Describe the relevance of BRICS and its future
BRICS an acronym for Brazil, Russia, India, China and South Africa, is a group of five major emerging economies of the world. The term 'BRIC' was coined by Jim O Nelli an economist in 2001, represents the first four countries, but after the inclusion of South Africa in 2010, it becomes BRICS. Since its inception in 2009, it has worked as catalyst to shift pivot of global economic power from developed economies to the developing world The five countries of BRICS together constitute 40 percent of world population,1/5th of world gross domestic product(GDP).
After the Second World War, most of the international financial institutions like World Bank, IMF, ADB etc. were dominated by US, Japan and European countries. In the name of development they provide loans to the developing countries to serve their vested interest. At that time there was no option for the developing countries, so they were compelled to take loans for their developmental work. These conditions created an environment for the four biggest economies (Russia, China, India and Brazil) to have separate financial institutions which not only compete with the present financial institutions but also make them financially independent, which is further fueled by 2008 crisis and euro zone crisis. As a result BRIC came into the picture in 2009. To initiate development work in the African continent, they invited South Africa to join this group, so that African continent not remain mere as exporter of raw material. With inclusion of South Africa in 2010 BRIC changes to BRICS.
In 2014 BRICS summit at Fortaleza, member countries laid foundation stone of a financial institution-the new development bank (NDB) which will provide finance to member countries as well as developing countries in their in infra- structural projects. Another major achievement in 2014 was contingency reserve agreement (CRA) which will provide financial liquidity to meet short term balance of payment crisis. In near future NDB and CRA will reduce the importance of World Bank and IMF as it will provide alternate option for the developing countries to meet their needs. As a result it will reduce the value of US dollar in near future.
Now the developing countries can bargain to finance their projects at cheaper rate, which ultimately give boost to infrastructure in these countries. Consequently it will create more employment opportunities, which will increase the GDP of the country. As a result least developed countries will invest more in social , environment and medical sectors, which will increase life expectancy and standard of living .Crimes and health related issues will come down .Now they will be able to taste the flavor of development.
In BRICS cohesiveness is lacking as there is disparity among member countries in various fields .Russia and China being a permanent member of Security Council are communist countries where as other members are democratic and non-permanent members of Security Council .Similarly there is disparity in energy resources, level of income, financial system etc. which will impede the smooth functioning of BRICS in near future.
With formation of NDB and CRR, the dominance of China in the world arena will increase as it control location and majority of shares. China also using other platforms like SCO (Shanghai Cooperation Organization), AIIB (Asian Infrastructure Investment Bank) etc. to pursue its objectives. In current global scenario some member countries of this group are facing economic slowdown which shadows its future aspiration. So BRICS has become more China dominated group. Consequently India has narrow scope to reap benefits form this group and a smaller role to play due to escalating rivalry between two countries (Mausam, string of pearls, and issue of South China Sea)
Although BRICS having disparity among its members and of little importance in Indian scenario yet it will emerge as a major bloc to shift balance of economic power from developed economies of west to emerging economies of developing nations in near future. It will bring a ray of hope for developing countries especially African countries, which always remain in trap of west dominated financial institutions.
- Gautam Govinda
- Why BRICS matters for INDIA?
- What is the importance of BRICS in India's context?
- Describe the relevance of BRICS and India's future with them