Current Affairs

Partnership for Global Infrastructure and Investment

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  • Categories
    World Affairs
  • Published
    29th Jun, 2022
  • Context

    US President Joe Biden along with his G7 allies unveiled the ambitious Partnership for global Infrastructure and Investment (PGII), announcing the collective mobilization of $600 billion by 2027 to deliver ‘game changing’ and ‘transparent infrastructure projects to developing and middle income countries.

  • Background

    • The west has been sceptical of the BRI, since it was launched in 2013 by the Chinese President.
    • It was considered to be the part of China’s larger strategy to increase geopolitical influence in the Asia and other developing countries.
    • G7 nations along with European Union, had announced the launch of Build Back Better World (B3W) in 2021, with the aim to narrow down the $40 trillion infrastructure gap in the developing world.
    • PGII is therefore, a relaunch of B3W plan, to counter China’s Belt and Road Initiative.
    • PGII aims to build connectivity, infrastructure and trade projects in Asia, Europe and Latin America.
  • Analysis

    What is PGII?

    • Partnership for Global Infrastructure and Investment (PGII) is a value-driven, high-impact, and transparent infrastructure partnership to meet the enormous infrastructure needs of low and middle-income countries and support the US and its allies’ economic and national interests.
  • What are the main objectives?

    • G7 members aim to collectively mobilize $600 billion by 2027.
    • The primary prime purpose of the fund mobilization is to invest in sustainable and quality infrastructure projects in developing countries, including India.
    • One of the objectives of the initiative is to strengthen the global supply chains.
    • The central theme of the initiative around which the projects revolves is to bridge the infrastructural gap in developing countries.
  • What kind of project will it undertake?

    The projects under PGII will be driven by four major pillars:

    • 1st Pillar: G7 grouping aims to tackle the climate crisis and ensure global energy security through clean energy supply chains.
    • 2nd Pillar: The projects will focus on bolstering digital information and communication technology (ICT) networks facilitating technologies such as 5G and 6G internet connectivity and cybersecurity.
    • 3rd Pillar: Initiatives aim to foster gender equality and equity.
    • 4th Pillar: To build and upgrade global health infrastructure.
  • Counter to Border Road Initiative (BRI):

    • China’s Border Road Initiative (BRI) had been announced as a two-pronged approach to build a Silk Road Economic Belt on land and sea waters, aims to strengthen the connectivity and break the bottle neck in the Asian connectivity.

    Meanwhile, G7 has specifically touted the PGII as a value based plan to help the underfunded low and middle income countries to meet their infrastructure needs.

    • Under the BRI China has built large coal-fired plants along with solar, hydro and wind energy projects.

    Whereas, G7 nations under PGII have laid the focus in climate change and clean energy.

    • BRI has been launched by China to fulfill its employment crisis, thus, large number of Chinese workers were employed in the project along with 80% of the contractors participating in the project are Chinese.

    On the other hand, G7 leaders emphasized on ‘transparency’ as the corner stone for the projects.

    • BRI has been criticized for making countries sign confidential tender to extend massive loans, leaving them indebted to China. There certain instances of debt-saddled countries failed to repay on time, and had to cede their strategic areas to China.

    G7 nations aim to bridge the infrastructure gap in the developing nations and promote inclusive developmental process.

    • G7 has pledged to mobilise $600 billion by 2027 under the PGII, with the assistance of large private capital.

    Till the time China will cross the $1.2 - $1.3 trillion mark through state funding.

  • How will this benefit India?

    • Economic front:
      • Massive capital expenditure
      • Inflow of foreign currency
      • Increasing the forex reserve
      • Strengthening the value of rupee
      • Diversification of import dependency
    • Developmental front:
      • Boosting Infrastructural development
      • Health care viability
    • Cyber space and ICT
      • Development in ICT
      • Safe and secure cyberspace
    • Environmental front:
      • Climate change and green action plan
    • Gender prosperity and equity
    • Strategic interest in the Indian Ocean Region and counter the Chinese assertiveness.
  • Conclusion

    The Partnership for Global Infrastructure and Investment has the potential to serve several interests, significant for India in various fronts. As India has opted out of the China’s BRI, it is important for India top balance out the power tussle between the west and China, as India shares a large land boundary with China.

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