• Jim O’Neill of Goldman Sachs came up with the acronym BRIC in a 2001 report about the growth prospects of Brazil, Russia, India, and China. Together, these four countries make up a big part of the world’s people and GDP, so their growth is important. According to the study, these countries will have some of the biggest economies in the world in the next 50 years. BRIC became BRICS when South Africa joined the group in 2010.
• The five countries that make up BRICS are all leading developing or recently industrialised countries, but they are all different in important ways. For example, they all have large, fast-growing economies that have a big impact on regional issues, and they are all members of the G-20.
• Every year, the BRICS Leaders’ Summit is held.
• The BRICS group is made up of five of the world’s biggest developing countries. Together, they have 41% of the world’s people, 24% of its GDP, and 16% of its trade.
• It’s a new place to put money and a growing world power bloc.
The group was put together because of shared business interests, but its goals have changed over time.
Over time, it has grown to include important global problems of the day. BRICS is trying to do the following:
• Its goal is to improve access to markets and make it easier for markets to connect with each other.
• Its goal is to encourage trade and investment between BRICS countries and make all of them more business-friendly for investors and business owners.
• They want to improve the coordination of macroeconomic policies and make the economy more resistant to shocks from the outside.
• They work for fair economic growth to get rid of poverty, deal with unemployment, and bring more people into society.
• The platform’s overall goal is to support peace, prosperity, security, and development in a world that is multipolar, connected, and globalised.
In terms of the rest of the world, the goals of BRICS are:
• The BRICS countries work together to push for a more fair international system. For example, they want the UN Security Council to be reformed.
• BRICS is a way for countries in the South to work together.
• Its goal is to connect wealthy and developing countries. For example, in the WTO, the BRICS countries are trying to make sure that agriculture policies are fair.
• BRICS can help poor countries get a better deal in global trade and climate change talks. This is a role that will become more and more important.
• Creating a New Development Bank and a Reserve for Unexpected Events can help poor countries get better deals.
• All of these countries want to change the way that Western financial groups like the IMF and World Bank are run.
Principles
• Full respect for each member state’s right to be independent.
• A commitment to international law and an understanding that the UN is the most important organisation for peace, security, and progress.
• These countries’ relationships with each other are based on the ideas of non-interference, equality, and mutual gain.
• Being open, sharing information, and coming to a choice as a group.
• Recognising that the world economic and financial system is made up of many different parts.
Structure of BRICS
• BRICS is not an organisation. Instead, it is an annual meeting of the top leaders of the five countries that make up the group.
• Each member of the group takes a turn as chairman every year, as shown by the acronym B.R.I.C.S.
• Over the past 10 years, BRICS cooperation has grown to include a yearly programme of more than 100 meetings with different groups.
Timeline
• The first BRIC Summit was held in the Russian Federation in 2009, and it was mostly about reforming the world’s banking system.
• In December 2010, South Africa was asked to join BRIC. After that, the group started using the name BRICS. South Africa then went to the Third BRICS Summit in March 2011 in Sanya, China.
Significance
• The five countries make up 43% of the world’s people, and their combined GDP is 30% of the world’s GDP. They also make up 17% of world trade.
• BRICS is made up of countries from Asia, Europe, Africa, and Latin America. This makes their cooperation more useful and important because it spans continents.
• The BRICS economies have been seen as the driving force behind the global economic recovery. This shows how these countries’ roles are changing in the world today.
• After the recent financial crisis, the BRICS countries had a lot of say in how the G-20 meetings shaped fiscal policies.
• In the multipolar world we live in now, the BRICS countries help the cause of developing countries and are key players in making decisions that affect developing countries around the world.
• Now that WTO talks and climate change are becoming more important, it’s more important for BRICS to work together as a group.
The main areas where BRICS countries work together
1. Economic Cooperation
• There is a lot of trade and business between BRICS countries, as well as a lot of economic cooperation in a lot of different areas.
• Agreements have been made in the areas of economic and trade cooperation, innovation cooperation, customs cooperation, strategic cooperation between the BRICS Business Council, the Contingent Reserve Agreement, and the New Development Bank.
• These deals help reach the shared goals of strengthening economic cooperation and making it easier for trade and investment markets to work together.
2. People-to-People exchange
• The BRICS countries have agreed that it is important to improve exchanges between people and to work more closely together in areas like culture, sports, education, movies, and youth.
• The goal of People-to-People exchanges is to make new friends and strengthen relationships and mutual understanding between the people of the BRICS countries. This is done in the spirit of openness, variety, and learning from each other.
• The Young Diplomats Forum, Parliamentarian Forum, Trade Union Forum, Civil BRICS, and the Media Forum are all examples of people-to-people talks.
3. Politics and Security Cooperation
• The political and security cooperation between BRICS members is meant to bring about peace, security, growth, and cooperation so that the world is more fair and equal.
• BRICS gives countries a chance to share policy tips and talk about what works best when it comes to domestic and regional problems. It also helps restructure the world’s political system so that it is more balanced and based on multilateralism.
• South Africa’s foreign policy goals, such as pursuing the African Agenda and South-South Cooperation, are driven by the BRICS group.
4. Cooperation Mechanism
• Cooperation among members is made possible by:
Track I: Formal official work between the governments of the two countries.
Track II: Getting involved through groups linked to the government, such as state-owned businesses and business councils.
Track III: Engagement with the public and between people.
Developments
• A group of advisors will be set up to help make Part NIR (Partnership on New Industrial Revolution), which aims to strengthen BRICS cooperation in digitalization, industrialization, innovation, inclusiveness, and investment, fully operational.
• A bank called the New Development Bank (NDB) or BRICS bank has been set up.
• BRICS has agreed to set up a credit rating agency: to set up an independent rating agency based on market-oriented principles. This would make the world governance structure even stronger.
• There are plans to create a BRICS Agriculture Research Platform, BRICS Railway Research Network, BRICS Sports Council, BRICS Media Academy, and BRICS news site, among other things.
• The BRICS Business Council was set up so that many businesses and parts of the economies of these 5 countries could be represented.
• BRICS thinks it’s unfair that Bretton Woods institutions have so much power and wants to support other ways of growing economies. Every meeting since 2009, including Goa, has been about how the IMF is run. They have asked for a new quota formula that would make sure that the greater voice of the dynamic emerging and developing economies matches their relative contributions to the world economy.
• The BRICS countries decided to work together more to stop terrorist groups like IS in the West Asia and North Africa (WANA) region.
• The BRICS Think Tanks Council (BTTC), which met for the first time in 2013, was a big step towards institutionalisation.
• A BRICS office will be in South Africa. This will strengthen South Africa’s place as a regional economic hub. South Africa is getting ready to open a regional office that will distribute money from the Brazil, Russia, China, India, and South Africa (BRICS) group’s New Development Bank (NDB). The office will look into money for South Africa and the surrounding area.
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BRICS Bank {New Development Bank (NDB)}
• The New Development Bank (NDB), which used to be called the BRICS Development Bank, is an international bank for development that was set up by Brazil, Russia, India, China, and South Africa.
• The Agreement on the NDB says that “the Bank shall support public or private projects through loans, guarantees, equity participation, and other financial instruments.” It also says that “the Bank shall cooperate with international organisations and other financial entities and provide technical assistance for projects that the Bank shall support.”
• At the Fourth BRICS Summit in New Delhi, India, in 2012, the idea of starting a new Development Bank to raise money for infrastructure and sustainable development projects in BRICS, other emerging economies, and poor countries was discussed.
• At the Sixth BRICS Summit in Fortaleza, Brazil, in 2014, the New Development Bank (NDB) Agreement was signed by the heads of state.
• The Fortaleza Declaration said that the NDB will make it easier for BRICS countries to work together and will help international and regional financial institutions do more for global development. This will lead to growth that is both steady and healthy.
• The NDB’s main areas of work are clean energy, transport infrastructure, irrigation, urban growth that is sustainable, and economic cooperation between the member countries.
• The NDB is run by the BRICS countries through a system of consultation in which each country has the same rights.
Major Projects funded by NDB in India
It has promised money to a number of big building projects in India, such as the Mumbai Metro rail, the Delhi-Ghaziabad-Meerut Regional Rapid Transit System, and many Renewable Energy projects.
So far, the NDB has given its approval to 14 Indian projects worth almost USD 4.2 billion.
In 2020, India and the NDB made a deal to give India a $1 billion loan to help with rural jobs and infrastructure.
Structure
• The starting amount of money that will be put into the New Development Bank will be $50 billion. This amount will be raised to $100 billion.
• Each of the five people will have the same amount of money in the bank. So, no one person is in charge of the group.
• The main office is in Shanghai
• The African Regional Centre for the bank will be in South Africa.
• India is the first country to lead the bank.
• A Russian will be the head of the Board of Governors.
• The emergency reserve fund, called a “Contingency Reserve Arrangement” when it was announced, will also have $100 billion and help poor countries avoid short-term liquidity problems.
• China will give it $41 billion, South Africa will give it $5 billion, and each of the other countries will give it $ 18 billion.
What is the Contingency Reserve Arrangement?
• Because there are more and more global financial crises, the BRICS countries signed the Fortaleza Declaration at the Sixth BRICS meeting in 2014, which included the BRICS Contingent Reserve Arrangement (CRA).
• The BRICS CRA wants to give its members short-term liquidity support through currency swaps to help ease the BOP problem and make the financial system more stable.
• The first hundred billion US dollars (USD 100 billion) will be given to the CRA as a commitment of all its resources.
• It would also help improve the global financial safety net and add to the international arrangements that are already in place (IMF).
Rationale
• The US and western countries have a lot of power in global financial institutions like the IMF and the World Bank.
• The quota system gives each country a certain number of votes in the IMF and the world bank. China has less voting power than the US, even though it has the second biggest economy after the US.
• The BRICS financial institution will make the US dollar less important as a global currency, but it will finally make the Yuan more important.
• The IMF’s cash aid programme has rules. If a country’s foreign policy goes against US interests, it will be hard to get a loan from the US.
• It will give money to developing countries so they can improve their facilities.
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Challenges Associated with BRICS
• As the BRICS goes forward, it will be hard for them to keep up with the big three, which are Russia, China, and India. BRICS must become pan-continental in order to truly represent the world’s big emerging markets. It needs to have more countries from other parts of the world as members.
• The BRICS will need to add more to their plan if they want to be more important in the world order. At the moment, climate change and development funds to build infrastructure are the most important things on the agenda.
• As BRICS goes forward, its basic ideas, like respect for sovereign equality and pluralism in global governance, may be put to the test as the five member countries work on their own plans.
• The military standoff between India and China on the Doklam plateau has put an end to the naive idea that BRICS countries can always have good political relationships with each other.
• China’s attempts to include nation states, which are an important part of its Belt and Road Initiative, in a larger political system could lead to a fight between BRICS members, especially between China and India.
• Heterogeneity: Critics say that the different interests of the countries in the BRICS group pose a threat to the group’s success because they are heterogeneous.
• China-Centered: All of the BRICS countries deal more with China than with each other. Because of this, the BRICS group is seen as a platform for China’s interests. Other trading countries have a hard time getting their trade deficits with China to balance out.
• Hasn’t Worked: The five-power combination has worked, but only up to a certain point. But China’s rise on the economic scene has made BRICS very unbalanced.
Also, the group hasn’t done enough to help people in the Global South understand and support their goals.
Importance of BRICS for India
• Geopolitics: The way things are right now in geopolitics makes it hard for India to find a way to balance its geopolitical interests between the United States and the Russia-China axis.
So, the BRICS platform gives India a chance to level out the relationship between Russia and China.
• Global Economic Order: All of the BRICS countries wanted to change the international financial and monetary system and build a more fair and balanced international order.
In order to achieve this goal, the BRICS group plays a big part in the G20, helping to shape global economic policies and promote financial stability.
• terrorists: BRICS also gives India a place to work together to fight terrorists.
• Joining groups around the world: India is working hard to join the United Nations Security Council (UNSC) and the Nuclear Suppliers Group (NSG).
China is the main thing that makes it hard to reach these goals.
Because of this, BRICS gives us a chance to actively work with China and fix our disagreements. It also helps to get help from countries that are already partners.
Importance of BRICS for India
• BRICS Media Forum: In March 2022, Brazil, Russia, India, China, and South Africa started a three-month plan to train journalists.
The BRICS Media Forum was the group that came up with the idea for the show.
• BRICS Meeting on Climate Change: In May 2022, the Union Minister of Environment, Forests, and Climate Change attended the BRICS high-level meeting on climate change.
During the meeting, India stressed the importance of the forum as a place to work together on climate change, find ways to speed up the transition to a low-carbon, resilient economy, and achieve sustainable recovery and growth.
Way Forward
• As the BRICS group continues to work on building institutions, it is important to keep in mind that equality, redress, and fairness should become guiding principles for all projects.
By leaving current groups, China will just have more freedom (even in groups where it is not a member but has loyal proxies). Instead, it might be better for India to stay involved and find ways to fight back against China.
• It’s clear that the lost India, Brazil, and South Africa (IBSA) group needs to be brought back to life. Turkey, Indonesia, South Korea, and other countries could be added to the group to create alternatives to China-centered groups.
• In the same way, India needs to put more money into building groups that bring people from the north and south together. The G4 (Brazil, India, Germany, and Japan), which wants to be on the UN Security Council, is one of these groups.
Up until now, the group has only been concerned with the UNSC. It might be time for them to add other things to their plan.
• The BRICS countries should now start working together to set up a Free Trade Area (FTA).
• Like ASEAN and SCO, BRICS can call “dialogue partners and observers” from all over the world, especially from countries that are still developing. This would make them more responsible for the emerging countries and could give them the motivation they need to speed up processes and set up institutions.
• In its first ten years, BRICS did a good job of finding problems that were important to all of them and making plans to deal with them. For BRICS to stay important over the next ten years, each of its members needs to be honest about the initiative’s strengths and weaknesses.
• The BRICS countries need to change how they do things and return to their original goals. BRICS must reaffirm their pledge to a multi-polar world with sovereign equality and democratic decision making. Only by doing this can they deal with the uneven distribution of power within the group and in global governance in general.
• They need to build on the NDB’s success and put money into more BRICS organisations. It would be helpful for BRICS to create a research arm like the OECD, which would offer answers that work better for the developing world.
• The BRICS countries should think about working together to meet their promises under the Paris Agreement on climate change and the UN’s sustainable development goals. This could mean, for example, putting up a BRICS energy alliance and an energy policy institution.
• If the NDB worked with other development finance groups, it could be a powerful way for BRICS members to make progress towards the sustainable development goals.
• The idea of creating a BRICS Credit Rating Agency (BCRA), which would be different from Western agencies like Standard & Poor’s, Moody’s, etc., was brought up by India. This could be on the BRICS plan in the future.
