Global financial architecture needs to be altered to meet the fund requirements of emerging economies, says G20 Sherpa Amitabh Kant

economictimes.indiatimes.com:

G20 Sherpa Amitabh Kant said. “The growth in the future will come from emerging markets and this would require financing. The international financial architecture needs to ensure that resources flow from the developed world to the emerging markets and not vice versa,” Kant said.

Kant was addressing the media after a two-day conference on Green and Sustainable Growth, organised by NITI Aayog in collaboration with the International Development Research Centre and the Global Development Network. While there is a consensus that there is no shortage of funds, lack of adequate data, asymmetry of risks and lack of green projects poses a challenge to attract global funding. “The sense is that there is no shortage of funds.

But there are challenges in the area of data, project preparation and the absorptive capacity,” NITI Aayog vice chairman Suman Bery said. Kant said there is an estimated requirement of $5-6 trillion of funds if one looks at both the advanced economies and emerging markets and their requirements for achieving the Sustainable Development Goals and of climate action. “The world is not short of resources.

Almost $350 trillion are available in the world today for investments and $150 trillion is available from pension funds and institutional investors,” he said, adding that the challenge is of asymmetry of risks and lack of adequate data. NITI Aayog CEO BVR Subrahmanyam raised the issue of cost of finance impacting the growth of emerging economies. “Since the bulk of money that will come will be private capital, the cost of capital is an issue and commercial flow will not happen till the time demand and supply side issues as well as the issue of high cost of capital is addressed,” he said.