Key issues and challenges as India takes over G20 presidency
The Indian side has asserted its focus during its G20 presidency for 2023 will be on an inclusive and action-oriented agenda, and that it will work to bridge the digital divide and tackle the challenges of food and energy security in the aftermath of the Ukraine war.
As India prepares to take on the presidency of the G20 from December, it will have to navigate crucial challenges such as persisting divisions among the world’s most powerful economies over the war in Ukraine, and meeting the expectations of developing countries.
The grouping of the world’s 20 largest economies was able to paper over its differences on the Ukraine conflict by agreeing on a joint communiqué at the eleventh hour at the summit in Bali due to a concerted push by India and Indonesia, but the document itself pointed to the continuing divisions.
The Indian side has asserted its focus during its G20 presidency for 2023 will be on an inclusive and action-oriented agenda, and that it will work to bridge the digital divide and tackle the challenges of food and energy security in the aftermath of the Ukraine war. As Prime Minister Narendra Modi put it, India will make the G20 a “catalyst for global change” since the world is looking at the group with hope at a time when it is grappling with geopolitical tensions, economic slowdown and rising food and energy prices.
Here are the key challenges and issues India will have to confront in its G20 presidency.
Foremost among the challenges for India will be the divisions over the Ukraine war, which resulted in almost all key meetings hosted by outgoing G20 president Indonesia ending without joint statements. Even the Leaders’ Declaration issued on Wednesday acknowledged that most G20 members “strongly condemned the war in Ukraine” and stressed it is exacerbating fragilities in the global economy, while there “were other views and different assessments of the situation and sanctions”.
With few signs of an early end to the conflict in Ukraine in sight, this will involve India continuing to walk a tightrope in view of its traditional close diplomatic and strategic ties with Russia and its rapidly growing partnerships with the US and key Western powers.
But the task won’t be easy, given the hardening of Western attitudes following Russia’s missile strikes targeting Ukrainian cities and a belief in some European countries that the West shouldn’t back down at a time when Ukrainian forces have pushed Russian troops out of Kharkiv and Kherson regions. While India’s assertion that this is not “an era of war” was echoed by the G20 Leaders’ Declaration, both Russia and Ukraine have given no signs that they will return to dialogue and diplomacy any time soon.
According to the World Bank, domestic food price inflation remains high across the world, with 83.3% of low-income countries and 90.7% of lower middle-income countries having seen inflation levels above 5% this year.
Global food prices have fallen from their highs in April and the World Bank’s food price index is forecast to decline by 6% in 2023, but multiple risks threaten the downward trend, including future disruptions in exports from Russia or Ukraine and further increases in energy prices. Inflation increases and adverse weather patterns could also lead to risks for food prices.
Turkey and India played important roles in the UN-brokered agreements for the unimpeded delivery of grain, foodstuffs and fertilisers from Ukraine and Russia, and as the G20 communique stated, all stakeholders must continue to ensure the full and timely implementation of these pacts to ease tension and prevent global food insecurity.
Speaking at the G20 Summit in Bali, Modi described the current shortage of fertilisers as “tomorrow’s food crisis” and emphasised the need for a mutual agreement to maintain the “stable and assured” supply of fertilisers and food grains.
Within days of India assuming the G20 presidency, the G7 is expected to put in place a long-awaited price cap for Russian oil, and there will be bans on using Western insurance, finance and maritime services for transporting Russian crude. The Indian side has said it feels no pressure from these measures and Modi said during the summit in Bali that the G20 “must not promote any restrictions on the supply of energy” and ensure stability in the global energy market. There is still a lack of clarity about the actual G7 price cap, and this is affecting buyers and shippers as most crude consignments are finalised weeks and months in advance. Such uncertainty is bound to have an impact on energy prices and could have significant implications for the post-pandemic economy recovery.
According to the latest report from the UN Environment Programme (UNEP), vulnerable and developing countries will need between $160 billion and $340 billion a year by 2030 to adapt to the climate emergency and this figure will increase to $565 billion by 2050. All this comes at a time when differences between the developed and developing countries for this funding are growing and India is among the voices calling on Western nations to do more for climate transition. The G20 Leaders’ Declaration acknowledged the “urgent need” to strengthen policies and mobilise financing in a predictable and timely fashion to address climate change, including a significant increase in support for developing countries. It urged developed countries to fulfil their commitments to deliver on the goal of jointly mobilising $100 billion a year by 2020 and through to 2025 for mitigation action. India’s G20 presidency will have push for developed countries to deliver on these pledges.
Bridging the digital gap, especially in developing countries, and ensuring inclusive benefits from digital technologies and transformation will be one of the focus areas of India’s G20 presidency. Modi told a session on digital transformation at the summit in Bali that G20 leaders should pledge to work jointly for digital inclusion over the next decade. In this context, he said, India’s experiences in developing digital payment systems and the CoWIN platform for vaccinations can be shared with the world.
Given that one of New Delhi’s key pillars for its G20 presidency is acting as the voice of the Global South, experts believe that India, in the months ahead, will have to strike a balance between the G7 — which includes Canada, France, Germany, Italy, Japan, the UK, the US and the European Union and is pitted against Russia — and the needs and expectations of developing countries in the G20 such as Brazil, Indonesia, Mexico and South Africa.
“Acting as the voice of the developing countries is a noble thought but it is always difficult to straddle two worlds. What the Global South will be looking for are practical and concrete solutions,” former ambassador Vivek Katju said. In this context, Katju pointed to Antigua & Barbuda Prime Minister Gaston Browne’s recent demand on behalf of the Association of Small Island States (AOSIS) that even emerging economies such as China and India should contribute to a climate compensation fund to help smaller countries rebuild after climate change-driven disasters.
India will also have work with influential G20 member China at a time when relations between the two countries have plummeted to their lowest in six decades because of the dragging standoff on the Line of Actual Control (LAC).
“There are global imponderables in terms of geopolitical and geo-economic challenges. There are also challenges on the external front like China, but India has never been better prepared,” said former ambassador Vishnu Prakash. “Whatever the outcomes, they won’t be for want of trying.”
India plans to host more than 200 meetings, focusing on issues such as infrastructure financing, sustainable finance, financial sector reforms, anti-corruption, digital economy, environment and climate and energy transition, before it hosts the G20 Summit in New Delhi in September 2023.