Modi at G20: Modest goals, modest gains for India
The problems of the Indian economy are largely self-afflicted, the Narendra Modi government is new and the core G20 issue of achieving 2% global growth – well, India is well above that figure.india Updated: Nov 18, 2014 10:46 IST
There are two ways to approach a G20 summit. One is to seek to provide solutions to major international problems affecting the global economy and get other countries to sign up for them. The other is to go with a largely domestic agenda and tomtom it, but in large part for a home audience.
India went into the G20 with the latter approach in mind. This made sense. The problems of the Indian economy are largely self-afflicted, the Narendra Modi government is new and the core G20 issue of achieving 2% global growth – well, India is well above that figure. And the biggest global migraine, the creaking Eurozone economies, is something India has little to contribute.
The only thing India had a role in was the WTO impasse. Having created the problem, India resolved it with the US before the Brisbane meeting. There was little chance of any other country opposing the deal and it was duly endorsed by the G20 “we welcome the breakthrough between the US and India.”
India should be wary of the climate change clause in the final communiqué. Despite the best attempts of Australia to scuttle it, it calls for its members “to adopt successfully a protocol, another legal instrument or an agreed outcome with legal force under the UNFCCC that is applicable to all parties” at the Paris 2015 climate summit. Expect Barack Obama, who sees this as a key legacy of his, to push hard for emerging economies like India to accept tight carbon chains. Here’s a look at key areas where New Delhi made significant gains:
India’s main accomplishments have been in the area of taxation where a number of its key goals were accepted. The endorsement of the common reporting standard and the automatic exchange of tax information will make it harder for tax havens to operate. There was some success in getting the Base Erosion and Profit Shifting tax reform plan of the OECD accepted. The communiqué commits the G20 to finalising the adoption of the BEPS system, designed to reduce the ability of multinationals to hide their profits from taxes, by 2015. But the communiqué only strengthens India’s negotiating hand with tax havens – many are not G20 members and need not comply. The biggest haven for Indian black money is probably Dubai and it is notable New Delhi barely mentions this city.
India, the world’s largest recipient of remittances, wants the cost of remittance transfers to be brought down — in theory more of the money would then be kept with Indians. The G20 committed to bring down the cost of such transfers, to 5%. But this target has been around since 2011. But at least transactions cost fell from 10 to 8% from that time. Whether they will fall more is not clear.
India pays among the highest global rates for natural gas because of the fragmented nature of the international gas market. It wanted the G20 to push for better energy markets to help reduce this sort of thing. A “principles on energy collaboration” was produced. There more agreement on the energy efficiency issue and the role of the International Partnership for Energy Efficiency Cooperation was boosted — India is among the few members. But the principles on energy collaboration are little more than that, with no action plan or commitment. Don’t expect much change there.
G20 issued a high-sounding commitment against corruption, much of which was about greater transparency in accounts of state-owned enterprises and the activites of the private sector. But this is a retread of a similar document that goes back to the G20 summit of 2010. The Action Plan has very little action in it – no individual commitments by member states and a “possible” look at compliance with the OECD Anti-Bribery Convention.
First Published: Nov 18, 2014 01:55 IST