India is benefiting from growing interest from multinationals, which see it as an alternative manufacturing base in the context of developed economies’ supply chain diversification strategies, said a flagship report by the United Nations. The report also underlined that investment in the country has remained strong.
The ‘2024 Financing for Sustainable Development Report: Financing for Development at a Crossroads (FSDR 2024)’ launched this week said that urgent steps were needed to mobilise financing at scale to close the development financing gap, now estimated at USD 4.2 trillion annually, up from USD 2.5 trillion before the COVID-19 pandemic.
Meanwhile, rising geopolitical tensions, climate disasters and a global cost-of-living crisis had hit billions of people, battering progress on healthcare, education, and other development targets.
The report said that investment was expected to remain subdued globally, but “in contrast, investment in South Asia, particularly in India, remains strong”.
It added: “India is benefiting from growing interest from multinationals, which see the country as an alternative manufacturing base in the context of developed economies’ supply chain diversification strategies.” The use of the word “alternative” here was an apparent reference to China.
Digital payment advances in India
Citing the example of digital payments in India, the report further said that advances in fintech had facilitated financial inclusion.
It said that fintech providers had enhanced access to and the use of digital financial services for individuals and micro-, small- and medium-sized enterprises (MSMEs). They had also improved the affordability and personalisation of financial product services, which made them more relevant for diverse customer needs.
“Prominent [fintech] examples include mobile payment services such as M-PESA in Kenya and online payments and messaging apps in developing countries such as China and India,” it said.
During the COVID-19 pandemic, fintech companies played a notable role in enabling quick-yet-contactless deployment of government support measures via digital financing to MSMEs and individuals, especially those living in marginalised and poor communities.
Need for rapid sustainable development
Outlining the growing advantages of countries like India, the UN report also stressed upon the need for scaling up sustainable development, without which extreme poverty would remain.
With only six years left to achieve the UN Sustainable Development Goals, hard-won development gains were being reversed, particularly in the poorest countries, said the report.
If the current trends continued, the UN estimated that almost 600 million people would continue to live in extreme poverty in 2030 and beyond, more than half of them women.
“This report is yet another proof of how far we still need to go and how fast we need to act to achieve the 2030 Agenda for Sustainable Development,” said UN Deputy Secretary-General Amina Mohammed.
“We are truly at a crossroads and time is running out. Leaders must go beyond mere rhetoric and deliver on their promises. Without adequate financing, the 2030 targets cannot be met,” she said.
Stronger and more frequent climate-related disasters account for more than half of the debt upsurge in vulnerable countries. “The poorest countries now spend 12 per cent of their revenues on interest payments — four times more than they spent a decade ago. Roughly 40 per cent of the global population lives in countries where governments spend more on interest payments than on education or health,” said the report.
UN Under-Secretary-General for Economic and Social Affairs Li Junhua said, “Resources are needed to address this, and the money is there. Billions of dollars are lost annually from tax avoidance and evasion, and fossil fuel subsidies are in the trillions. Globally, there is no shortage of money; rather, a shortage of will and commitment.”