International finance and geopolitics are quite dynamic and will tend to alter each day. We must have a clear view of our nation and where it stands in this landscape. It is thus necessary that we do frequently look at this scape and the Centre for Financial Accountability is attempting to do so with its first edition of the India & Global Finance: An Annual Review 2023-24. The first edition of the Annual Review comes at a time when India is stubborn to portray itself as a major leading role player in global finance matters and how it does not leave any stone unturned to make it a grand spectacle. No such proper evaluations have been made since the Indian government adopted globalisation, particularly following the 2014 Lok Sabha elections. It is remarkable that since then, India has only seen an increase in the quantity of foreign direct investment for development. In 2022, India was the world’s third-largest beneficiary of foreign direct investment (FDI) in greenfield projects, according to the most recent UN Conference on Trade and Development report. The report also stated that India was the world’s second-largest beneficiary of international project finance in 2022. Thus, the timing of this review adds more to its relevance.Ā
Today the global economy is experiencing high inflation, debt, and a climate crisis. The global recovery from the pandemic was predicted to continue till 2022 and 2023. The world economy is facing a new negative supply shock as a result of global political unrest such as Russia’s war against Ukraine, Israel’s genocide in Palestine, the war in Sudan, and many more. These events are impending global growth and escalating inflationary pressures. The Indian markets are greatly affected by these geopolitical tensions because they constitute a serious risk to retail inflation. It will be necessary for the Indian government to diversify energy sources, boost efficiency wherever they can, and lessen the impact of rising energy costs.Ā
The world is commemorating the 50th anniversary of the new International Economic Order. The world economy is seeing a similar scenario to 1975 when NIEO was created to address the root cause of polycrisis, food inflation, and sovereign debt. The difference now is that we have an extra challenge: the rapidly increasing climate crisis. However, it will necessitate new responses to the same old questions from the previous polycrisis. The essays in the review explore some critical questions, such as: What institutions must we establish? How do we extract resources from old masters? And how should we distribute resources among people and nations around the world?Ā
In the opening piece ‘Can the Bretton Woods Twins be Reformed?’ C P Chandrashekhar, speaks on the expectation of the international community to change course by dismantling the dominant Neoliberal system, which is proven to be unsuitable for an equitable world. The geopolitical concerns include the overwhelming of developed elite nations and their greater position and influence in BWIs. Underdeveloped and developing nations have become underrepresented and marginalized as a result, not just in terms of their quota shares but also in terms of their nominal GDP and per capita. The continuing inequalities in representation that have existed since the establishment of the BWIs in 1944, with power oscillations causing discontent among underrepresented nations. The financing should go from wealthier nations, who are responsible for a major portion of cumulative carbon emissions, to less developed nations. Through this article, he tries to emphasise the importance of developing a new global governance structure and a financial architecture capable of mobilizing the resources required for sustainable development.Ā Ā
The concept of Loss and Damage, which has evolved as the third pillar of the climate movement, is examined by Harjeet Singh in his essay āThe Loss and Damage Fund: A Breakthrough but a Long Road Yet to Climate Justice.ā The Loss & Damage Fund attempts to aid communities in underdeveloped countries adhering to natural disasters. It is an important step towards acknowledging and addressing climate change’s disproportionate impact on vulnerable countries. There was significant pushback and delayed progress in formalizing the concept under international climate agreements. The inclusive representation of the fund is crucial to its success, and how important it is that the fund adheres to the concepts of climate justice.Ā
The article ‘Geopolitical Shifts and Atmanirbhar Bharat’ by Dinesh Abrol discusses the palpable shift of transnational businesses in policymaking and how their influence on policymaking has grown manifold. He also analyzes how policymakers want to encourage domestic enterprises and agencies to be involved in the global value chain. Subsequently, the Atmanirbhar Bharat emerged as a government initiative in India that seeks to achieve self-sufficiency in multiple domains, including manufacturing, defence, technology, and agriculture. Following this route, the government joined the Quad and the Indo-Pacific Economic Framework for Prosperity (IPEF), which were established by the US and its allies as a calculated countermeasure to China’s military and economic ascent. The decision aims to subjugate India’s economy to the same powers that drained the country of enormous sums of wealth during the colonial era. India shouldn’t enter the game that the former colonial powers have set up by sleepwalking in. The World Trade Organization (WTO) and the entire international economic arena are confronting their greatest crisis as the US and EU put increasing emphasis on achieving predictability in supply chain design and management. India must maintain its options for upcoming policies. The author argues that Atmanirbhar Bharat cannot be driven by trade and that the best course of action is to detach from the globally integrated economy gradually. India needs exports, but not export-led growth. Indian economic nationalism cannot be FDI based āMake in Indiaā journey.
In his essay āReforming Multilateral Financial Institutions: The Challenges,ā Biswajit Dhar discusses the need for the reforms of the Multilateral Development Banks; the Bretton Wood Institutions in particular. The essay delves into the problems that developing countries face, the difficulties that must be overcome, and the necessity of democratizing the Bretton Woods Twin. For emerging market economies and developing nations to have more influence in decision-making processes that correspond with their relative weight in the global economy, the IMF and the World Bank must address their deficiencies in legitimacy. This will involve significant changes to their governance structures. These institutions’ financing priorities have not kept pace with the pressing demands of the developing world; rather, they have reflected the agenda of the developed world. Lastly, multilateral development banks, including the BWIs, need to offer greater amounts of concessional financing given the multiplicity of difficulties that developing nations confront, such as achieving sustainable development goals and resolving the debt problem. These institutions ought to offer emerging nations a bigger role and be more considerate of their pressing financial requirements. However, it is unlikely to occur unless there is a significant change in how these institutions operate, which can occur if developing nations are granted more authority over their administration. The essay states that only then can they respond to developing countries’ vital finance demands.
In her article āFuture of International Tax,ā Suranjali Tandon, discusses the historical influence of the UN and OECD on international tax rules as well as how developing countries express their displeasure and demand equal rights within the international tax architecture. Since the conditions affect the character of dominating rules, the essay traces the historical contribution of the OECD and UN to the development of international tax laws. There have been some achievements under the base erosion and profit shifting (BEPS) program, but these have mostly depended on the availability of solutions to solve BEPS issues. The global south is driving a shift in power dynamics, resulting in increased transparency in negotiations. According to Mansour (2023), there appears to be a preference for the OECD to maintain standards among a small group of countries while developing countries seek adequate representation. This is evident in the recent UN vote, where Nigeria’s proposal was taken up and voted against by developed countries such as the UK, the US, and the EU. The essay further addresses how the UN should take lessons from history and how it seeks to change the global tax system to create a new world order.Ā
In his article āMultilateral Development Banks at Crossroads: Does the Summers-Singh Report Provide the Right Direction?ā Subhash Chandra Garg discusses the Summers-Singh recommendations and its assumption that the MDBs must embrace a revolutionary development agenda because of the āworld on fireā that is present. He claims that with only 26 LICs and fewer than 10% of the population living in extreme poverty, the development challenge of today is significantly less severe. Pollution and climate change are two major new challenges that the globe is currently facing. The 13 suggestions made by Summers-Singh for “better MDBs” are incredibly petty and offer no substantive alteration to the current institutional structures and procedures. Similarly, the eight suggestions made for ābolder MDBsā are not novel. To help in changing the future for developing nations, MDBs need to transform themselves. To improve teamwork, become more client-responsive, and engage in joint financing, risk-sharing, and standard-setting, it is necessary to adopt a comprehensive culture of change. The world needs these radically reorganized MDBs, not Summers-only Singh’s futile advice, to address today’s developmental problems.
In her piece, āAgricultural Intellectual Property Rights in Trade Rules and Investment Treatiesā Shalini Bhutani discusses the growing scope of intellectual property rights. Investment is defined not only as an enterprise in brick and mortar but also as its assets, which include shares, stocks and intellectual property. She talks about the IPR in agriculture. Peasant communities, who form the backbone of agriculture in developing nations, keep disputing the concept of intellectual property rights (IPRs) on plants. The global south attempts to assert the flexibility provided to developing nations and LDCs under the WTO framework, which allows them to vary their domestic IPR laws and policies to their developmental requirements as well as their socio-cultural and political contexts. As a result, the majority of developing countries still do not give patents on planting materials in their legislation. This piece focuses mainly on issues related to Plant Breeder Rights (PRB) and Plant Variety Protection (PRV), specifically pertaining to the Protection of Plant Varieties and Framers’ Rights Act (PPV & FRA) 2001 and the relevant Indian laws as it plans to enhance its seed exports abroad. India is eager to participate in a new generation of bilateral trade and investment agreements with wealthy countries. It is essential to observe changes in the seed sector in India in addition to international trade and investment agreements. In terms of seed market share, India makes up less than 1%.Ā
All in all, the annual review tries to emphasize the necessity of a radical shift in the global geopolitical environment. It explores every facet of the subject matter in great detail and gives a compelling overview of the current state of international politics and transnational finance. However, the state of international economic integration remains questionable.Ā