India’s tryst with G-20

It is a testament to India’s growing influence in the global landscape as a nation to be looked up to that culminated in it being primed to host the G-20 summit next year. India is assuming the presidency of the Group of Twenty nations at an hour marked by international crises of an unprecedented dimension. There are many factors working in India’s favour. It is the third largest economy in the world, in terms of purchasing power parity (PPP). It is also the fifth largest when it comes to market exchange rates. India makes up for 3.6% of the GDP of G-20 nations in nominal terms, and 8.2% in terms of PPP. As per the IMF, our GDP is set to grow at a rate of 6.1% next year, which will be the highest among G-20 nations. India will kick off the first meeting of G-20 finance secretaries and apex bank deputies in Bengaluru on Tuesday. As many as 40 meetings have been planned under the Finance Track steered by Finance Minister Nirmala Sitharaman and RBI Governor Shaktikanta Das.

The meetings will address key concerns involving unbacked crypto assets, pushing forth the international taxation agenda, management of global debt-related vulnerabilities, the advancement of financial inclusion, productivity gains, as well as financing climate action, sustainable development goals (SDGs) and smart cities of tomorrow. Undoubtedly, that’s a lot to chew on. Thankfully, India’s presidency is benefitted by its progress in digital technologies and its experiences derived from a bustling fintech ecosystem.

One of the focus areas is regarding a coordinated approach towards regulating crypto assets, which has assumed relevance in the backdrop of the Union government unveiling its own RBI-backed digital rupee. The turmoil seen in the cryptoverse over the last few months has made central banks sit up and take note. The de-pegging of a few stablecoins as well as the fall from grace of many high profile crypto exchanges, have thrown light on the dangers presented to financial stability by cryptocurrencies.

The call for broadening the discourse around crypto comes on account of related phenomena including monetary policy, macroeconomic issues, data protection/privacy rules, competition policy as well as legislation on taxation. Stakeholders seek to promote international cooperation in risk management frameworks to manage operational, liquidity and concentration centric risks. These risks are a fallout of the growing digital financial services ecosystem in India and our increased dependence on third party services which render the financial system vulnerable. There are also threats to cybersecurity as a single outage anywhere on the net could precipitate cascading effects that could impact the financial system in toto.

India has a tall order ahead as it assumes the hot seat at the G-20. The group owes its existence to the underlying axiom that problems of an international nature need a unified coordinated approach to resolve. Growth today cannot be limited to nations in the global north. We need sustainable, strong, inclusive and balanced solutions as per the G-20 mandate. India will need to reinforce this idea among its peer nations by bringing them all onto the same page.