In recent years, India has been pressing for reforms in big multilateral institutions. In many such organisations, reforms have been long overdue as it is seen that the power structure is tilted towards a few powerful countries putting the global South at a disadvantage. In this article, we explore this aspect of India’s foreign policy and how it can impact the global South. This topic is relevant for the IAS exam IR segment.
India’s Big Reform Push
Introduction:
- Reform in multilateral institutions is a demand that has been talked about way back. Major issues that have led to the demand for reforms in these institutions are:
- Greater demand for resources from developing countries.
- Overarching control of these institutions lies with countries like China which create hurdles for India in many of the projects.
- Thirdly, there has been much confusion regarding the modus operandi of climate finance across the world.
- The third factor comes with a deadline since climate change will not wait for countries to forge a consensus among themselves.
- Unless timely efforts are made in this respect the world would be at a greater risk of breaching the target of 1.5 degrees Celsius.
- But, the major concern lies in the fact that there has been little consensus over the issue of climate finance across the world.
Statistics related to climate finance:
- In 2021, multilateral development banks provided just over $50 billion to low- and middle-income countries as climate finance.
- This falls much shorter than the promise made by the developed countries to provide 100 billion dollars as climate finance.
Changes proposed by India:
- Under these circumstances is India’s push for “transformative” and “holistic” reforms of the multilateral development banks.
- India has proposed that “global public goods” be added as the third goal to the two existing ones of the multilateral development banks
- Elimination of poverty and
- Shared prosperity
- Global public goods include everything from the environment to health to culture to aspects of the digital domain. India, for instance, is showcasing its Unified Payments Interface or UPI, which has powered India to become a world leader in digital transactions, as a digital public good.
Challenges that lie ahead for global public goods:
- Finding out resources for financing global public goods is the biggest hurdle in front of emerging countries.
- Multilateral institutions would not be highly encouraged to sign such a deal where they have to part away with their resources.
- The multilateral development banks cannot provide unlimited funds for about every need, and there is a need to tap other sources of finance.
- There is a lack of enthusiasm from the private players to take these areas as a mode of investment since they do not make very profitable businesses.
Significance of India’s step:
- It will help the developing and underdeveloped countries to mitigate the risk that may arise due to climate change.
- It will also lead to equitable distribution of financial resources across the countries without any discrimination and prejudices.
Conclusion: Getting these institutions to focus on public goods, especially climate financing, may well be the key to accelerating the transition to low-carbon economies.
India’s Big Reform Push Will Help Global South:- Download PDF Here
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