PM has echoed the concerns of Global South on multilateralism

PM Modi warned that those that cannot reform will be unable to anticipate or prepare for the future and hence could end up as “irrelevant debating clubs”.

The need to reform multilateral institutions to meet the needs of changing times was one of the dominant themes of Prime Minister Narendra Modi’s wide-ranging interview with Moneycontrol. His comments on this issue assume significance as there has been a growing clamour from the South to make multilateral agencies more responsive to the requirements of emerging economies. The Bretton Woods institutions as well as subsequent organisations like the World Trade Organisation (WTO) have operated under the pervasive influence of powerful developed countries. With a changing world order, these need to alter their perspective and mode of functioning to grapple with upheavals like the pandemic and the Ukraine war.

Clearly aware of the ramifications of institutions becoming out of touch with the current geopolitical scenario, Modi warned that those that cannot reform will be unable to anticipate or prepare for the future and hence could end up as “irrelevant debating clubs”. In unusually strong words, he noted when such institutions cannot act against those who violate the global rules-based order, or worse, get “hijacked” by such entities, they risk losing credibility. His call for “credible multilateralism” and the need to treat stakeholders with “consistency, equality and dignity”, echoes the concerns of the South over past failures to support them.

Greater Role For The Global South

In fact, one of the highlights of India’s presidency of the G20 has been the increasing role of the Global South. It went ahead without any delay to hold a Voice of Global South summit, highlighting empathy with its compatriots in the developing world and those who felt excluded from the global discourse.

Against the backdrop of the growing decline of the WTO’s authority, the prime minister stressed India is committed to working towards necessary reforms like strengthening rules and restoring the dispute settlement mechanism. He hinted at the recognition that the absence of the dispute settlement process has weakened the institution. The fact is that the WTO is no longer capable of resolving trade frictions between countries. The original concept of creating a rules-based multilateral trading system that would provide equal opportunities to the North and South has been diluted considerably.

Given the fact that the WTO’s decline has impacted the developing world far more than advanced economies, it is notable that India has made efforts during the G20 presidency towards strengthening the multilateral trading system. This is imperative as ultimately developing economies are now being forced to enter into either bilateral or regional trade pacts with uneven results, instead of coming under the umbrella of a global rules-based trading system.

Modi also spoke at length in the interview about the debt crisis faced by low- and middle-income countries. Here again, this country has become the voice of the Global South as multilateral coordination was being strengthened to ensure coordinated debt treatment for debt-distressed countries. One initiative has been the Global Sovereign Debt Roundtable (GSDR), jointly launched by the IMF, World Bank and the Presidency. An interesting aspect mentioned by him regarding the rapid dissemination of news in the information age recognised that this has actually given advance warnings to countries and allowed them to take precautionary steps to avoid similar debt traps.

Coordination On Inflation Control

On global inflation, he pointed to the understanding at the forum that timely and clear communication of policy stances is crucial for central banks. This is in the light of events over the past two years, which have shown that inflation spikes in developed economies combined with aggressive rate hikes by central banks, have created a contagion effect in emerging economies. The dialogue on this issue during the G20 Finance Ministers meeting could lead to closer coordination among central banks of both developed and developing economies. This in turn could help lower-income countries in particular to prepare for policy changes that could potentially create inflationary pressures in their jurisdictions.

No interview about the G20 could have been complete without talking about India’s success in creating digital public infrastructure. Modi observed that countries of the Global South are excited about the opportunity to empower the poor without any leakages due to technology. One of the bigger achievements of the G20 Presidency has been the adoption of a framework to govern digital public infrastructure. India’s success in the tech arena, he pointed out, has made its call for tech-related cooperation to be credible, whether in crypto or cyberterrorism.

Regarding the implications of a stronger India for the world as it becomes the fifth largest economy, he declared that the “human-centric” approach could be replicated in other countries. Not only did it further the interests of the global south, it helped bring a sense of reliability to the global supply chain. It cannot be denied that India’s rapid growth in recent times has made a sizable contribution to the world economy. It has also become a role model for the Global South through its leadership in economic empowerment via technology.

Sushma Ramachandran is a senior journalist based in Delhi. Views are personal, and do not represent the stand of this publication.