G-20 Past and Present

Who are in G20?

The G20 comprises Argentina, Australia, Brazil, Canada, China, EU, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, UK and USA. The G20 Countries together represent around 90% of global GDP, 80% of global trade, and two thirds of the world’s population.

Aims

• Policy coordination for global economic stability and sustainable growth;

• Financial regulations to reduce risks and prevent financial crises after the contagion in late 1990s hit South Asia;

• International financial architecture to manage global economy;

• Anti Corruption

• Food Security

• Development in Poor Countries

Growing recognition that some of these countries were not adequately represented in global economic discussion and governance.

Since Finance Ministers and Central Bank Governors have met annually. India hosted a meeting of G20 finance ministers and central bank governors in 2002. G20 was raised to the Summit level in 2008 to address the global financial and economic crisis of 2008.

Organizational Structure of G20

The G-20 operates without a permanent secretariat or staff. The chair rotates annually among the members and is selected from a different regional grouping of countries. The chair is part of a revolving three-member management group of past, present and future chairs referred to as the Troika. The current chair of the G-20 is Australia; the next Chair will be Turkey.

Six G20 Summits have been held so far. The First Summit was hosted by the US President in Washington in November 2008 to develop a coordinated response to the global financial crisis. At the First Summit, the Leaders discussed the causes of the global economic and financial crisis and agreed to implement an Action Plan around three main objectives, namely,

1. Restoring global growth,

2. Strengthening the international financial system and

3. Reforming international financial institutions

The Second Summit in London in April 2009 came up with a stimulus package of US$ 1.1 trillion to restore credit and growth and strong regulatory provisions, expansion of Financial Stability Forum (renamed as ‘Financial Stability Board’ or FSB) and Basel Committee on Banking Supervision (BCBS), reiteration of commitment against protectionist trends (including trade, investment and services) and commitment to reform of International Financial Institutions.

The Third Summit in Pittsburgh in September 2009 designated the G20 as the ‘premier forum’ for international economic cooperation. The main outcomes of the Pittsburgh Summit included to foster a ‘Framework for Strong, Sustainable and Balanced Growth’ in the 21st century through sound macroeconomic policies that prevent cycles of boom and bust through a Mutual Assessment Process (MAP) or ‘peer review’ which is co-chaired by India, a decision to reform the IFIs by shifting IMF’s quota share to dynamic Emerging Markets and Developing Countries (EMDCs) of at least 5% from over-represented countries to under-represented countries, adoption of a dynamic formula for the World Bank to generate an increase of at least 3% voting power for developing and transition countries that are under-represented; and ensuring that World Bank and Regional Development Banks (RDBs) have sufficient resources to address global challenges.

The Fourth Summit in Toronto in June 2010 under the theme ‘Recovery and New Beginnings’ focused on the ‘Framework for Strong, Sustainable and Balanced Growth’ and completion of Phase-I work comprising MAP (or ‘peer review’) by groupings of countries. Advanced economies have committed to fiscal consolidation, i.e. halving of fiscal deficit by 2013 and stabilizing debt by 2016 as part of internal re-balancing. An agreement was also reached on differentiated approach to consolidating growth and recovery versus exit strategies and fiscal consolidation, i.e. ‘growth-friendly fiscal consolidation’. ‘Development’ was introduced for the first time on the G20 agenda to be addressed through a High-Level Development Working Group (DWG).

The highlight of the Fifth Summit in Seoul in November 2010 under the theme ‘Shared Growth Beyond Crisis’ was the launching of the G20 Development Agenda embodied in the Multi-Year Action Plans (MYAP) under the nine development pillars, viz.,

• Infrastructure (including a High-level Panel on infrastructure financing),

• Human Resources Development,

• Trade,

• Private Investment and Job Creation,

• Food Security,

• Growth with Resilience,

• Domestic Resource Mobilization,

• Knowledge Sharing and Financial Inclusion.

The Sixth G20 Summit in Cannes in November 2011reviewed the global economic situation in the backdrop of the Eurozone/Greek crisis. Its major outcomes included regulation of commodity derivatives markets, including Action Plan on Food Price Volatility and Agriculture and increase in transparency of energy markets and an expression of support for recommendations of High Level Panel and MDBs Action Plan on development. The outcome of the Cannes Summit resulted in the ‘Communique’ and ‘Declaration’ titled ‘Building our Common Future: Renewed Collective Action for the Benefit of All’ along with the ‘Cannes Action Plan for Growth and Jobs’.

The Seventh G20 Summit : Priorities of the Mexican Presidency

The Seventh G20 Summit was being held in Los Cabos, Mexcio on 18-19 June 2012 under the Mexican Presidency. Mexico identified the following as its priorities :

1. To promote economic stabilization and structural reforms as foundations for growth and employment;

2. Strengthening the financial system and fostering financial inclusion to promote economic growth;

3. Improving the international financial architecture in an interconnected world;

4. Enhancing food security and addressing commodity price volatility; and

5. To promote sustainable development, green growth and the fight against climate change.

India and G-20

India’s participation in the G20 process stems from the realization that as a major developing economy India has a vital stake in the stability of the international economic and financial system.

India has been actively involved in the G20 preparatory process both at the Sherpas Track and the Financial Track since its inception. The Prime Minister participated in all seven G20 summits. India’s agenda at the G20 Summits is driven by the need to bring in greater inclusivity in the financial system, to avoiding protectionist tendencies and above all for ensuring that growth prospects of developing countries do not suffer. India has strived to ensure that the focus of the global community remains on the need to ensure adequate flow of finances to emerging economies to meet their developmental needs.

India has welcomed the inclusion of development as an agenda item of G20 process at the Seoul Summit and supported the Seoul Development Consensus and the associated Multi-Year Action plans. Prime Minster called for the recycling of surplus savings into investments in developing countries to not only address immediate demand imbalances but also developmental imbalances. .