G20: India's Presidency will Convert Uncertainties into Opportunities

Dr S P Sharma Ms. Manpreet Kaur

As a fastest growing economy in the G20 nations, India will play a significant role to convert uncertainties into opportunities. India's Presidency would be impactful for bringing stability at the most crucial juncture of geo-political developments, high inflation and slowing economic growth. Proud moments for the Indians as country have assumed the G20 Presidency on 1st December 2022. Indonesia handed over the G20 Presidency to India at the closing ceremony of the Bali Summit on 16th November 2022. G20 was constituted in 1999 in the wake of the 1997 global international economic and financial stability. After the Lehman crisis of 2008, G20 holds significant economic influence for the growth and development of many economies. The G20 has a large set of growth and developmental issues on its agenda ranging from Sustainable Development Goals to Macro Economic and Financial Markets Stability.

Leadership Summits So Far

Source: PHD Research Bureau, Compiled from various sources.

Hon'ble Prime Minster Shri Narendra Modi highlighted India's achievements, and unwavering commitment to collectively address global challenges at the G20 summit with the theme Vasudhaiva Kutumbakam or One Earth One Family One Future, which underlines the message of equitable growth and shared future for all. G20 has emerged as a major driving force in today's economic environment, connecting the world's major emerging and developed economies. G20 assumes a great strength in shaping global socio-economic trends. Now, in the Post covid-19 period and emanated geopolitical developments, as global economy is facing uncertainty and instability, at this juncture, the role of the G20 assumes a great significance to create conducive environment to rejuvenate from the uncertainties to opportunities. G20 represents a significant proportion of economic and trade horizons as a leading forum of world's major economies. The G20 represent 90 percent of global GDP, 80 percent of global trade and 2/3rds of global population; US is the largest economy in the G20 nations with a size of USD 23 trillion (2022) and India is the growth leader with an average growth of 7% (2021 - 2025).

G20 So Far

Source: PHD Research Bureau, Compiled from various sources.

Over the glorious years, the G20 has been at the forefront of addressing issues emerged from the Global Financial Crisis 2008-09, the Eurozone Crisis in 2010 and the COVID-19 pandemic Crisis in 2020. India always has shown its strong support and commitment to multilateralism with a strong footing towards the United Nations 2030 Agenda on Sustainable Development Goals (SDGs). An analysis of GDP growth rates of the G20 countries indicates that India is the growth leader in all the G20 countries. According to the recent IMF projections, India's average growth rate for 2021-2025 would be 7% followed by Turkey at 5.1%, China at 5.0%. At this juncture, India holds a great opportunity to bring focus on crucial global issues and come forward with its narratives on growth and development of the nations. As the fastest growing economy among all the G20 economies, India's policy perspective would go a long way to enhance the growth and development of members nations.

India: A growth leader in the growth trajectory of G20 Nations (GDP Growth Rates)

Source: PHD Research Bureau, PHDCCI, Compiled from IMF, World Economic Outlook, October 2022.

Note:

(a)    NA stands for data not available and P stands for projections.

(b)   Averages are according to the availability of data and years.

(c)    Growth rate in the S. No. 20 is according to the Euro area not European Union. The G20, over the past two decades, has emerged with its agenda for a strong, sustainable and balanced growth trajectory of the members' nations. Over the past 15 years, since the Lehman crisis of 2008, the G20's agenda has focused on the efficiency of the financial markets, promotion of international trade, strengthening of health care and education, skill enhancement, women development, youth promotion and anticorruption.

An analysis of India's bilateral trade with G20 countries indicate that USA is India's largest trade partner with USD 119.5 billion of which India's exports to USA are USD 76.2 billion and Imports from USA are USD 43.3 billion from US with a trade surplus of USD 32.9 billion. China is India's second largest trade partner with USD 115.8 billion of which India's export to China are USD 21.3 billion and Imports from China are USD 94.6 billion with a trade deficit of USD 73.3 billion. Saudi Arabia is India's third largest trade partner in the G20 countries with USD 42.9 billion trade of which India's export to Saudi Arabia is USD 8.8 billion and Imports are USD 34.1 billion with a trade deficit of USD 25.3 billion.

Indonesia is India's fourth largest trade partner among the G20 countries with USD 26.2 billion trade of which India's export is USD 8.5 billion to Indonesia and Imports USD 17.7 billion from Indonesia with a trade deficit of USD 9.2 billion. Republic of Korea is India's the fifth largest trade partner with USD 25.6 billion of which India's exports are USD 8.1 billion and Imports at USD 17.5 billion with a trade deficit of USD 9.4 billion. India has signed 13 Free Trade Agreements (FTAs) and 6 Preferential Trade Agreements (PTAs) with various countries of which only 3 Free Trade Agreements are with the G20 nations including Australia, Japan and Republic of Korea. Among the G20 countries, India holds trade surplus with 8 economies.

India's bilateral trade with G20 countries

Source: PHD Research Bureau, PHDCCI, Compiled from Ministry of Commerce.

An analysis of lead indicators including Ease of Doing Business and Global Innovation Index indicates that India's ease of Doing Business is ranked at 15th among the G20 countries whereas in the Global Innovation Index, India is ranked at 12th position in the G20 countries. At this juncture, India should focus more and more on innovation and percolation of ease of doing business. As these two important ingredients of the production processes would enhance India's competitiveness in the domestic and international markets as well.

Ease of Doing Business Ranking and Global Innovation Index

Source: PHD Research Bureau, PHDCCI, Compiled from World Bank.

Going ahead, India must provide the leadership role to save the world from the global economic and financial uncertainties. The epicenter of the current crisis is the RussiaUkraine conflict and resultant sharp jump in the US dollar which will have a significant impact on the World economic growth. At this juncture, India as a growth leader in the G20 nations must do desired efforts to create stability in the World Economy. India's Presidency in the G20 would be one of the most significant proud moments for India. The fundamentals of the Indian economy are strong as compared with many of the G20 countries. So at this juncture time is most opportune to explore potential in the expansion of production possibilities and enhanced size of the economy.

(Dr. S P Sharma is Chief Economist, DSG, PHD Chamber of Commerce and Industry. He can be reached at spsharma@phdcci.in and Ms. Manpreet Kaur is Research Associate, PHD Chamber of Commerce and Industry) Views expressed are personal.