India Has to Play a Leading Role as Chairman at BRICS 2016 Summit

BRICS 2016: Urgent Steps Needed to Strengthen Alternative Financial System

India will be hosting the eighth summit of BRICS – Brazil, Russia, India, China and South Africa in Goa in October this year and as the Chairman of the BRICS group, the Indian Government has been entrusted with a major responsibility to contribute to the process of easing the global economic crisis by identifying the areas where immediate action is needed to correct the distortions.

The five members of BRICS represent more than two-fifths of the world population and a combined GDP of over US$ 16 trillion. As a multilateral organization, BRICS has a crucial role to play in the global economy apart from expanding the scope of cooperation between the members of the grouping. India has to impart an innovative leadership to the BRICS summit this year by focusing on the issues which have been ailing the global economy due to the partisan policies of the rich nations led by the United States.

Right now, India is having the most comfortable situation in terms of both economy and polity among the BRICS nations. All other countries are having serious economic problems.

That way, India is better placed to give the leadership for taking concrete steps to some of the decisions which were taken at the 2015 summit at UFA in Russia. The 2015 summit expressed its disappointment at the prolonged failure by the United States to ratify the IMF 2010 reform package which continues to undermine the credibility, legitimacy and effectiveness of the IMF. Further, the BRICS declaration shared concerns regarding the challenges of sovereign debt restructurings. Debt restructurings have often been too slow and too late thus failing to reestablish debt sustainability and market access in a durable way. India has to take the lead in ensuring that the handling of sovereign debt restructurings is improved to the benefit of the developing countries.

BRICS members are aware of the need for a strong alternative to the existing international financial institutions like IMF, World Bank and ADB. This can be done in phases and to start with, the arrangement can be a supplement to the existing operations of the West backed international financial institutions. But the process has to start and the setting up of the BRICS Bank New Development Bank as also the Asian Infrastructure Investment Bank (AIIB) are good signs that the alternative financing model has a place in the global system and this will be in the interests of the developing countries for their speedy infra development and this will expand the areas of infra cooperation among the BRICS nations also.

NDB has already approved its investment projects for 2016 and India is going to get projects in the first lot. Apart, the NDB is cooperating with AIIB and this ensures a sort of synergy in operations to the benefit of the borrowing countries and this gives competition to the existing financing agencies like World Bank and ADB.
Right now, India is having the most comfortable situation in terms of both economy and polity among the BRICS nations. All other countries are having serious economic problems

In fact, the time has come to take more concrete steps to strengthen the alternative financial system on behalf of BRICS. Russia and China have already moved in this direction and India also can take a leading role to coordinate the BRICS positions and make use of its chairmanship in 2016 to push forward the global financial system reform and prepare the alternative to the west backed international financial institutions. At UFA summit, the ratification was done to the treaty establishing a Contingency Reserve Arrangement (CRA) of the BRICS. Further, the BRICS members welcomed the signing of the BRICS Inter Central Bank Agreement that sets technical parameters of operations within BRICS CRA. In fact, the creation of BRICS CRA is an important step in the financial cooperation of the BRICS members. This mechanism is a valuable contribution to the global financial safety net.

The strategy for the BRICS Economic Partnership that was adopted at 2015 summit, is presently the key guideline for expanding trade and investment, manufacturing and minerals processing, energy, agriculture cooperation, science and technology, connectivity and financial cooperation between the BRICS members.

As the present Chairman of BRICS, India must ensure that the member countries ministries take appropriate steps to implement the programmes mentioned in the Partnership and urgent steps are taken for corrective steps if there are some critical gaps. The Economic Partnership strategy has to be put into action by the joint efforts of NDB, BRICS Business Council, BRICS Think Tank Forums and InterBank Cooperation Mechanism. India has to give the lead in preparing feasibility of developing a BRICS trade, economic and investment cooperation roadmap for the period up to 2020.

The issue of taking concrete measures for stepping up investment cooperation is very much on the agenda at Goa summit. Indian Government is preparing a list of priority projects for which investments could be sought from the other four members of the BRICS group. Investments will be sought for the projects, mostly in the infrastructure sector from other member countries Brazil China, Russia and South Africa. At the last summit, Russia also submitted a list of 60 projects in oil and gas, coal, water resources, high tech manufacturing, mining, engineering, aviation, agriculture, transport & logistics, and information technology.

The strategy for the BRICS Economic Partnership that was adopted at 2015 summit, is presently the key guideline for expanding trade and investment, manufacturing and minerals processing, energy, agriculture cooperation, science and technology, connectivity and financial cooperation between the BRICS members.

Prime Minister Narendra Modi has innovative ideas on cooperation among the BRICS members. At the last summit, he mentioned the scope for investments in India by the BRICS members in his pet Make in India programme. Now India wants to hold a trade fair and investors forum to promote the government’s flagship schemes such as Make in India, Digital India, Smart City Project. Start-Up India, Stand Up India and National Mission for Clean Ganga. Indian officials feel that there are immense opportunities for the four other BRICS members to be benefited by investing in these innovative projects in India.

Indian economy is now among the fastest economies in the world. Despite some problems, all other BRICS economies are also looking for new investment opportunities. India can really play a big role at BRICS summit by preparing a concrete roadmap for the maximum utilisation of the BRICs nations capabilities for their respective economic growth. At the global level, it is also an opportunity for New Delhi to raise its international role as a global and regional actor by steadfastly protecting the interests of the developing countries by fighting the western pressures and interests led by the USA.