The G20 Summit concluded here Sunday with its leaders endorsing India’s concerns over black money, while promising a new global transparency standard that will modernize international tax rules and allow automatic exchange of related information between governments to curb illicit outflow of money estimated at over $1 trillion annually.
India, being represented at the summit by Prime Minister Narendra Modi, immediately called this development an unprecedented success, and said the next step will be the delivery of an action plan, along with the Organisation of Economic Cooperation and Development (OECD). The two forums represent 44 countries and 90 per cent of the world economy.
“We are taking actions to ensure the fairness of the international tax system and to secure countries’ revenue bases. Profits should be taxed where economic activities deriving the profits are performed and where value is created,” the G20 leaders said in a joint communique at the end of the eighth summit, promising to finalise work by end-2015.
This was precisely what Prime Minister Narendra Modi had specifically said and sought during a session on “Delivering Global Economic Resilience” on the second day of the summit in this west Australian city, while also wanting systems that will help countries in getting back the ill-gotten monies stashed away abroad.
“At this Summit, G20 Leaders have endorsed a new global transparency standard that will leave no place for tax cheats to hide. More than 90 jurisdictions will begin automatic exchange of tax information, using a common reporting standard by 2017 or 2018,” said Australian Prime Minister Tony Abbot, the summit chair and host.
India has no official estimates of illegal money stashed away overseas, but the unofficial ones range from $466 billion to $1.4 trillion.
In fact, according to Indian interlocutors, such strong words on illicit money and imposition of curbs in the communique would not have been possible without India’s intervention, since the original draft did not contain a language that was satisfactory for India.
They said the prime minister and his official team led by his Sherpa, Railway Minister Suresh Prabhu, got strong endorsements for New Delhi’s stand, notable Brazil and South Africa, to make this happen.
“India scores at G20,” the external affairs ministry spokesperson Syed Akbaruddin tweeted. He and Minister Prabhu even termed the outcome “unprecedented success”.
“The G0 communique addressed concerns going beyond G20, developmental issues — employment, India’s prime concern, was a central issues of discussion,” Prabhu told reporters at a post-summit briefing here.
The tax and related black money issue apart, several other issues which New Delhi pursued vigorously in Brisbane found echo at the G20 Summit — reducing the cost of remittances from abroad, of which India is the largest beneficiary at $70 billion annually, collaborations on energy, infrastructure financing, inclusive growth, job creation and energy security.
The communique also specifically welcomed the breakthrough between India and the United States at the World Trade Organisation (WTO) and saw this as paving the way for a pact that will help ease the processes involved in global commerce, and move forward in addressing the concerns of developing countries on food security.
The G20 promised strong, practical measures to reduce the global average cost of transferring remittances to 5 percent, which goes up sometimes as high as 10 percent.
The communique also promised to raise global growth to deliver better living standards and quality jobs for people across the world to ensure financial inclusion. It specifically set a target of raising the output of G20 members by around 2.1 percent by 2018 and the necessary steps towards achieving this.
India said this was significant. “We have $2 trillion of extra global economic growth, which will happen because of this 2 percent growth rate, that we are talking about. I think India would benefit, but India will also contribute,” Prabhu said.
“India will contribute because India’s growth rate will definitely be upwards of 6 percent, and definitely India will benefit because when the global markets open up, we will also get a significant part of that as our share of the global trade,” he said.
“Just to add, the Brisbane Action Plan mentions two emerging markets as growing strongly – China and India. Only two by name,” said Usha Titus, who was the deputy Sherpa giving key inputs specifically on financial matters.
Prime Minister Modi had also made a strong pitch for energy security and finding alternative solutions. “Our prime minister mentioned that we should create a global centre for dealing with renewable energy to find solutions and everything. It was very widely welcomed including by those who are not part of the G20, like Jeffrey Sachs and others who have been saying that this is an excellent idea that we have done,” Prabhu said.
Indian interlocutors said another issue that has become a central theme for G20, thanks to India, is employment. There was also some movement forward in raising the target of 25 percent jobs for women.
“This is very significant because you have noticed that in the last several decades we could have unprecedented growth in global output but absolutely no relationship with employment. So, this has been a very significant demand, significant contribution India has made for her own interest and also for others,” Akbaruddin said.
Similarly on infrastructure, the G20 decided to establish a Global Infrastructure Hub within four years to emerge as a platform for sharing of knowledge, also for networking between governments, the private sector and funding institutions.
Akbarudding, summing up India’s gains at the G20, said: “If you go back to our initial briefing and see from there where we are today, we have achieved substantially or overwhelmingly all our goals.”
“These goals were in terms of outcomes of the communiquÃ©, in terms of transparency, in terms of subsequent developments relating to the India-US understanding on WTO, as well as on remittances-related issues. As far as growth, we are in the forefront of growth. So, if you add up all these elements, it has been an extremely successful visit.”
Originally formed at the level of finance ministers and central bank governors in 1999 after the East Asian economic crisis, the G20 assumed significance after its elevation to a summit-level forum in 2008, following the global financial crisis.
The past summits were held in Washington, London, Pittsburgh, Toronto, Seoul, Cannes and Los Cabos.
Besides India, the G20 comprises Argentina, Australia, Brazil, Canada, China, France, Germany, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, Britain, the US and the EU.