With many of the developed Western economies looking at a ‘long-drawn recession’, it is imperative for emerging economies to become growth engines of the world and help in resolving various global challenges, Finance Minister Nirmala Sitharaman said on Tuesday.
She was speaking with the members of the Indian diaspora in Seoul, South Korea, on the sidelines of the annual meeting of the Asian Development Bank.
“Large economies are looking at a long-drawn recession, central banks have no other tools to handle inflation but raise interests to battle inflation… In such a situation, how can economies, particularly emerging market economies, who are all showing good signs of growth...is it possible for us to sustain that growth, is it possible for us to give greater energy to that growth momentum so that emerging markets can literally be the engines of growth and help the global crisis be solved,” Sitharaman said.
The finance minister also said the G20 Presidency has come at a crucial stage to the emerging economies, stressing that three years are critical for the global economy, which is going through a reset.
India currently holds the presidency of G20, which it has taken over from Indonesia and will hand it over to Brazil later in the year.
Sitharaman said India is being noticed worldwide not just because it is the fastest-growing large economy, but also because of the way in which it has handled the pandemic and economic revival.
The minister said the G20 troika -- Indonesia, India, and Brazil-- are all emerging economies, and hence it is important that the voice of the global south be heard. The 'Global South' largely refers to developing nations in Asia, Africa and South America.
“The three years are going to be important for the global economy to reset itself and readjust to the global realities,” she said, adding there is a recession on one hand and economic revival from Covid on the other.
India, Sitharaman said, has already adopted a digital payment system, faceless tax assessment and digital ID, and is scaling up technology at a very fast pace. Companies in India are also resetting themselves, using artificial intelligence and adapting to the requirements of the 21st century.
Sitharaman said India is responding to climate change and also looking at it with great foresight, and is on track to meet the Paris commitments.
Regretting that commitment of $100 billion for climate change by advanced economies is just on paper, she said India on its own is taking steps to deal with the challenges posed by climate change. India has launched International Solar Alliance and is setting up climate-resilient infrastructure.
Later, interacting with representatives of Korean businesses, Sitharaman said the GST Council is deliberating a taxation policy for online gaming and exuded confidence that the sector will attract investment once it is finalised.
She was responding to a question from a Korean gaming company, Krafton, on what are India's plans to attract foreign investment in gaming companies.
The minister said the discussion is going on at the ministerial level in the GST Council into various aspects of online gaming, including taxation and regulation.
The goods and Services Tax Council is chaired by Sitharaman and comprises finance ministers of states. "Once the policy certainty arrives, taxation becomes more clear, it will attract investors," Sitharaman said.
Online gaming witnessed a spurt during the time of the Covid lockdown, with the number of users in India rising substantially. As per a KPMG report, the online gaming sector would grow to Rs 29,000 crore by 2024-25, from Rs 13,600 crore in 2021.
The vexed issue of levying Goods and Services Tax (GST) on online games has been hanging fire for nearly two years now with many states pitching for a lower tax rate on those online games which require skill. They are of the opinion that games of skill should not be treated at par with games of chance.
A final decision on the taxation on online gaming is expected to be taken by the GST Council in its next meeting, which is likely either this month or in June.
Last month, the electronics and IT ministry notified norms for the online gaming sector, which categorically prohibits all such games involving betting and wagering. The online gaming sector will follow a self-regulation model and will initially notify three self-regulatory organisations that will approve the games that can operate in the country as per the rules.