Category: Uncategorized

• According to the RBI, India’s foreign reserves stood at $578.4 billion in March 2023, a decrease of more than $28 billion from March 2022, $19.7 billion of which was attributable to value changes.
• The fall in the value of the US dollar, along with increased capital flows, has contributed to a jump in reserves this year.

What is Foreign Exchange (Forex) Reserve?

• Foreign exchange reserves are essential assets kept by the central bank as reserves in foreign currencies.
• They are frequently employed to support the currency and set monetary policy.
• Foreign reserves in India include gold, dollars, and the IMF’s quota for Special Drawing Rights.
• Given the currency’s prominence in the worldwide financial and trade system, the majority of reserves are normally stored in US dollars.
• In addition to US dollars, several central banks retain reserves in Euros, British pounds, Japanese yen, or Chinese yuan.

India’s forex reserves cover:

• Foreign Currency Assets (FCAs)
• Special Drawing Rights (SDRs)
• Gold Reserves
• Reserve position with the International Monetary Fund (IMF)

Current Situation: The Effects of US Rate Hikes and Capital Inflows

• Rate Hikes in the United States and Capital Flows: Rate hikes by the United States Federal Reserve have spurred a flow of international investments into the United States Treasury, resulting in capital outflows from India.
• Potential capital inflows: The US Fed has raised interest rates by 75 basis points so far this year. This could enhance capital inflows into emerging markets such as India.
• Improved Balance of Payment (BoP): India’s BoP has greatly improved, with the current account deficit anticipated to be less than 2% of GDP.
• Resumption of Equity Capital Flows: Equity capital flows have resumed, and India continues to draw considerable investments when compared to other emerging market counterparts.

Global Position of India’s Forex Reserves Among Nations:

• India ranks fourth among countries with the largest forex reserves, trailing only China, Japan, and Switzerland.
• Differences in Reserve Accumulation: Due to a competitive export market, most countries sustain large and consistent current account surpluses. India, Brazil, and the United States, on the other hand, have accumulated reserves predominantly through capital flows rather than a significant current account surplus.

The RBI’s Strategy for Diversifying Foreign Exchange Reserves

• The RBI intends to internationalise the Indian rupee in order to lessen dependency on foreign currencies.
• Exploring the Use of Asian Clearing Union Currencies: The RBI is investigating the use of currencies from Asian Clearing Union member countries, including the rupee, for payment and settlement among themselves.
• An agreement with the Central Bank of Sri Lanka allows the rupee to be used as a recognised foreign currency, encouraging trade between the two nations and enabling rupee transactions for Indian visitors in Sri Lanka.

@the end

• While India’s forex reserves have fluctuated due to a variety of circumstances, the country’s ongoing efforts to diversify and increase its reserves position demonstrate the RBI’s proactive attitude.
• The continued emphasis on attracting foreign investment, together with initiatives to internationalise the rupee, may contribute to a more stable and resilient forex reserve management system in the future.

Source: https://m.economictimes.com/news/economy/indicators/indias-forex-reserves-fall-2-91-billion-to-593-2-billion-as-of-june-23/articleshow/101395343.cms#:~:text=Much%20of%20the%20decline%20since,against%20a%20surging%20US%20dollar.

As world leaders and financial titans convene in Paris for the Summit for a New Global Financing Pact, the need to take concrete steps towards sustainable finance becomes critical. French President Emmanuel Macron stresses the importance of strengthening “financial solidarity with the [Global]South.” As president of the G20 and co-chair of the summit’s steering committee, India is expected to be a prominent advocate for the interests of the Global South.

What exactly is the Summit for a New Global Financing Pact?

• The Summit for a New Global Financing Pact is a high-level international conference aiming at addressing global financing difficulties and finding answers.
• The summit provides a forum for world leaders, finance titans, policymakers, and other stakeholders to explore ways for mobilising financial resources for long-term development, particularly in low- and middle-income nations.

The summit’s specific objectives

• Increasing Financial Solidarity: The summit intends to strengthen financial solidarity with the Global South, recognising the need of addressing the specific obstacles that developing nations have in securing appropriate financial resources for long-term development efforts.
• Bridging the financing Gap: It tries to bridge the financing gap between international community commitments and real funding supplied for sustainable development. The emphasis is on identifying specific measures to close the gap and ensure that budgetary promises are met.
• Transforming Financial Architecture: The summit intends to facilitate the change of the international financial and development architecture to make it more egalitarian, predictable, and supportive of long-term development goals. This includes looking into new financing mechanisms, increasing transparency, and lowering conditions.
• Mobilising Private Sector Investment: The summit recognises the need of private sector participation in financing long-term development. It aims to promote policies and processes that encourage private investment in sustainable infrastructure, renewable energy, and other critical areas.

Significance of the New Global Financing Pact

• Addressing Sustainable Development Challenges: The summit provides a forum for discussion and resolution of key issues concerning sustainable development. It is primarily concerned with mobilising financial resources to address concerns such as climate change, poverty eradication, social injustice, and fulfilling the Sustainable Development Goals (SDGs).
• Bridging the Financing Gap: One of the summit’s main goals is to close the funding gap between promises made and real funding supplied for sustainable development initiatives. The summit attempts to establish tangible strategies and processes to ensure that financial promises are met and appropriate cash is made available by emphasising the gap between pledges and payment.
• Increasing Financial Solidarity: The summit emphasises the significance of financial solidarity, particularly with low- and middle-income countries, also known as the Global South. It recognises the need of ensuring equitable access to financial resources and assisting poor countries in their efforts to achieve sustainable development.
• Transforming Financial Architecture: The summit provides a forum for participants to debate and suggest changes to the worldwide financial and development architecture. It fosters the development of novel funding channels, improved openness, and fewer conditions in order to make better use of financial resources.
• Mobilising Private Sector Engagement: The summit recognises the private sector’s critical role in financing long-term development. It seeks to increase private sector engagement by investigating solutions for mobilising private investment in sustainable infrastructure, renewable energy, and other critical areas.

Gap between Promises and Payment

• Inadequate financing: Despite worldwide promises and pledges to support sustainable development efforts, the actual quantity of financing falls short of the targets. This includes pledges made in international agreements such as the Paris Agreement and the Sustainable Development Goals (SDGs) of the United Nations.
• Lack of Predictability: The availability of money for sustainable development initiatives is frequently unpredictable, making long-term project planning and implementation challenging for governments and organisations. This uncertainty stymies progress in tackling urgent global issues.
• Regional discrepancies in funding exist, with a large share of monies directed to wealthier nations or specific regions, whereas low- and middle-income countries, notably in the Global South, suffer difficulty in receiving enough financial resources.
• Terms and limits: International funding frequently comes with terms and limits that limit recipient countries’ flexibility and sovereignty. These circumstances may make it difficult to use cash for sustainable development efforts effectively.
• Inadequate execution: Even when funds are available, disbursement and execution may be delayed or ineffective. Administrative obstacles, bureaucratic processes, and ineffective systems can all contribute to project delays and hamper timely project implementation.
• Limited Private Sector Engagement: It is difficult to mobilise private sector investment for sustainable development due to perceived risks and low returns on investment, particularly in low- and middle-income nations. The disconnect between promises and payments extends to encouraging private sector engagement.

In the future: Steps to ensure sustainable financing progress

• Action Plans in Concrete: The summit should result in the development of tangible action plans and pledges from participating governments and stakeholders. Specific actions, deadlines, and responsibilities should be outlined in these action plans to bridge the gap between promises and real funds.
• Implementation and accountability: It is critical to ensure that action plans are effectively implemented and that stakeholders are held accountable for their commitments. Regular monitoring, reporting, and evaluation processes should be put in place to assess progress and highlight areas where more work is required.
• Innovative Financing strategies: The summit should stimulate the development and use of novel financing strategies. This includes looking into alternatives to traditional development aid, such as impact investing, green bonds, climate funds, and public-private partnerships.
• Strengthening Global Cooperation: The future requires greater global cooperation and collaboration. Fostering collaboration between governments, international organisations, civil society, and the commercial sector to harness their unique skills, resources, and networks is one example.
• Empowering Developing Countries: Empowering developing countries, particularly those in the Global South, is a critical component of the path forward. This can be accomplished by providing technical help, capacity building, and knowledge transfer to enable these countries to access and use financial resources more effectively.
• Long-term Commitment: Long-term commitment and persistent efforts are required for sustainable finance. The path forward should prioritise multi-year financing commitments, financial flow stability, and a predictable and supportive climate for investment.

@the end

The Summit for a New Global Financing Pact provides an important chance to take tangible steps towards sustainable finance. As we approach key anniversaries, such as the United Nations’ 80th anniversary, reformed financing for sustainable development should serve as the foundation for inclusive and effective multilateralism. It is critical to guarantee that the foods served at the table are appropriate for the palates of the Global South, as this will considerably contribute to global expansion.

Source: https://unctad.org/board-action/financing-development-mobilizing-sustainable-development-finance-beyond-covid-19

The G-20 civil society mechanism, known as C-20, was co-opted by India’s ruling party in order to give a platform for independent voices and keep governments accountable. Critics contend that, under the pretence of civil society representation, C-20 has become a tool for advancing a politico-religious vision and legitimising neoliberal economic policies. This distortion of C-20 calls into question its integrity and ability to act as a check on undue commercial influence.

What are the worries concerning the credibility of the C-20?

• Politicisation: In India, the C-20 process has been co-opted by the ruling party, which is using it as a platform to advance its own politico-religious ideology. This calls into doubt the civil society process’s independence and neutrality.
• Lack of diversity: Concerns have been expressed concerning the overwhelming representation of members from a single religion on the C-20, which violates the ideal of inclusivity. A religious group’s dominance weakens the diversity and representation of civil society voices.

What are the worries concerning the credibility of the C-20?

Politicisation: In India, the C-20 process has been co-opted by the ruling party, which is using it as a platform to advance its own politico-religious ideology. This calls into doubt the civil society process’s independence and neutrality.

Lack of diversity: Concerns have been expressed concerning the overwhelming representation of members from a single religion on the C-20, which violates the ideal of inclusivity. A religious group’s dominance weakens the diversity and representation of civil society voices.

Censorship and suppression: Within C-20, there have been incidents of censorship and attempts to control the narrative. Participants have been requested not to make political statements on the G-20 and C-20, which limits their ability to critically discuss policies and activities that may be harmful to biodiversity and community interests.

Influence is limited: The C-20 process, like other G-20 engagement platforms, has been denied the ability to play an independent role in holding governments accountable or resisting undue commercial influence. Civil society’s effect on G-20 decisions and policies remains limited.

Lack of openness: The C-20 selection and decision-making processes have been criticised for their lack of transparency. The C-20 architecture, with its Secretariat based in a civil society organisation aligned to a specific political ideology, raises issues about the process’s independence and fairness.

What is the political impact of using international engagement forums?

Credibility is being eroded: When international participation platforms, such as the G-20 and its civil society process, are utilised for political and electoral advantage, their legitimacy and purpose are undermined. These forums are intended for meaningful global discourse, collaboration, and decision-making, and politicising them for short-term domestic goals undermines their credibility.

Political manipulation of international engagement forums can result in a breakdown of confidence and cooperation among participating countries and civil society organisations. It fosters distrust and destroys the culture of mutual respect and collaboration that these forums are meant to cultivate.

Weakening global governance: The use of international engagement platforms for political benefit has the potential to undermine global governance processes. It limits these forums’ ability to effectively address important global concerns and make informed decisions based on the common good, as decisions may be motivated by limited political considerations rather than smart policy-making.

Impact on international reputation: Misusing international engagement forums can harm a country’s international reputation. It might be interpreted as a violation of trust and an attempt to influence global platforms for domestic political reasons, harming the country’s international position.

Impeding global progress: When international engagement venues are used for political and electoral advantage, the emphasis shifts from solving global challenges to pursuing narrow domestic agendas. This can stymie progress on critical issues like climate change, sustainable development, poverty alleviation, and human rights, which necessitate international cooperation and coordinated efforts.

Civil society alienation: The politicisation of international participation forums has the potential to alienate civil society organisations and weaken their trust in the process. When civil society voices are co-opted or marginalised for political advantage, they lose their independence, influence, and ability to contribute meaningfully to global policy dialogues.

Short-term political and electoral gains over long-term rewards of substantial international participation can result in squandered opportunities for economic, social, and diplomatic achievements. It stifles the possibility of constructive debate, knowledge sharing, and collaboration, all of which can lead to great outcomes for the country and the global community.

In the future: Addressing the C-20 concerns

• Improve transparency and inclusiveness: C-20 member selection processes and decision-making mechanisms should be more transparent. Efforts should be taken to ensure diversified representation from other religions, philosophies, and industries, fostering inclusivity and avoiding group supremacy.
• Protect independence: Steps should be done to ensure C-20’s independence from government control. The Secretariat and coordination should be assigned to impartial and independent organisations or institutions with a track record of supporting civil society involvement norms.
• Civil society organisations should strengthen their networks, cooperation, and solidarity in order to raise their voices and urge for meaningful participation in the C-20 process. This can include forming partnerships with other organisations, exchanging information and resources, and collectively campaigning for inclusivity and accountability ideals.
• Encourage open and productive dialogue inside the C-20, allowing for varied perspectives and critical scrutiny of G-20 policies and actions. Participants should be able to express their concerns, present different perspectives, and contribute to the discussion without fear of censorship or retaliation.
• Advocate for policy coherence: Civil society organisations should actively engage in lobbying and policy engagement with the government as well as international organisations such as the G-20. They should emphasise the importance of policy coherence that integrates social, environmental, and economic components, while also prioritising biodiversity protection, sustainability, and the rights of marginalised populations.
• Increase public awareness: Efforts should be made to raise public awareness of the G-20 and its civil society processes, especially the C-20. Disseminating information, organising awareness campaigns, and allowing public participation in conversations and decision-making processes are all examples of how this might be done.
• International solidarity: Indian civil society organisations should encourage collaborations and exchanges with international civil society networks and organisations working on related problems. Sharing experiences, initiatives, and best practises can increase civil society’s worldwide collective voice and push pressure for more accountable and inclusive processes.

@the end

The co-opting of C-20 by India’s ruling party has harmed its credibility as an independent civil society organisation. Civil society organisations participating in C-20 must consider whether to legitimise or oppose this distortion, as their actions will influence the future of this critical venue for global conversation and accountability.

Source: https://www.opengovpartnership.org/actions-for-a-secure-and-open-civic-space/