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BRICS, acronym of Brazil, Russia, India, China and South Africa, is a group of countries which are considered at the same stage of economic development and are believed to overtake the economies of G-8 countries by 2050.
In 2009, BRIC countries come together in their inaugural summit at Yekaterinburg in Russia on June 16. Today, BRICS countries accounts for roughly 20 percent of world’s gross domestic product and have accumulated 40 percent of overall gold and hard currency reserves.
The sixth BRICS Summit was hosted by Brazil at Fortaleza and Brasília from July 15-17, 2014. Theme of the summit was "Inclusive growth: sustainable solutions", which is also one of the objective of Indian economic development. The declaration of the summit answered many Indian concerns which it faces in national and international arena.
The major outcomes of the summit include adoption of Fortaleza Declaration and Action Plan, the Agreement on the New Development Bank (NDB), the Treaty for the Establishment of BRICS Contingent Reserve Arrangement (CRA) etc. The NBD will finance infrastructure and sustainable development projects while CRA will provide an additional line of defence to the BRICS countries in scenarios of Balance of Payments (BoP) difficulties.
CRA is $100 billion currency reserves pool to help the countries forestall short-term liquidity pressures. The contingency currency pool will be held in the reserves of each BRICS country and can be shifted to another member to cushion balance-of-payments difficulties. This move will help in containing the volatility in the emerging markets of BRICS. If CRA would have been in place couple of years back, India may have avoided fall in Rupee value and widening current account deficit. It will further help in avoiding BoP crisis like situation in member countries.
China, the holder of the world's largest foreign exchange reserves, will contribute the bulk of the contingency currency pool, amounting to $41 billion. Brazil, India and Russia will chip in $18 billion each and South Africa $5 billion. If a need arises, China will be eligible to ask for half of its contribution, South Africa for double and the remaining countries the amount they put in. This arrangement is made to strengthen the global financial safety net and complement existing international arrangements.
The $100billion NBD will be based in Shanghai, China and India will preside over its operations for the first five years, followed by Brazil and then Russia. Bank is expected to start lending operations in 2016 and would be open to other countries membership as well, but the capital share of the BRICS cannot drop below 55 percent. The bank will reduce the dependence on World Bank in international finance which is dominated by western powers.
Other major declarations and Fortaleza includes –
- Establishment of BRICS Information Sharing and Exchange Platform to facilitate trade and investment cooperation.
Trade and investment are the most promising tools to increase the income of people. Improved trade with BRICS will open a market comprising 3 billion people with the combined GDP of US$24,371 billion on purchasing power basis.
- Proposal to establish the BRICS Network University recognizing the strategic importance of education for sustainable development and inclusive economic growth.
Inclusive growth was made important aspect of Indian growth process during the eleventh five year plan. This is important to reduce the widening inequalities in income which are gradually increasing in the current economic set up. Greater inequalities in a society are often the cause of social unrest.
- Memorandum of Understanding on Cooperation among BRICS Export Credit and Guarantees Agencies that will improve the support environment for increasing trade opportunities among our nations.
Improved trade tries among the countries means increase in the export of member countries. But often, red tape, cumbersome procedures put hassles in exports. Export Credit and Guarantees Agencies will improve the export environment facilitating the export from BRIC to rest of the world.
- National Institutes of Statistics and the Ministries of Health and Education of BRICS countries asked to work on the development of joint methodologies for social indicators to be incorporated in the BRICS Joint Statistical Publication.
Until and unless there is reliable data, no scheme or plan for social development can be materialized. Since health and education are most important factors for social upliftment, synergy is between statistics, health and education is demanded.
- Called for a comprehensive reform of United Nations in line with the 2005 World Summit Outcome Document so as to make it more representative, effective and efficient
Though two members of BRICS are permanent members of the UN Security Council, reforms in UN is the long standing demand of Brazil, South Africa and India. Statement on UN reforms is a win for India.
- Called for an inclusive and consensus-based multilateral consultations on a draft International Code of Conduct on Outer Space Activities
Indian achievement in the space programmes is comparable to any developed country of the world. The space application and satellite launch facilities provided by India are one of the cheapest in the world. With many future satellites and GAGAN (Indian version of GPS) in the pipeline, an agreement on outer space activities will avoid any possible future clash. The call for draft International Code of Conduct on Outer Space Activities will specially help India, China and Russia.