Prime Minister Narendra Modi is on a two-day visit to Brasilia starting from 13th November, 2019 to attend the 11th BRICS summit. He has arrived in the city and is all ready for an action-packed schedule. This year the theme of the summit is “economic growth for an innovative future”. This will also provide an opportunity for the PM to hold bilateral meetings with his counterparts. In this regard, let us examine the details of this interesting group.
1. What is this BRICS grouping all about? When did it begin?
It was sometime in the year 2001, that British Economist and former Chairman of the Goldman Sachs Asset Management division Jim O’ Neill, coined the acronym’ BRIC’ (Brazil, Russia, India and China) to indicate developing or emerging economies with similar characteristics and who will be in a position to dominate the global economy in the coming decades. This was merely an assessment made by an economist till the year 2009.
These four nations met for the first time in 2009 at Yekaterinburg in Russia. In 2010, it became a full organization.
South Africa joined the grouping in December 2010 and attended the 3rd BRIC summit at Sanya (China) in 2011 and this group then became ‘BRICS’ (Brazil, Russia, India, China and South Africa).
BRICS as a group has expressed its support for a multi-polar world, an alternate global banking system (as opposed to the International Monetary Fund and the World Bank) and reforming the global trading system (WTO reforms).
All the members are also G-20 members and play a significant role in determining global affairs of importance.
In terms of its clout, the group represents 42% of the world population, 23% of the global GDP and 17% of the global trade.
2. What are some of the areas of cooperation and what are the forums/ arrangements that have been made till date?
The countries have established a dialogue forum on key regional and global issues. Some of the areas for cooperation and dialogue include the following:
Finance and Central Bank,
Trade,
Business Forum and Council,
Financial forum,
Academic and Think Tanks council,
Health and Science & technology,
Security issues including terrorism,
Agriculture,
Youth Affairs and sports,
Disaster Management and
Statistics among others.
Some of the initiatives taken by this forum include the:
BRICS forum– It is a social, economic and political forum which seeks to promote people to people ties between the members of the BRICS, SCO (Shanghai Cooperation Organization) and other friendly countries.
BRICS Contingency reserve– This was set up in the year 2014 after the BRICS summit at Fontaleza in Brazil. It came into effect in 2015. It hopes to assist member nations and others in meeting short term liquidity crunch situations and Balance of Payment shortfall situations. The countries have contributed a total of US $100 Billion.
The following is the extent of contribution: (All in US $ and in Billion terms)
China (41)
Russia (18)
Brazil (18)
India (18)
South Africa (5)
New Development Bank (NDB)– Has its headquarters in Shanghai in China. It hopes to supplement global financial institutions in their efforts towards sustainable development.
Some of the areas and projects it lends to include clean energy, public transport infrastructure, irrigation, sustainable urban development and balanced growth.
BRICS Cable Network– In the 2012 New Delhi summit, the countries pledged to develop the Optical Fibre Submarine communication. This has been initiated amongst the member states.
BRICS Payment system- During the 2015 summit in Russia, the member states decided to build an alternate payment system and reduce their dependence on the globally operated SWIFT system (The Society for worldwide interbank financial telecommunication). However, there is no movement in this regard.
BRICS cooperation in IT sector- In 2019, the communication Ministers of this forum signed an agreement of intent to cooperate in the IT sector.
3. What has been India’s role in this forum and what are its interests?
India has been an active participant and a founding member of this organization. It is in India’s national interest to sustain an economic growth which is beneficial for its citizens in terms of job creation, GDP growth and poverty alleviation. This forum provides an alternate global mechanism to promote economic and social growth, especially at a time when the global institutions and order are under considerable strain (US actions on the economic front, climate change, geo political uncertainties around the world).
India seeks to use this forum to expand its ties into Africa and South America, continents which were neglected till recently due to “tyranny of distance”.
This forum also provides an opportunity to India to resolve its disputes with its northern neighbour China.
India has also been an active participant in the counter terrorism forum.
Also, the first and the current chairman of the New Development Bank is an Indian national, KV Kamath (former Chairman of Infosys and non-executive Chairman of the ICICI Bank).
India has hosted two summits till date. One in New Delhi in 2012 and the other at Goa in 2016.
4. What are the achievements and challenges?
Some of the achievements include the following:
Enhanced share of global trade– In 1996, these countries contributed a little over 8% of global trade. At present it stands at 17% and is expected to grow further.
Establishment of the Contingency Reserve Arrangement and the New Development Bank has ensured that traditional institutions such as the IMF and World Bank initiate reforms. This will soon become an alternate arrangement to these institutions and will become a voice of the developing and under developed nations that seek to avoid exploitation of the tradition ‘North’ as opposed to the global ‘south’.
Greater say in global affairs– These nations cannot be ignored anymore and will become partners in the development process and will become the deciding authorities on events of global and regional affairs.
Some of the challenges include:
Slowdown in the Chinese economy,
Recovery of the US economy- while it is definitely positive for the global economy, as far as BRICS is concerned it does pose a challenge. As the US economy improves, investors may pull out investments from the BRICS nations and invest them in the US where better returns could be expected.
Recession in Russia, South Africa and Brazil and a slowdown experienced in the Indian economy.
Overwhelming presence of China.
Varying political structures of these nations.
This 11th BRICS summit will provide an opportunity for the grouping as well as India to make a meaningful impact and to resolves issues of contradictions and steer the world towards the path of growth and development. India can very much take the lead in this regard. The PM is also set to engage with the members of the forum on a wide variety of critical matters related to the economy and emerging Geo-political challenges.