At a seminar held under the G20 Finance Track National Event titled ‘Global Economy: Challenges, Opportunities and Way Forward’ organised by the Ministry of Finance and the Reserve Bank of India, Reserve Bank of India Governor Shaktikanta Das, while explaining the benefits of global public goods said, risk sharing should be an important design element in fostering private financing for global public goods.
“In this endeavour, Multilateral Development Banks (MDBs) could catalyse private sector investment through risk-sharing mechanisms,” Das said. “High and unsustainable debt levels have severely constrained many countries, limiting their fiscal capacity,” he said, giving an example how an absence of seamless access to Covid-19 vaccines hurt many countries.
Three important suggestions made by RBI Governor
He made three specific suggestions, one of them being the creation of a global debt data-sharing platform.
“First, it is essential that Debt Sustainability Analysis (DSA) for countries is realistic on growth and fiscal projections are fully founded on accurate and comprehensive debt data.”“A global debt data-sharing platform can help in this regard. Establishing such a platform could be very challenging and may take several years.”
Among others, he suggested consideration for a multilateral debt relief program providing targeted assistance to low-income countries with high debt levels.
In his third suggestion, taking into consideration the crucial role of the International Monetary Fund (IMF) and the World Bank in addressing global debt vulnerabilities, he called for more support for countries in debt distress.
“These institutions are at the centre of the international monetary and financial system. Hence it is incumbent upon them to do more for countries in debt distress. At present, the IMF’s precautionary programmes such as the Precautionary Lending Line are available for countries with sound macro-fundamentals; however, there is little reason for countries with strong macro-fundamentals to seek Precautionary Lines.”
Summing up all his observations, he said the key point he was trying to stress is that corrective measures, including financing, should be put in place on a “timely, non-stigmatised and more open access basis.”
As part of his concluding remarks, he said it is important to focus on people-centric transformative changes taking place in member countries like the UPI and the financial inclusion initiatives in India.
“Wider adoption of such models would make the world a better place for everyone,” he said.
India leads from the front with regards to UPI
UPI payments system has become hugely popular for retail digital payments in India, and its adoption is increasing at a rapid pace. Unified Payments Interface (UPI) is India’s mobile-based fast payment system, which facilitates customers to make round-the-clock payments instantly, using a Virtual Payment Address (VPA) created by the customer. So far, Sri Lanka, France, UAE, and Singapore had partnered with India on emerging fintech and payment solutions. A key emphasis of the Indian government has been on ensuring that the benefits of UPI are not limited to India only, but other countries, too, benefit from it.
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