Why is it in the News?

If India slowly but steadily raises its development cooperation budget to less than 0.5 per cent of its GDP by 2030, it will still have put around $70 billion into the global system. India is already the voice of the Global South; it will become the bank of the Global South.

Context:

• In 2007, China's GDP stood at approximately $3.6 trillion. Fast-forward to the present, India's GDP has reached $3.7 trillion or potentially more, framing a significant context for a crucial juncture in Indian diplomacy under the current leadership.
• As India wraps up its transformative diplomatic year in 2023, highlighted by its G20 presidency, it becomes imperative to reflect on the geopolitical lessons drawn from China's rise post the 2008 financial crisis.

Global South and India:

• Global South represent a group of countries primarily located in Asia, Africa, and Latin America which are referred to as "developing" or "underdeveloped".
  • Global North on the other hand is completely opposite to this- developed, high per capita income, higher life expectancy and having a strong voice in various multilateral organizations.

Significance of the Global South:

• Economic Projections: By 2030, three out of the four largest economies are anticipated to emerge from the Global South (China, India, Japan, Indonesia).
• BRICS Dominance: The GDP of BRICS nations, measured in terms of purchasing power, now surpasses that of the G7 countries.
• Increased Intra-South Trade: Intra-South trade has surged, constituting over a quarter of global trade.
• Addressing Global Challenges: Collaborating with Global South nations is crucial for tackling issues like climate change, inequality, malnutrition, and energy security.
• Foreign Direct Investment: Outflows of foreign direct investment from the South contribute significantly to global flows.

India's Initiatives as a Global South Leader:

• Multilateral Reforms: India advocates for the reform of multilateral institutions to enhance inclusivity.
• Aarogya Maitri Project: Providing medical supplies to disaster-affected countries.
• Global South Diplomacy: Initiatives like the Global South Young Diplomat Forum and the Global South Centre of Excellence for R&D.
• Educational Support: Offering Global South Scholarships for students pursuing higher education in India.
• While India possesses the potential and political will to lead the Global South, it must also strive to narrow the gap between the Global North and South, aligning with its vision of 'Vasudhaiva Kutumbakam'—The World is One Family."

The Rise of China to Geoeconomic Prominence: An Analysis

• China's Strategic Moves During the Financial Crisis: Back in 2007, China had not yet achieved the geo-economic prominence it now holds.
  • However, despite having a GDP lower than India's today, it swiftly emerged as a pivotal nation during the global financial crisis in 2008.
• Countries worldwide sought to deepen their ties with China, aiming to secure a special standing in their diplomatic relations with the People's Republic.
• China's strategic advantage lies in its provision of institutional and geo-economic responses.
• • These responses included the establishment of a development bank, the initiation of a cross-continental lending program, and the catalyzation of infrastructure projects without the legacy constraints associated with Western agencies.
  • This marked the beginning of what later evolved into the Belt and Road Initiative.
• China's Role as a Crucial Non-Western Alternative: In 2008, China capitalized on its economic potential to amass significant economic and political influence, a position it has maintained ever since.
• This was achieved by positioning itself as a vital addition to the global order.
  • While the US grappled with post-crisis recovery and the Eurozone faced internal challenges, China emerged as a symbol of stability and economic dynamism.
• The world, in search of an extra engine for growth and an additional source of investment, welcomed China as a crucial alternative outside the Western world.
• Hence, China's adept strategic manoeuvres not only offered a remedy during the financial crisis but also solidified its status as an indispensable centre of geopolitical power on the global stage.

Does India Possess Enough Resources to Continue China's Ascent the Path?

• Unleashing India's Potential for Global Influence: India is in a similar position and has a comparable GDP. This is the foundation that Indians must comprehend in order to grasp their current position in the world as we approach 2024.
• Recent history shows us that a $4 trillion economy, comparable to India's, can have a significant impact.
• It can make a place for itself beside economies that are four or five times larger than its own, such as the US, the EU, and China, with foresight and deft diplomacy.
• A Unique Opportunity for India: In 2024, as Europe stagnates, the US withdraws, and China faces internal issues and sees a nominal decline in its share of the global economy, there is real potential for India.

What Additional Advantages India Can Provide Along China's Lines?

• Momentum-Focused Additionalities: Unlike China's case, India's aspirations for additionalities require momentum more than extraordinariness.
  • With its trajectory set on a green and digital future, in contrast to China's manufacturing dominance, India aims to leverage its $4 trillion economy to wield influence comparable to a $15 trillion economy.
• Systematic Approach to Additionalities: India's quest for additionalities should emulate China's approach from 15 years ago, emphasizing a systematic roadmap.
  • This roadmap, outlining India's unique proposition, signals that its economy is positioned to exert significant influence globally.
• Dedicated Development Finance Institution: To meet global corporate needs beyond trade finance, India should establish an outward-focused development finance corporation, mirroring China's China Development Bank.
  • This institution should carry a distinct global imagery and play a pivotal role as a major source of development finance.
• Strategic External Engagement: Collaborating with like-minded partners, India should strategically map priority infrastructure, connectivity routes, business hubs, and developmental projects.
  • This external engagement approach aligns with the vision for India's global role and positions 2024 as the year to articulate a comprehensive world map reflecting this vision.

Priorities for India's Upcoming Government in the Years Ahead:

• Information Technology (IT) and Innovation: Demonstrate India’s global potential, following the model set by China in 2007 and during the 2008 financial crisis.
  • Leverage the established status as a global IT hub to propel software services and technology exports to new heights.
• Entrepreneurship and Start-ups: Sustain and enhance the flourishing start-up ecosystem through supportive policies and funding.
  • Capitalize on the growing number of Unicorns (over 100) as a testament to India's entrepreneurial prowess.
• Strategic Location: Leverage India's strategic geographical location as a gateway between the Middle East, Europe, and Asia for enhanced international trade.
  • Strengthen India's role in the India-Middle East Europe corridor, offering an alternative trade route to the Middle East and Europe.
• Key Reforms and Policies: Continue the momentum of economic reforms aimed at improving the business environment and ease of doing business.
  • Build on initiatives such as Make in India and Goods and Services Tax (GST) to streamline processes and stimulate economic activity.
  • These strategic focus areas can propel India’s global standing, foster innovation, and contribute to sustained economic growth.

As India enters a transformative phase in 2024, its capacity to translate economic momentum into global influence becomes pivotal for its role in the changing geopolitical scenario.

Drawing insights from China's ascent, a strategic roadmap, systematic methodologies, and visionary diplomacy emerge as crucial elements for reshaping the global order.

India's trajectory toward becoming the bank of the Global South hinges on its ability to contribute significantly to global growth, institutions, and security through strategic additions.