India @World Bank, IMF: Finance Minister Nirmala Sitharaman highlights India’s accomplishments, challenges facing North And South

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Washington: India’s Finance Minister Nirmala Sitharaman emphasized the global challenges facing countries of the North and the South, and highlighted India’s role as G20 President, during the Spring 2023 World Bank Group and International Monetary Fund meetings April 10- 16.

One of the main meetings was the Second G20 Finance Ministers and Central Bank Governors (FMCBG) Meeting, under India’s Presidency. Sitharaman said many proposals discussed by India were very well received by participating members. She also emphasized that there has been a lot of momentum gained since the First G20 FMCBG held in February in Bengaluru this year.

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During her visit for the Spring Meetings, and on its sidelines,  Sitharaman followed a hectic schedule, participating in a series of events including a fireside chat on “Resilience of the Indian economy amidst tightening of financial conditions” hosted by Petersen Institute for International Economics (PIIE); a roundtable on “Investment opportunities for the long term: India on the rise” co-hosted by Confederation of Indian Industry and US-India Business Council; a roundtable on “Investing in the India Decade” organized by US-India Strategic Partnership Forum (USISPF) and Federation of Indian Chambers of Commerce & Industry (FICCI); another roundtable on “Multilateral Development Bank Evolution: Building Shareholder Consensus” hosted by US Treasury Secretary Janet Yellen. She also met with First Deputy Managing Director of IMF, Gita Gopinath, US Ex-Commerce Secretary, Penny Pritzker, and visited NASA’s Goddard Space Flight Center in Greenbelt, Maryland.

Speaking at a press conference April 13, following the FMCBG meetings, she said, “The discussions were very intense in the sense they were a lot of substantive inputs coming from the members. We were very happy to see most of India’s proposals have been well supported and there’s been an active engagement.”

Some 350 delegates with 13 invitee countries, and international and regional organizations participated in the FMCBG meeting which was grouped into three sections including sustainable finance, financial inclusion, and international taxation. The meetings wrapped up discussing progress made on India’s G20 Presidency, strengthening of Multilateral Development Banks, and challenges posed by Crypto Assets and debt distress in middle-income countries.

Sitharaman shared six key takeaways: recognition by members of the urgency to address debt vulnerability including strengthening multilateral coordination towards addressing the increasing debt distress in low income and middle-income countries; the issue of reforming multilateral development bank was very well received; the discussion on climate finance and sustainable financing of climate and climate related matters heading in a positive direction; Global Partnership for Financial Inclusion, where digital public infrastructure has had tremendous traction; international taxation issues were discussed in detail with the members; and the issue of Crypto Assets were discussed taking into account all the risks.

About strengthening global financial architecture, she said “There’s been a lot of discussion getting into details of how exactly the global financial architecture should be strengthened and what are the next steps and so on. So, through the India Presidency, I think we will be having several sessions to get into the details of how we want to look at the National architecture itself.”

Later addressing a panel discussion on “Empowering Women as Entrepreneurs and Leaders” at the World Bank, along with President of World Bank Group, David Malpass, Sitharaman recalled that the Financial Inclusion program was launched in 2014 when she was a junior Minister of Finance and went on to credit Prime Minister Narendra Modi for empowering women. She said “Prime Minister Modi’s first line, and that line continues till today – is that it has to be a women-led development for India rather than just women centric… So Prime Minister Modi gave a very prominent statement saying, I’m the Prime Minister of the country and I’m the guarantee for these loans, please give them the loans without a guarantee the government stands guarantee.”

When asked about specific initiatives that have enhanced economic conditions of women in India, she pointed to initiatives such as the National Rural Livelihood Mission, Floating Supermarket in Kerala, and Prerna Canteen run by women in Uttar Pradesh.

On April 10, at PIIE, Sitharaman said, “India being President of the G20 at this challenging time, is a great opportunity for India to prove and to work towards bringing more countries together on substantive issues. There still can be one or two on which you’re not able to get consensus. But there are pressing issues of the world which a forum like the G20 will have to address and I would think it is time that the members of the G20 sit up and take these issues on board.”

She also noted the challenges such as debt distress in middle-income countries, and risks in cryptocurrencies including working out a common framework for all countries, which will be part of the discussions.

She also noted that three emerging market economies – Indonesia, India, and Brazil – are serving as the President of the G20 from 2022-2024 for consecutive terms and added “I hope this will bring more of the emerging market views and the voice of Global South onto the table of the G20.”

When asked about World Trade Organization (WTO), she opined, “I would like WTO to be a lot more progressive, a lot more listening to all countries, to be fair to all members. It has to give more space to hear voices of countries which have something different to say and not just hear, but also somewhat heed because today’s message for the WTO should be to have greater openness.”

She continued, “In fact, I’m not quoting, in the context of WTO, but it might be useful to recall the words of US Commerce Secretary Katherine Tai. She had recently spoken and I was very, very impressed if I can use that word – about what exactly is the traditional trading approach? What exactly is liberalizing the market? What would it actually mean, in terms of tariff reduction? It is true now countries do look at it. It is a time when countries are looking at what extent to which you would want to have market liberalization.”

At the USISPF and FICCI event, she said, “Despite the challenges of COVID since 2020, the momentum of reforms in India has not abated…”

“Digitization is one such a thing, what we found is that although digitization was happening earlier, prior to the pandemic, to the extent that we were digitized, we were able to reach out the benefits to those citizens who needed it,” Sitharaman added. “And during the pandemic, with more such digitization efforts, bringing 5G now, India is one of those countries which has its own indigenous well developed 5G which at least two private operators are also bringing into the country.”

Underscoring that the Indian economy is “growing and watchable” she said, “With all these developments, therefore, for the next 25 years, in the budget this time, we proposed that India should become an Artificial Intelligence [AI] hub,” adding “We proposed three centers of excellence in the premier institutions at the Indian Institute of Technology, who would have the centers to research into AI and find out tools using AI which can make life of businesses or householders easy. So, India wants to lead in the AI area.”

Sitharaman also took part in the high-level meeting April 13, on negotiating the restructuring of Sri Lanka’s debt where she expressed India’s support for the island nation’s economic recovery and debt sustainability. The meeting was co-chaired by India, Japan and France.