Relevance: GS-2: India and its neighbourhood- relations. Bilateral, regional, and global groupings and agreements involving India and/or affecting India's interests

Key Phrases: Beijing Declaration, New Development Bank, Contingent Reserve Arrangement, Global Governance, South-South Cooperation, Reorienting the Global Order, Emerging Economies, Beijing Declaration.

Why in News?

• The 14th BRICS Summit was convened under the Chairmanship of China on 23-24June 2022, in a virtual format.
• Theme:"Foster High-quality BRICS Partnership, Usher in a New Era for Global Development".
• The joint Beijing Declaration was passed which was based on “making instruments of global governance more inclusive, representative and participatory”.

What is BRICS?

• BRICS is an important grouping bringing together the major emerging economies from the world, comprising:
  • 41% of the world population;
  • 24% of the world GDP; and
  • over 16% share in the world trade.
• BRICS countries have been the main engines of global economic growth over the years.
• Over a period of time, BRICS countries have come together to deliberate on important issues under following three pillars:
  • political and security;
  • economic and financial and cultural; and
  • people-to-people exchanges.
• The grouping of five emerging nations is based on “a similar approach to global governance”.

Evolution of BRICS:

• On November 30, 2001, Jim O’Neill, a British economist who was then chairman of Goldman Sachs Asset Management, coined the term ‘BRIC’ to describe the four emerging economies of Brazil, Russia, India, and China.
• The leaders of BRIC (Brazil, Russia, India, and China) countries formalised the grouping as BRIC during the 1st BRIC Foreign Ministers’ Meeting in 2006, which met on the sidelines of the General Debate of the UN Assembly in New York City.
• The 1st BRIC summit was held in Yekaterinburg, Russia on 16 June 2009.
• BRIC group was renamed as BRICS (Brazil, Russia, India, China, South Africa) after South Africa was accepted as a full member at the BRIC Foreign Ministers’ meeting in New York in September 2010.

How important is BRICS to India?

• BRICS aim to create economic alternatives for countries in the global south. Participation in a non-Western grouping balances India’s growing partnerships with the West, a key aspect of its strategic autonomy policy.
• Intra-BRICS trade presents opportunities for India in key markets, including China, which remains an important commercial partner despite security tensions.
• India also supports the BRICS goal of shielding members from the economic fallout of Russia’s war in Ukraine.
• And unlike within the Quad, the Ukraine issue does not create tension for India within BRICS.

Financial Architecture of BRICS:

• Currently, there are two components that make up the financial architecture of BRICS, namely,
  • the New Development Bank (NDB), or sometimes referred to as the BRICS Development Bank; and
  • the Contingent Reserve Arrangement (CRA).

1. New Development Bank (NDB):
   • The New Development Bank (NDB), one of the multilateral development institutions created by the BRICS has been working successfully and is headquartered in Shanghai, China.
   • It was discussed in the 2012 Summit (4th BRICS Summit – New Delhi) and established in 2015.
   • The bank's primary focus of lending is on infrastructure projects with authorised lending of up to $34 billion annually.
   • It has an equal distribution of shares between the shareholders.
   • The bank had a starting capital of $50 billion, with wealth increased to $100 billion over time.
   • The Bank’s membership is open to members of the United Nations.
   • Recently Bangladesh, Egypt, United Arab Emirates (UAE), and Uruguay were added as new members of the BRICS New Development Bank (NDB).
2. BRICS Contingent Reserve Arrangement (CRA):
   • The BRICS Contingent Reserve Arrangement (CRA) is a framework for providing protection against global liquidity pressures.
   • This includes currency issues where members' national currencies are being adversely affected by global financial pressures.
   • The CRA is generally seen as a competitor to the International Monetary Fund (IMF) and along with the New Development Bank, is viewed as an example of increasing South-South cooperation.

Some achievements of BRICS:

1. BRICS BUSINESS COUNCIL: It is composed of 25 prominent entrepreneurs from BRICS countries representing various industries and sectors in BRICS nations.
2. BRICS Women Business Alliance: It is created as a women empowerment measure and as a tool to bring “a distinctive perspective on issues of interest for the business community.”
3. BRICS Bond Fund: It will help member countries conduct intra-BRICS trade in national currencies, avoiding the US dollar.
4. BRICS Credit Rating Agency: Independent rating Agency proposed by India in 2018.
5. PartNIR: It is the BRICS Partnership on New Industrial Revolution.

What are the differences highlighted among the members of the BRIC during the summit?

1. UN Reforms and Terrorism:
   • India and China have found themselves on opposing sides of the debate.
   • India and Brazil have made common cause on pushing for an expanded UN Security Council, yet China has suggested it is not in favour of a permanent seat for India.
   • On terrorism, the recent blocking by China of an attempt by India to sanction the LeT terrorist, Abdul Rehman Makki, at the UNSC sanctions committee, served as a reminder of contrasting approaches.
   • Indeed, those two different approaches found mention in the Beijing Declaration, which acknowledged both India’s concerns on a lack of transparency at the sanctions committee and Chinese claims, seemingly driven by the desire to shield Pakistan that these cases amounted to “politicisation”.
2. Ukraine Crisis:
   • The bloc affirmed a commitment to respect Ukraine’s sovereignty, despite Russia’s actions, and stopped short of condemning NATO, as Russia and China have done, reflecting different views within BRICS.
   • These differences certainly cast doubt on the bloc’s loftier goals of reorienting the global order.

Challenges faced by the grouping:

1. Poor Intra-BRICS Trade: Despite accounting for 41% of the population, trade is just 17% of world trade.
2. Geographical Discontinuity: Bilateral exercises become difficult on account of the different continents of the BRICS nations.
3. Lack of Dispute Redressal: There is no internal mechanism for resolving disputes among the member nations.
4. Global Antagonism: China and Russia are seen on the opposite ends of the established order in respect of democracy, human rights, and regional peace.
5. Differences in Agenda: All the BRICS nations have different global aims and ambitions and lack coherence in them.

Conclusion:

• Despite all the differences, the grouping can work together towards common goals where interests align, whether in financing projects, as the NDB has done, working on climate change, as India and China have continued to do despite the LAC crisis, or even on space cooperation, where the five countries have agreed to create a joint constellation of remote sensing satellites.

Source: The Hindu

Mains Question:

Q. Recently held 14th BRICS summit revealed that despite differences the members are making efforts to work together towards common goals where interests align. Elaborate.(250 words).