What is BRICS ?
- BRICS is a group of leading emerging economies
- It includes Brazil, Russia, India, China and South Africa
- It works not as an organisation but annual summits are organised for work progress and planning
- The Chairmanship of the summits is rotated annually between all countries
How Significant is this group of countries ?
- BRICS countries account for 40% of world’s population
- The countries together have a share of
- 30% of world’s land area
- 24 % of world GDP
- 16 % of World Trade
- These are fast emerging economies with huge investment markets
- They together form a sizeable power bloc
- BRICS’ combined foreign reserves are estimated at US$4 trillion.
- Sizeable Economies
- 2011, Brazil became the world’s sixth-largest economy.
- Russia is currently the ninth-biggest economy
- South Africa is the 26th-largest economy.
- 2010, China became the second-biggest economy in the world.
- India currently stands as
- 10th-largest economy by GDP
- 4th largest economy in terms of GDP at Purchasing Power Parity (PPP)
Short History of BRICS
- The acronym BRICS was formulated in 2001.Goldman Sachs economist Jim O’Neill coined the term BRIC (without South Africa) in 2001, claiming that by 2050 the four BRIC economies would come to dominate the global economy
- The BRICS nations offered a source of foreign expansion for firms and strong returns for institutional investors.
- It was officially launched by a meeting of the Foreign Ministers of Brazil, Russia, India and China in 2006
- In 2009 the first summit was held at Yekaterinburg, Russia. The summit’s focus was on improving the global economic situation ,reforming financial institutions and future cooperation.
- South Africa officially became a member nation on 24 December 2010, after being formally invited by China. South Africa joined the group for national interests like infrastructure and enhanced regional integration.
- 9th September 2021 marked the 13th Summit
What are the Objectives of BRICS ?
- The BRICS mechanism aims
- to promote peace, security, development and cooperation.
- economic cooperation
- to contribute for development of humanity
- to establish equitable and fair world
- cooperation for sustainable development
- to emerge as a new political entity
3 Pillars of BRICS cooperation
1. Political & Security Cooperation
- To enhance cooperation on issues of global and regional security
- To reform the multilateral system to make it relevent for the 21st century
- Cooperate on Countering Terrorism and its financing
2. Economic & Financial Cooperation
- To promote economic growth and development for mutual prosperity
- Exapand cooperation in sectors such as
- trade
- agriculture
- infrastructure
- small and medium enterprises
- energy
- finance & banking
- To achieve Sustainable development Goals.
3. Cultural & People to People Exchange
- To eable people contacts
- To increase collaboration in areas of culture , academics, sports,etc.
- Parliamentarians, young scientists exchange
BRICS Financial Architecture
- Currently, there are two components
- New Development Bank (NDB), or BRICS Development Bank
- Contingent Reserve Arrangement (CRA)
- Both became active in 2015
- New Development Bank
- It is a multilateral development bank with primary focus of lending to infrastructure projects
- It has an authorized lending of up to $34 billion annually
- The NDB President is elected on a rotational basis from one of the founding members,
- The bank is headquartered in Shanghai, China
- The bank aims to contribute to the development plans established nationally through projects that are socially, environmentally and economically sustainable.
- Bank’s Articles of Agreement specify that all members of the United Nations could be members of the bank, however the share of the BRICS nations can never be less than 55% of voting power.
- The grouping has decided to open a regional office of the New Development Bank (NDB) in India.
- Contingent Reserve Arrangement
- It is a framework for providing protection against global liquidity pressure. This includes currency issues where members’ national currencies are being adversely affected by global financial pressures. It also help in mitigating BOP crisis and achieving financial stability.
- The capital cost is $100 billion
- It was established in 2015
Challenges for BRICS
- BRICS does not have the ‘strategic vision’ required to deal with ‘global matters’
- The rise of China has raised questions about the multilateral processes
- Disputes may arise in sharing the burden of NDB.
- this is because the size of the economy of each member is very different
- every member has great differences in GDP
- To gain consensus on expanded agenda for BRICS is not easy
- Limited resources, increasing trade protectionism, and lack of trust among members
- Disagreements between its members and slow progress
- BRICS has not become the centerpiece of an alternative world order because members are plagued with internal domestic issues, thus a mutual level is difficult to achieve
- India – internal security
- Africa – Domestic Economy issues
- Brazil – Poverty & health care issues
Why BRICS is important for India
- The BRICS also allows India and China to modulate their rivalry
- BRICS provides India a transcontinental reach by virtue of Brazil and South Africa’s presence.
- NDB helps financing of projects in India’s priority areas.
- Terrorism is now a key concern of all member states, and India made good use of this opportunity
- India can benefit in areas of
- economic issues
- terrorism
- climate change
- food and energy security
- reform global governance institutions
Way Forward
- The future of Brics depends on the adjustment of the internal and external issues of India, China and Russia.
- Strategy needs to be developed to increase people-to-people interaction
- It needs to increase private sector and citizen participation
- A single BRICS visa for citizens of the BRICS countries can be worked out
- The group should increase people-to-people connect and build mutual trust
- The group can work to establish a BRICS payment system
- BRICS should work to formulate joint responses to serious world issues
- More BRICS institutions and frameworks can be setup for
- research
- energy alliance
- climate change
- SDGs
Sumit is Creator and Author at learncrisp.com. He started this learning platform with a mission to emerge as an aspirants resource hub, especially for those preparing in self study mode. He loves writing and his interests are History, Security and Diplomacy.