India’s experience has shown how Digital Public Infrastructure (DPI) can be utilised for advancing financial inclusion and productivity gains through cost reductions. “Our sustained engagement in the India Stack and the Unified Payments Interface (UPI), especially during the pandemic and thereafter, has filled us with the conviction that digital public infrastructure like the UPI can become a critical part of global public goods (GPGs) when scaled up beyond national borders. It is not necessary that public goods can only be developed and financed by the public sector. The private sector needs to engage in the provision of GPGs not just because they create an enabling ecosystem for businesses to thrive but also because they would be a commercially viable endeavour,” said Shaktikanta Das, Governor, RBI at the Seminar on ‘Global Economy: Challenges, Opportunities and Way Forward’ in Mumbai on Friday.
GPGs play a crucial role in shaping developmental strategies and securing human welfare across borders and generations. Financing them has become a critical issue in the wake of the COVID-19 pandemic. Das added: “it is worthwhile to build innovative design features which private investors find attractive in financing of GPGs. In the investment cascade, keeping in view the very large investment requirements, the trigger financing can come from public investment. This would help in minimizing risk and expanding market access. Subsequent financing needs can be met by the private sector. This is where international capital flows and movements assume importance. Hence, 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.”
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. Das recommended a global debt data-sharing platform which can help in this regard. Establishing such a platform could be very challenging and may take several years. “In the interregnum, therefore, we may examine the possibility of constructing suitable proxies for debt flows. Such proxies may be derived from data on capital flows and locational banking statistics from sources such as the Institute of International Finance (IIF) and the Bank for International Settlements (BIS),” he said.
The corrective measures, including financing, should be put in place in a timely, non-stigmatised and more open access basis. “For this purpose, a bigger and stronger IMF that is capable of managing the levels of country risk assumes crucial importance. Since the IMF’s support is linked to the quota size of countries, the 16th general review of quotas and its attendant requirements, including governance reform, need to be completed expeditiously,” the RBI Governor stated.