G20 : A Brief Understanding
What is G20 ?
- G20 an informal intergovernmental coalition of 19 countries and the European Union, with participation from representatives of the International Monetary Fund and the World Bank.
- It encompasses a diverse combination of the world's leading advanced and emerging economies.
- Together, the G20 members collectively account for approximately 85% of the global Gross Domestic Product (GDP), over 75% of global trade, and encompass around two-thirds of the world's population.
Origin of G20:
The origin of the G20 can be traced back to the 1997 Asian Financial crisis when global economic cooperation became evident. In response, the G7, a group of major advanced economies, invited both developed and developing economies to form a ministerial-level forum. As a result, finance ministers and central bank governors convened a meeting as the G20 in Berlin in 1999.
Amid the wake of the 2008 global financial crisis, the G20 assumed a more prominent role, becoming a platform for leaders' summits. Consequently, it was decided that G20 leaders would meet annually to address economic challenges, financial stability, and sustainable development on a global scale.
To support the preparation of these summits, the G20 finance ministers and central bank governors continued to meet twice a year. These meetings coincided with the gatherings of the International Monetary Fund and The World Bank, enhancing coordination and cooperation among the member nations.
Members of G20 :
Objectives of G20 :
The G20's objectives are to foster global economic stability and sustainable growth.
- It aims to promote international cooperation among major economies, addressing financial vulnerabilities and regulating financial markets.
- Encouraging inclusive growth and reducing inequalities are key goals, as well as facilitating free and fair trade to boost global commerce.
- The G20 strives to tackle pressing global challenges like migration, digitisation, employment, healthcare, women's empowerment, and development aid.
- By emphasising the UN Sustainable Development Goals and the Paris Climate Agreement, it aims to ensure a more resilient and equitable global economy.
In essence, the G20 seeks collaborative solutions for shared prosperity and economic resilience.
G20 Consists of two parallel tracks: the Finance Track and the Sherpa Track.
1. Finance Track:
- This track is led by Finance Ministers and Central Bank Governors from the G20 member countries.
- They meet several times throughout the year to discuss and coordinate policies related to international financial stability, economic growth, and other financial matters.
- The Finance Track culminates in the G20 Finance Ministers and Central Bank Governors Meeting, where these officials finalise agreements and recommendations to be presented to the G20 leaders during the Leaders' Summit.
2. Sherpa Track:
- Each member country appoints a Sherpa, who is a high-level official, usually from the foreign ministry or a related government department.
- The Sherpas serve as personal representatives of their respective country's leader (such as the President or Prime Minister) and are responsible for preparing the groundwork and negotiations for the Leaders' Summit.
- They engage in various meetings and discussions throughout the year to align positions on a wide range of topics and draft the final documents that will be presented to the G20 leaders.
Structure and Functioning of G20 :
Presidency :
- The G20 Presidency rotates annually among its member countries according to a system that ensures a regional balance over time.
- The 19 individual countries, excluding the European Union, are divided into five different groups, each containing no more than four countries.
- The rotation of the G20 Presidency proceeds by selecting a country from a different group each year to chair the G20 Leaders' Meeting.
- All countries within a group are eligible to take over the G20 Presidency when it is their group's turn.
- Therefore, the member states within the relevant group must negotiate among themselves to decide and agree on which country will assume the G20 Presidency for the designated year.
Organisation:
- The G20 does not have a permanent secretariat or headquarters.
- Instead, the G20 operates on a rotating presidency system, where each member country takes on the responsibility of hosting and leading the group for a single year.
- The G20 president plays a crucial role in setting the agenda for the organisation in consultation with other member countries and in response to developments in the global economy.
- Indonesia - 2022
- India - 2023
- Brazil - 2024
G20 and India : Priorities During its Presidency
- Green Development, Climate Finance & LiFE: India aims to prioritise climate change issues, with a focus on climate finance and technology. It also seeks to promote just energy transitions for developing nations. India's unique approach, LiFE (Lifestyle for Environment), aims to encourage environmentally-conscious practices through behaviour-based movements inspired by the nation's sustainable traditions.
- Accelerated, Inclusive & Resilient Growth: India seeks to achieve sustainable development through accelerated, inclusive, and resilient economic growth. Key areas of focus include integrating Micro, Small, and Medium Enterprises (MSMEs) into global trade, promoting labor rights and welfare, addressing the global skills gap, and building inclusive agricultural value chains and food systems.
- Accelerating progress on SDGs: India recognises the impact of the COVID-19 pandemic on the 2030 Agenda for Sustainable Development. During its G20 Presidency, India will emphasise recommitting efforts to achieve the targets outlined in the 2030 Agenda.
- Technological Transformation & Digital Public Infrastructure: India advocates for a human-centric approach to technology and knowledge-sharing in priority areas like digital public infrastructure, financial inclusion, and tech-enabled development across various sectors.
- Multilateral Institutions for the 21st Century: India aims to push for reformed multilateralism to create a more accountable, inclusive, just, equitable, and representative multipolar international system capable of addressing the challenges of the 21st century.
- Women-led Development: India places a strong emphasis on inclusive growth and development, with a focus on empowering and promoting women's representation in leadership positions to boost socio-economic development and achieve the Sustainable Development Goals (SDGs).
Analysis Of G20 :
The G20 is a prominent global forum that addresses a wide range of critical issues, with a primary focus on the global economy. Key topics discussed within the G20 include financial markets, tax and fiscal policies, trade, agriculture, employment, energy, combating corruption, empowering women in the job market, implementing the 2030 agenda for Sustainable Development, addressing climate change, improving global health, countering terrorism, and promoting inclusive entrepreneurship.
India's priorities within the G20 Summits have been occurred mainly around combatting tax evasion to fight corruption, disrupting terror funds, reducing the cost of remittances, advocating for market access for essential drugs, pushing for reforms within the World Trade Organisation, and supporting the full implementation of the Paris Agreement to combat climate change.
The G20 has demonstrated several strengths and achieved significant milestones. Its relatively small membership of 20 countries allows for agility and prompt decision-making. Furthermore, the inclusion of invited countries, international organisations, and civil society groups through engagement initiatives ensures a more inclusive perspective when addressing global challenges. The G20 has been instrumental in strengthening the international financial regulatory system and providing emergency funding during the 2008 global financial crisis. It has also driven reforms within international financial institutions, including crucial initiatives such as the G20/OECD Base Erosion and Profit Shifting (BEPS) project and the implementation of tax transparency standards. The G20 played a pivotal role in the ratification of the Trade Facilitation Agreement, which could have a significant positive impact on global GDP if fully implemented.
Despite its successes, the G20 faces certain challenges. One of the main limitations is the lack of an enforcement mechanism, and its decisions are not legally binding, potentially hindering the effectiveness of its actions. Additionally, the G20 grapples with polarised interests among its member countries, which can impede the consensus-building process on certain issues.
Moving forward, the G20 must acknowledge that it cannot solve all of the world's problems single-handedly, but it remains an essential forum for fostering international cooperation. To enhance its effectiveness, the G20 should strengthen partnerships with key international organisations such as the IMF, the OECD, the WHO, the World Bank, and the WTO, and delegate monitoring tasks to them. Prioritising global cooperation over individual interests and promoting dialogue and diplomacy to resolve conflicts are essential strategies to ensure the G20's continued relevance and impact in addressing global challenges.
UPSC Civil Services Examination, Previous Year Question (PYQ)
Q. In which one of the following groups are all the four countries members of G20? (2020)
(a) Argentina, Mexico, South Africa and Turkey
(b) Australia, Canada, Malaysia and New Zealand
(c) Brazil, Iran, Saudi Arabia and Vietnam
(d) Indonesia, Japan, Singapore and South Korea
Ans: Option (a)
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