Bloomberg — India is set to use this week’s meeting of finance ministers and central bank governors from the Group of 20 nations to try to amplify its influence over developing economies in Asia, Africa and Latin America called the Global South.
Without the cash to dole out billions in loans like China did under President Xi Jinping’s Belt-and-Road Initiative, India is seeking to use soft power by championing issues important to struggling nations such as debt relief. That’s one issue that may emerge as a key theme at the meetings in Bengaluru on Feb. 24-25.
While China is the obvious rival, India doesn’t want to be constrained by the US and its allies either and will stick up for its own interests on matters such as energy security. For Prime Minister Narendra Modi, this year’s hosting of the G-20 is an opportunity to leverage India’s growing strategic and economic heft.
India’s geopolitical importance to the US and its allies has increased as American policy makers seek to contain Beijing’s rise, with an increased focus on the Quad grouping that also includes Japan and Australia. Already the world’s most-populous nation according to some estimates, India is one of the fastest-expanding economies at a time of sluggish growth around the globe, luring companies like Apple Inc. to expand.
Even before kicking off key G-20 gatherings, New Delhi organized a virtual Global South summit in mid-January where Modi said: “As far as India is concerned, your voice is India’s voice. Your priorities are India’s priorities.”
Nirmala Sitharaman, in an address to fellow finance ministers from across 14 economies as far-flung as Belize and Sierra Leone during that summit, said that as G-20 host, India seeks to “rebuild trust in multilateralism” and greater inclusion of struggling nations in discussions.
Reforming multilateral institutions, assistance for low- and middle-income countries on debt vulnerability and climate initiatives are among India’s priorities, according to the nation’s Chief Economic Adviser V. Anantha Nageswaran.
As poorer nations face debt distress, India is pushing that conversation into the mainstream. G-20 sherpa, Amitabh Kant, last week publicly pressured China to be more transparent on its loans to low-income countries and to take some losses.
India’s self-nomination as the leader of the Global South is the culmination of messaging on the global stage that it will not simply play by the rules and norms of more powerful nations. The government crackdown on BBC that met no resounding reprimand from the US and allies shows Modi’s success at leveraging his nation’s rising importance.
India’s resistance to some Western ideas extended to a more combative attitude toward criticism from foreign investors. After billionaire George Soros said Modi would “have to answer questions” about his relationship with Adani, the government went on the offensive.
Smriti Irani, a minister in Modi’s cabinet, described Soros’s remarks as an attempt to destroy Indian democracy, a response similar to Adani’s characterization of US-based short-seller Hindenburg Research’s allegations against the group as an “attack on India.”
India’s oil minister expressed the country’s stance clearly in a recent interview when asked about New Delhi shunning Western sanctions on Russia following its invasion of Ukraine. His message: It’s business, not personal.
“Energy is not about altruism or philanthropy,” Hardeep Singh Puri told Bloomberg Television’s Menaka Doshi on the sidelines of the G-20 Energy Week meetings in Bengaluru.
India’s campaign has already garnered allies — some natural, some unlikely. Indonesia has signaled a strong backing of India’s leadership on the global stage as the Southeast Asian giant passed the torch of the G-20 presidency this year.
Finance Minister Sri Mulyani Indrawati counted the two nations as “among a few big emerging countries who are performing very well on the economy,” and thus have “more gravitas, more influence and more respect globally,” she said in a recent interview with Nikkei Asia.
What Bloomberg Economics Says:
“The economic clout of India and Indonesia will rise in the coming decades. Our team’s projections point to India’s share of global GDP rising to about 20% in 2050 from 7% now, thanks to favorable demographics and abundant opportunities for catch-up growth. We also expect Indonesia to double its share in the world economy to 4% over the same period. Their geopolitical influence may begin to reflect their rising economic weight.” — Ziad Daoud, Chief Emerging Markets Economist
While the US has been at odds with India around issues like the sanctions on Russia, officials in Washington are warmer toward New Delhi’s call for the need to revamp multilateral institutions.
US Treasury Secretary Janet Yellen gave a speech in Washington earlier this month that called for a World Bank overhaul, including a push for the lender to be more aggressive in extending its balance sheet and recruiting more private-sector capital. The US was coordinating closely with India on its pursuit of multilateral development bank “evolution” as a key priority during the G-20, said Yellen.
To be sure, there’s healthy skepticism that India’s efforts will translate into real change in the global order anytime soon.
India’s big challenge will be securing any sort of consensus at the G-20 meetings, which have long been panned for producing little more than watered-down agreements on broad issues. Last year, it failed multiple times to achieve a consensus that would constitute a final “communiqué” at the close of the gathering.
Whether or not India’s time has come, the world cannot afford to ignore the South Asian giant. Japan is considering inviting India to a Group of Seven summit in May to discuss issues including Ukraine, nuclear disarmament and climate change.
“People of the Global South should no longer be excluded from the fruits of developments,” Modi said at the January summit.
--With assistance from Anup Roy, Ruchi Bhatia and Vrishti Beniwal
Read more on Bloomberg.com