Multilateral institutions have been a topic of concern for developing countries for a long time. These institutions have been criticized for their power structure that tilts towards developed countries, leaving developing countries at a disadvantage. India, being a developing country, has been pressing for reforms in multilateral institutions, primarily due to greater demand for resources from developing countries and the overarching control of developed countries over these institutions.
India’s Demands for Reforms
India has proposed transformative and holistic reforms for multilateral development banks that include adding “global public goods” as the third goal, along with the existing goals of eliminating poverty and shared prosperity. Global public goods include environmental, health, cultural, and digital aspects that impact the world at large. India’s Unified Payments Interface (UPI) is showcased as a digital public good that has made India a world leader in digital transactions.
Challenges with Financing Global Public Goods
Financing global public goods is the biggest hurdle in front of emerging countries. Multilateral institutions may not be highly encouraged to sign such a deal where they have to part away with their resources. Additionally, multilateral development banks cannot provide unlimited funds for every need, and there is a need to tap other sources of finance. Private players also lack enthusiasm to invest in areas that do not make very profitable businesses.
Significance of India’s Reforms
India’s push for transformative and holistic reforms of multilateral development banks will help mitigate the risks that may arise due to climate change in developing and underdeveloped countries. This step will also lead to equitable distribution of financial resources across the countries without any discrimination and prejudices.
Importance of Public Goods
Focusing on public goods, especially climate financing, may be the key to accelerating the transition to low-carbon economies. According to statistics, in 2021, multilateral development banks provided just over $50 billion to low- and middle-income countries as climate finance, falling much shorter than the promise made by developed countries to provide $100 billion as climate finance.
Important Points:
- 🔍 India has been pressing for reforms in multilateral institutions, as the power structure is tilted towards a few powerful countries.
- 💸 Developing countries face a greater demand for resources from multilateral institutions, which can be a challenge.
- 🌏 Multilateral institutions have overarching control of resources, which can put developing countries at a disadvantage.
- 🌡️ Climate change is a major concern, and timely efforts are needed to mitigate risks and achieve targets.
- 💰 Multilateral development banks provided just over $50 billion for climate finance in 2021, falling short of the $100 billion promised by developed countries.
- 🏗️ India has proposed transformative and holistic reforms for multilateral development banks, including adding “global public goods” as a third goal.
- 📈 Global public goods include environmental, health, cultural, and digital aspects, and India’s Unified Payments Interface is showcased as a digital public good.
- 💰 Financing global public goods is a challenge for emerging countries, and there is a lack of enthusiasm from private players to invest in these areas.
- 🌍 Focusing on public goods, especially climate financing, may be key to accelerating the transition to low-carbon economies.
- 🙌 India’s push for reforms in multilateral institutions can positively impact the global South and ensure equitable distribution of financial resources.
Why In News
India has been urging for changes in major multilateral institutions, which are overdue as the power dynamics favor a handful of powerful nations and put the global South at a disadvantage. This article examines India’s foreign policy approach to these issues and the potential impact on the global South.
MCQs about India’s Push for Multilateral Institution Reforms
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India has been pressing for reforms in which of the following?
A. Big multilateral institutions
B. Small bilateral institutions
C. Regional development banks
D. Private corporations
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What are the major issues that have led to the demand for reforms in multilateral institutions?
A. Greater demand for resources from developing countries
B. Overarching control of these institutions lies with China
C. Confusion regarding the modus operandi of climate finance
D. All of the above
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What is the third goal that India has proposed to be added to the two existing goals of multilateral development banks?
A. Elimination of poverty
B. Shared prosperity
C. Global public goods
D. Sustainable development
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Why is finding resources for financing global public goods a challenge for emerging countries?
A. Multilateral institutions are highly encouraged to sign deals where they have to part away with their resources
B. The multilateral development banks can provide unlimited funds for every need
C. Private players are enthusiastic to take these areas as a mode of investment
D. These areas do not make very profitable businesses
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