The two-day Brisbane summit of the G-20, which ended on Sunday, focused on enhancing the world’s collective GDP by 2.1 per cent in the next five years, although geopolitical tensions remain and recovery (after the slump that began in 2007) has been slow.
The Brisbane Action Plan of the world’s most powerful economies and key emerging economies such as India — which account for 85 per cent of the international GDP — lays down some 800 measures to this end. If these were implemented, the stipulated growth target would be met, noted IMF managing director Christine Lagarde sounding sceptical. She said the IMF would monitor each country’s performance.
The plan focuses on job creation, strengthening financial institutions (where the skulduggery began, leading to the last slump), boosting infrastructure which was viewed as a key sector for attaining growth, and cutting “inefficient subsidies” to enhance fossil fuel efficiencies. The reference to climate change was largely general, but indications were strong that each country would need to come with a carbon-lowering target at the climate summit in Paris next year. This pushes India to do something concrete and new.
Prime Minister Narendra Modi’s emphasis on dealing with the issue of black money — money on which tax has been evaded — is in the context of the G-20 deliberation on deterring tax crooks among transnational companies. The summit recognised that taxes had to be paid — and not avoided — in jurisdictions where profits were earned. These taxes were needed to push government programmes for infrastructure that would bring jobs, noted host country Australia’s PM Tony Abbott while he explained that the summit was quite clear that private sector involvement in economic activity would have to be enhanced by reducing regulatory mechanisms.
The black money issue has another ring in India on account of the politicisation of the question through election-time rhetoric. Wild figures are thrown around and no reliable data exists on possible sums of unaccounted money stashed in tax havens. It is lost sight of that much of the “black money” resides within the country and is produced in daily economic activities and in bribes.
Indeed G-20 deliberations in the past have concerned themselves with funds of questionable provenance. It was in this context that Indian officials last year were able to get the Swiss authorities to agree to disclosures of accounts if India (and presumably any other country) could show that sums in their banks had been earned through illegal activity and tax evaded, necessitating their parking abroad. With this backdrop, and Prime Minister Modi’s espousal at the Brisbane G-20 of the black money issue, a good deal of the onus will be on Indian authorities themselves as they press for tax-related information from other countries within the confines of treaties.