Ever since Jim O'Neill, former chairman of Goldman Sachs asset management, coined the term Bric for four powerful economies — Brazil, Russia, India and China — in their 2001 paper, The World Needs Better Economic BRICs, the regional grouping has caught the world's attention. With South Africa joining the club in 2010, BRICS commanded an even bigger influence. It soon evolved into a group with a significant say over the political-economic affairs of the world. Take a look at what Brics means to the world today.
According to certain estimates, Brics constitutes nearly half of the world population, one-third of the world's GDP and close to one-fifth of the world's trade. The grouping has three heavyweights — China, Russia and India, that practically controls the region, both politically and economically and is seen as an Eastern power centre. The point of highlighting these statistic is to say how critical is the summit slated to be held in Goa on 15, 16 October to the region and the Western world.
In the recent past, Brics has gradually begun to set the stage for a new world economic order.
The formation of the New Development Bank (NDB), also known as BRICS development bank is a big example. Set up in 2014, the NDB sent a signal to the world that the region wants an institution that can eventually offer an alternative to existing multilateral agencies such as International Monetary Fund (IMF), World Bank and Asian Development Bank (ADB) and that the new body will be more sensitive to the needs of region.
Going by the initial contours, the NDB will have a corpus of $50 billion divided equally between its five founding members, with an initial total of $10 billion in cash put over seven years and $40 billion in guarantees. Another $50 billion is expected to come from other members who join in later. Besides, there will be a currency chest of $100 billion to help member countries meet their emergency cash requirements. China will contribute the largest share of $41 billion to the reserve. Russia, India and Brazil will contribute $18 billion each, while South Africa will contribute $5 billion. One Indian—K V Kamath, former chairman ICICI Bank—is the first chief of BRICS bank. The Goa meet will be looked closely to know how the grouping wants to grow the BRICS development bank from here.
Second, according to reports, the Brics countries are now considering forming a new global credit rating agency for emerging markets to challenge the dominance of western credit rating agencies like Moody's, Standard and Poor's and Fitch, whose observations and rating decisions have often come under heavy criticism by some of the developing markets including India. For instance, India has, in the past, challenged the methodology followed by rating agency Moody's saying the agency has ignored the reforms initiated by the government and it should not wait “till infinity” for them to take root before upgrading the country's sovereign rating. Presently, there are no alternatives for the eastern world to challenge the dominance of the 'big three' of the West. Here again, the Brics meet this weekend will be watched for clues.
Besides the economic factors, the Brics meet this time assumes even more significance in the context of the growing threat of terrorism originating from Pakistan and its impact on rest of the world. India, which managed to completely isolate Pakistan from the Saarc countries in the aftermath of a series of border terrorist attacks by Pakistan-based elements (the latest being Uri), will most likely take up the issue of the Pakistan factor in the Brics meeting. India has already raised concerns on Russia's suspicious bonhomie with Pakistan, though Russia has openly expressed its willingness to support India's fight against terrorism.
Similarly, China's growing influence in Pakistan and China's economic aid to that country is a matter of concern for India. As Firstpost has noted before, Pakistan economy's dependence on China to improve its fortunes is so high that a recent World Bank report warned that Pakistan's prospects of growing even at at modest five percent a year are at risk due to delays in the implementation of the $46-billion China-Pakistan Economic Corridor (CPEC) projects. India is looking at this progress closely, given that it sees potential threats from China. There is a possibility that India will raise its concerns to Brics partners about the danger of extending economic and military aid to Pakistan. Whether India manages to convince the Brics partners about its stance on Pakistan and the need to isolate the country in the larger interest of the region, needs to be seen.
In this backdrop, the Goa meet of Brics isn't just another event for the world, the region and India, in particular. The meet has crucial, unprecedented significance. Beyond the regional issues, the Goa meet will be watched by the world to gauge how the regional group is silently building a new world order brick by brick that the West can't ignore any longer.
Data contributed by Kishor Kadam