignored the 21 outcomes from the Finance Track delivered at the July G20 FMCBG meeting which have been welcomed or endorsed by the G20 Finance Ministers and Central Bank Governors. Another 17 outcomes were noted by the G20 at the same meeting. These are all very significant and far-reaching outcomes. Forging a consensus on these agenda items was the culmination of a year-long exercise of consensus-building and painstaking negotiations among the G20 members. Therefore, contrary to what the article states, none of the key issues were stymied.
 
The article refers to a report about diversifying the decision-making structure of the Bretton Woods systems. This section also requires some factual corrections. The priority proposed by the Indian Presidency was “Strengthening the Multilateral Development Banks to address shared global challenges of the 21^st century”.  In February, G20 members stated, in the Chair Summary and Outcome Document that they looked forward to the report of the Independent Expert Group formed by the Indian G20 Presidency.  Subsequently, this Expert Group, co-convened by Prof. Summers and Mr. N K Singh delivered Volume 1 of their report titled “Strengthening the MDBs: A Triple Agenda” (https://bit.ly/A_Triple_Agenda). The G20 FMCBGs, in their July meeting, took note of the recommendations in Volume 1 of the report, agreed to examine both Volumes 1 and 2 together and encouraged MDBs to discuss recommendations within their governance frameworks. Volume 2 will be delivered in October. It may be noted that the G20 Finance Track meetings will continue after the Leaders’ Summit, with the final Ministerial meeting under the Indian Presidency scheduled to be held in Marrakesh on October 12-13, 2023 on the sidelines of the IMF/WB Annual meetings as per the tradition.
 
Further, there are many other significant and successful achievements under the G20 Finance Track. Since the taking over of the G20 Presidency by India, terminologies such as ‘Digital Public Infrastructure (DPI)’ and ‘Strengthening MDBs’ have gained currency in the international economic discourse, leaving a lasting imprint. There is a long list of agreed deliverables that have emerged from the Finance Track in 2023 so far.  To name a few, the outcomes include endorsement of the G20 Policy Recommendations for Advancing Financial Inclusion and Productivity Gains through Digital Public Infrastructure, a new G20 Financial Inclusion Action Plan 2024-26, endorsement of the G20 Principles for Financing Cities of Tomorrow and the G20/OECD Report on Financing Cities of Tomorrow, recommendations for mobilising climate finance and enabling finance for Sustainable Development Goals (SDGs). There has been a significant advancement in the crypto-assets agenda with the development of an IMF Discussion Paper on the macro-financial implications of crypto-assets and an upcoming IMF-FSB Synthesis Paper, including a Roadmap, before the Leaders’ Summit in September 2023, to support a coordinated and comprehensive policy and regulatory framework taking into account the full range of risks, and risks specific to the emerging market and developing economies (EMDEs). Other important outcomes include progress on the Sustainable Development Goals (SDGs)  through a G20 Sustainable Finance Technical Assistance Action Plan, an analytical framework for SDG-aligned finance, a Framework on Economic Vulnerabilities and Risks (FEVR) and a Report on Economic Vulnerabilities and Risks arising from pandemics, a Report on Mapping Pandemic Response Financing Options and Gaps, a Report on Best Practices from Finance Health Institutional Arrangements during Covid-19, progress on the international tax agenda including the two-pillar solution, capacity building and tax transparency. The aforementioned Reports may be accessed at https://bit.ly/G20Reports.
 
Even the contentious issue of debt has seen positive developments under the Indian Presidency with impetus provided for forward movement in debt treatment and progress in cases covered under the Common Framework (Zambia, Ghana and Ethiopia) and also outside the Common Framework (Sri Lanka). The July Outcome Document and Chair Summary also encourages the Global Sovereign Debt Roundtable, which is co-chaired by the G20 Presidency, the IMF and the World Bank. This roundtable aims to have open discussions, help identify barriers to debt restructurings, and develop steps to improve the process. It is worthwhile to note that just prior to the Indian Presidency, the debt references included a footnote. However, during the Indian Presidency, all documents featured unambiguous consensus on the debt paragraphs, with every G20 member in agreement.
 
The table in the referred article lists key areas of convergence and areas of difference. The table ought to have listed 39 outcomes, which are mentioned in Annex 2 of the Third G20 FMCBG Outcome Document and Chair Summary, as areas where convergence was achieved. There is only one area of divergence under the Indian Presidency, which is the legacy issue of the war in Europe.
 
All relevant documents related to the output of the G20 Finance Track are publicly available. Readers are encouraged to refer to the  Outcome Document and Chair Summary of the two G20 FMCBG meetings in February 2023 and July 2023 which list all the progress and outcomes and can be accessed respectively at:   https://bit.ly/1st-FMCBG-Outcome and https://bit.ly/IIIrd-FMCBG-Outcome
 
The article in question misinterprets the inability of some of the Finance Ministers to attend the meetings, owing to various domestic engagements. It is imperative to clarify that there was no deliberate intention by any country's Minister to abstain from participation in the second or any other meeting of the G20 FMCBGs. All the G20 countries, without exception, have been fully represented in the meetings. Invariably, in such meetings some Ministers are unable to participate in-person and either attend virtually or depute their representatives. Thus, the inference that some countries ‘skipped the second meeting’, is factually incorrect and misleading.
 
The Ministry of Finance, through this rejoinder, urges readers to exercise their judgment while reading the article under reference and invites their attention to the substantial body of work and achievements of the G20 Finance Track 2023.