With the world buffetted by simultaneous phases of recovery and recession in an increasingly connected system, where a volcanic eruption in Iceland can upset the business of an Indian exporter, the G20 or Group of Twenty, has become a significant platform for both developed and developing nations.
The G20 was born as an answer to the Asian financial crisis 13 years earlier, to build more effective monetary and regulatory mechanisms that key economies would abide. Over the years, it has assumed a greater role than just being a sort of crisis management body, running parallel to or, sometimes, even challenging the existence of the Bretton Woods brothers – the World Bank and International Monetary Fund (IMF).
“It (G20) is really an agenda of the western world to develop their own institution along with some of the advanced developing countries. It is one platform where everyone is getting a fair chance to voice their opinion, which is seen as a major drift from the traditional approach of the World Bank or IMF, thereby shaping a global viewpoint when nothing else is moving, whether a multilateral trade deal in WTO (World Trade Organization) or commitments on climate change,” says Biswajit Dhar, director-general, Research and Information System for Developing Countries (RIS).
Setting the agenda
Within the government, it is felt such technical issues need to be handled exclusively by a cell. The Ministry of Finance is, therefore, planning a separate secretariat for the purpose.
“Increasingly, the G20 will both set the agenda and determine the course of action on issues engaging governments the world over,” said Rahul Khullar, secretary, ministry of commerce and industry, while underscoring the forum’s importance. He sees it as the new international club to deliberate on matters of global governance.
Experts around the world agree G20 is evolving as the world is undergoing a paradigm shift. However, it lacks an institutional backing and clear framework in addressing issues concerning global imbalances.
The recent crisis in the financial world that shrunk the growth of both developed and emerging nations made G20 a cynosure of the world economy, as it responded proactively by announcing international commitments and measures that restored confidence and boosted growth performance.
“The G20 has assumed a greater role during the recessionary times, and will play a role in the recovery phase, too. One example of this is the G20’s framework for strong, sustainable and balanced growth. The framework is a policy process for ensuring that global growth is restored to a strong level, while also addressing the long-term sustainability of growth and its composition,” Jonathan Coppel, economic counselor, Organization for Economic Cooperation and Development (OECD) told Business Standard.
According to Bibek Debroy, professor at the Centre for Policy Research, a New Delhi-based think tank, G20 has assumed greater importance in the past decade due to its host countries.
Coming meets crucial
Experts and analysts also believe the coming annual meetings of G20 in Canada from June 26-27 and Seoul in November 11-12 would be crucial, as these would take place while the world would be at a crucial juncture of crisis and recovery.
“If we get out of the crisis successfully, the G20 will be definitely viewed as the core of global regulation, even if the sharing of power and confrontation of interests will not make life easy as in the G7, where the US is the superpower,” emphasised Jean-Joseph Boillot, economic advisor for emerging countries and co-chairman, Euro-India Economic and Business Group.
Amit Mitra of the Federation of Indian Chambers of Commerce and Industry agrees the G20 has emerged as a powerful body for giving directions to the global economy.
