Page 11 - CII Artha Magazine

Focus Story

Financing For one, rising inflation across Engagement Group of G-20 gap would be premature at effective in emerging and Hence, India and the other are among the foremost areas namely (i) Supporting framework to align economic

this stage considering that
frontier markets where public
agenda items of India at the
growth with development
the globe, associated with the
MSMEs, (ii) Infrastructure
which has reported that
G20 members should work
focus, (iii) Health
recent geopolitical situation, is
priorities which in turn would
several nations of the Global
resources and donor funds
economic slowdown has
G20. Recognising this, the Task
towards catalysing sustainable
Force of the B-20, an
impacted revenue generation
infrastructure, (iv) Technology
putting pressure on
are limited. For example, a
South are likely to fall short
help build a coordinated
finance to meet the climate
for Global households, industry, and of their 2030 sustainable capabilities of nations. hugely successful healthcare targets, food security and the engagement group of G-20, advancement, (v) Climate response for sustainable
development goals (SDGs) on
Moreover, the spending
has been set up, under India’s
blended financing entity called
governments and constraining
financing, and (vi) Sustainable
economic recovery.
broader SDG goals. Similarly,
Sustainable Access to Markets
account of the funding crunch.
Energy.
priorities to tackle the health
resource availability.
Presidency, which is focused
G-20 countries could also
and Resources for Innovative
on “Financing for Global
In fact, the funds constraint
and social emergencies of the
[Note: Mr Kotak is the Chair of the
work towards drawing up a
India and the other G20
Economic Recovery’. The Task
Delivery of Healthcare
pandemic has further limited
could stymie investment
Second, the monetary
B20 Taskforce on ‘Financing for Global
common framework for
Economic tightening measures and the FUNDS CONSTRAINT the fiscal space. This in turn (Samridh), involved in aligning SDG finance with a force would suggest the ways members have the potential Economic Recovery’]
to play a pivotal role in
strengthening India’s health
high interest rates in the
and means of addressing the
leaves governments with even
set of guidelines, policies and
fewer fiscal resources for
developed countries are
catalysing sustainable finance
systems, has impacted 25
gaps in financing and suggest
IS STYMIEING
tools as well as establishing
meeting the SDGs. Hence
million people since 2020 and
new and innovative financing
forcing Central banks even in
to meet the broader SDG
common standards and rules
INVESTMENTS IN
has deployed over US$16
goals. It is hoped that the
techniques for SDGs. The Task
there is a need to put in place
the emerging economies to
that can support inclusive and
Recovery pull their monetary policy CRITICAL SECTORS innovative financial million in philanthropic funds sustainable growth. Force has identified its B-20 Group would come out
OF THE ECONOMY
priorities for making
levers and raise interest rates
with specific
instruments which would
to over 60 social enterprises
through both grant and debt
to stem capital outflows. This
fund sustainable development
recommendations and
recommendations on SDGs
Fostering financial inclusion
needs.
financing provisions. Similarly,
financing across six broad
provide a comprehensive
is raising borrowing costs
and financing global recovery
thereby limiting the funding
options for inclusive growth. especially in sectors like The role of multilateral blended finance could also be
infrastructure -both physical
instrumental in bringing
and social- which is one of institutions, including innovative solutions to
Third, countries are finding the main drivers of multilateral development finance global challenges such
themselves in a very difficult sustainable growth in the banks, is vital for addressing as climate change and green
situation due to capital flight emerging markets after the the funding gaps and transition. Such examples
T he global economic sporadic floods and SDF FINANCING GAP from their countries as COVID-19 crisis. Similarly, complementing efforts of could also be emulated by
earthquakes, global warming,
national governments
other countries. Emphasis
foreign fund managers and
sectors such as MSMEs and
environment continues to
be mired by choppy economic among others are accentuating IS ANTICIPATED TO investors are exiting from small businesses are also towards financing green and should be given to capacity
and geopolitical conditions the risks for sustained global HAVE EXPANDED emerging markets to reap the impacted by financial inclusive recovery. Multilateral building of domestic financial
which are creating growth. Hence, pursuing a FROM US$2.5 dividends from higher interest constraints which are banks may be encouraged to sectors for achieving
uncertainties for global growth durable recovery path which is TRILLION IN 2019 TO rates in the advanced preventing them from play a greater role in sustainable development
and consequently impacting green, inclusive, and socially US$4-5 TRILLION countries. This is resulting in expanding their business and providing financing including objectives.
trade and investment sustainable is crucial to
worldwide. The world over, strengthen resilience against POST THE PANDEMIC shortage of capital in contributing to economic in alignment with private
commodity prices are facing future shocks. For this, resource constrained activity. sector financing or extending Similarly, innovative financing
an uncertain trajectory and countries should come emerging economies. technical assistance through models are needed in areas
the geopolitical turbulence together and work towards What is more, the SDG around US$4-5 trillion post Under the circumstances, it innovative financing models. such as providing credit to
arising from the achieving sustainable financing gap is widening in the Covid-19 pandemic. And a Fourth, many low-income and would be a formidable task MSMEs on cost effective
Russia-Ukraine war has development goals (SDGs) and the wake of the recent World Bank Report developing economies are for economies across the terms, developing inclusive
resulted in elevated inflation target their support towards a Russia-Ukraine war, Covid-19 has estimated an average also experiencing high levels world to secure the vast BLENDED FINANCE and smart digital
while supply chain disruptions recovery which works for all. pandemic, climatic change annual spending need of INVOLVING PRIVATE
will continue to be a risk. At occurrences and natural US$2.4 trillion per year of debt due to a resource resources required for green CAPITAL IS AN infrastructure, encouraging
the same time the hike in The question then arises, how disasters. The SDG between 2023 and 2030 for crunch caused by the global investments such as clean EFFECTIVE WAY TO sustainable disaster resilient
interest rates worldwide to then would this durable financing gap is developing countries to uncertainty and the lingering energy and climate mitigating infrastructure, promoting
combat inflation means that economic recovery be anticipated to address the global challenges impact of the pandemic. infrastructure. After all, with GARNER RESOURCES investments in renewable and
the era of easy money is finally financed? After all, have expanded of climate change, conflicts, only seven years left to sustainable energy while
ending. funding from an and pandemics. Finding The inability to generate achieve Agenda 2030 for Besides, the involvement of moving towards achieving
requirements would annual resources for reducing the
This is happening at a time be enormous for US$2.5 huge gap would be a requisite resources, especially sustainable development, the private sector is critical as energy security, among others.
when the world economy has building back trillion in challenge. There are many by the low income and stepping up sustainable it has the potential to come
already been weakened by the environmentally and 2019 to reasons for this. emerging economies, would finance has become up with innovative financing India’s G20 leadership has
Covid-19 pandemic. Besides, socially sustainable come in the way of putting in imperative to finance an techniques for bridging the come at a critical juncture
the recurrence of natural growth. place the financial equitable and durable global SDG financing gap. In fact, when the world economy is
calamities such as weather and architecture for achieving recovery. bringing in private capital at an inflexion point and is
climate change related issues, broad-based growth. This is through green and social looking for credible solutions
also corroborated by a policy Relying on the governments financial instruments such as to achieve sustainable growth.
Mr. Uday Kotak, Immediate Past President, CII and
Managing Director & CEO, Kotak Mahindra Bank Ltd brief by the Think 20 alone for bridging the funding blended finance can be very
10 ANALYSIS, RESEARCH, THOUGHT LEADERSHIP & ADVOCACY ANALYSIS, RESEARCH, THOUGHT LEADERSHIP & ADVOCACY 11
QUARTERLY JOURNAL OF ECONOMICS
QUARTERLY JOURNAL OF ECONOMICS
MAY 2023 MAY 2023