BRICS: Relevance For India And Global South

Source: Indian Express
GS II: Important International Institutions, Agencies and Fora- their structure, mandate

Why in the News?

India is hosting the18th BRICS Summit on September 12-13 and is chairing the grouping. The upcoming summit has revived the debate on whether BRICS remains strategically relevant for India and whether it can strengthen India’s role as a leading voice of the Global South.

News in Brief

• BRICS has evolved from a grouping of emerging economies into a broader platform for cooperation among countries of the Global South.
• Its major achievements include the creation of the New Development Bank (NDB) and the Contingent Reserve Arrangement (CRA).
• Critics, however, point to internal differences, China’s dominant economic position and the limited capacity of BRICS institutions.
• For India, BRICS presents both an opportunity and a challenge: it can strengthen India’s voice in global affairs, but it cannot replace India’s growing economic and strategic engagement with the West.

Key Concerns

• One of the major criticisms is that BRICS has not been able to translate its political statements into concrete outcomes on issues important to India.
• For instance, BRICS declarations have supported the aspiration of India and Brazil to play a greater role in the United Nations.
• However, this has not resulted in an explicit and unified endorsement of India’s permanent membership of the UN Security Council.
• Differences among members, including the representation of Africa, have further complicated the issue.
• The same concern applies to BRICS-led financial institutions.
• The New Development Bank, in which India has made a significant contribution, has financed around 120 sustainable infrastructure projects worth nearly $39 billion.
• While this is a notable achievement, the bank remains much smaller than established institutions such as the World Bank.
• The NDB has therefore added another source of development finance but has not yet emerged as a comparable alternative to the traditional multilateral financial system.
• Similarly, the Contingent Reserve Arrangement, created in 2014 as a financial safety mechanism for BRICS countries, has seen limited practical use.
• India committed around $18 billion to the arrangement, but the facility has not become a major instrument for addressing financial crises among member countries.

The China Factor

• For India, the most complicated aspect of BRICS cooperation is its relationship with China.
• BRICS brings India and China together on several global issues, but the two countries continue to have serious bilateral differences.
• India faces concerns relating to border tensions, a large trade deficit, supply-chain dependence and access to critical materials such as rare-earth magnets.
• China’s economic weight also creates an imbalance within BRICS.
• Its economy is considerably larger than that of most of the other members, raising concerns that the grouping could increasingly reflect Chinese priorities.
• This creates a fundamental contradiction for India.
• BRICS offers a useful forum for cooperation with China and other emerging powers, but India must simultaneously ensure that the grouping does not become dominated by any single country.
• The diversity of political systems, economic interests and foreign policy priorities among BRICS members makes this balancing act even more difficult.

BRICS and Major Geopolitical Conflicts

• The grouping includes countries with sharply different positions on major international issues.
• Russia’s war in Ukraine, tensions in West Asia and growing geopolitical rivalry among major powers have exposed these differences.
• BRICS may provide a platform for dialogue, but dialogue alone does not always produce common action.
• The grouping’s ability to influence global affairs will ultimately depend on whether its members can move beyond broad declarations and find common ground on difficult political questions.

Relevance of BRICS

• Despite limitations, dismissing BRICS as irrelevant would be premature.
• The grouping has become an important platform for countries that believe the existing global order does not adequately reflect contemporary economic and political realities.
• Over the last two decades, BRICS has moved beyond being merely a grouping of large emerging economies.
• It increasingly represents the concerns of countries seeking greater influence in international decision-making.
• For many developing countries, institutions created after the Second World War continue to reflect an older distribution of global power.
• Representation in the UN Security Council, voting power in international financial institutions and the ability of developing countries to shape global rules remain important concerns.
• BRICS provides an additional platform to raise these issues and coordinate the positions of countries from the Global South.

BRICS and the changing global order

• BRICS is often portrayed as being opposed to the West.
• However, its purpose is better understood as seeking a more multipolar and representative international order.
• The grouping does not necessarily seek to dismantle the existing global system.
• Instead, it wants greater space for emerging economies and developing countries within that system.
• Its broader principles include,
  • Respect for sovereignty
  • Non-interference in domestic affairs
  • Greater multipolarity
  • Reform of international institutions
  • Stronger multilateralism
  • Recognition of civilizational and cultural diversity.
• In this sense, BRICS is better seen as a reformist platform rather than a revolutionary alternative to the existing world order.

The role of the New Development Bank

• The New Development Bank remains one of the most tangible outcomes of BRICS cooperation.
• The bank was created to provide additional financing for infrastructure and sustainable development.
• It has financed projects across member countries and has expanded its membership beyond the original BRICS grouping.
• An important feature of the NDB is its growing emphasis on financing in local currencies.
• This could help reduce excessive dependence on major international currencies and limit the exchange-rate risks faced by borrowing countries.
• The NDB is also seen as offering development finance with fewer political conditionalities than some traditional lending institutions.
• However, its limitations are equally clear. Its lending capacity remains far below that of institutions such as the World Bank.
• Therefore, the NDB should currently be viewed as an additional source of development finance rather than a replacement for the existing financial architecture.

BRICS and Global Trade

• BRICS has also gained importance because of the growing economic weight of its members.
• According to the figures cited, the grouping accounts for more than 20% of global trade, while trade among BRICS countries has expanded significantly over the past two decades.
• This growth has been supported by:
  • Expanding markets;
  • Greater economic links among emerging economies;
  • Resource complementarities;
  • Strengthening supply chains; and
  • Increased trade cooperation.
• The expansion of intra-BRICS trade shows that the grouping is not merely a political platform.
• Economic links among its members are becoming increasingly important.

Local Currencies and De-dollarisation

• Another important area of BRICS cooperation is the increasing use of local currencies in bilateral trade.
• Countries have begun exploring settlements in their domestic currencies, including trade arrangements involving Russia, China, Brazil, India and the UAE.
• Greater use of local currencies can reduce exposure to dollar liquidity shortages and limit the impact of changes in US monetary policy on developing economies.
• However, this does not mean that BRICS is close to launching a common currency.
• A common currency would require a far greater degree of economic and political integration.
• BRICS countries have different inflation levels, exchange-rate systems, monetary policies and economic structures.
• For this reason, local currency trade may continue to expand, while the creation of a common BRICS currency remains unlikely in the near future.

Relevance of BRICS for India

A  Stronger voice of the Global South

• India can use BRICS to raise issues that directly affect developing countries, including,
  • Development financing;
  • Climate justice;
  • Food and energy security;
  • Debt concerns;
  • Technology access; and
  • Reform of global institutions.
• India’s leadership of the Global South can gain greater visibility through such platforms.

An opportunity to act as a bridge power

• India is in a unique position because it engages simultaneously with BRICS, the G20, the Quad, Western economies and developing countries.
• This gives India the ability to avoid choosing between competing geopolitical blocs.
• Instead, India can act as a bridge between the West and the Global South, while maintaining its strategic autonomy.
• This role could become increasingly important in a world marked by geopolitical fragmentation.

Cooperation in development and technology

• BRICS can also provide opportunities for cooperation in areas such as,
  • Infrastructure;
  • Digital technologies;
  • Sustainable development;
  • Climate action;
  • Trade; and
  • Financial cooperation.
• For India, these areas may offer more practical benefits than attempting to turn BRICS into a rigid geopolitical alliance.

India’s Way Forward

• India should not view BRICS and the West as competing alternatives.
• Its national interests are better served by a policy of multi-alignment.
• India can use BRICS to strengthen strategic autonomy, promote the interests of the Global South and push for reforms in global governance.
• At the same time, India’s economic transformation will require deeper engagement with the United States, Europe and other advanced economies for investment, technology, markets and innovation.
• India should therefore:
  • Continue pushing for reforms in global governance through BRICS;
  • Strengthen the New Development Bank and other BRICS institutions;
  • Promote practical cooperation in trade, technology and development;
  • Guard against excessive dominance by any one member;
  • Expand local currency settlement where economically beneficial;
  • Continue deepening economic and technological ties with the West; and
  • Use its position to act as a bridge between developed and developing countries.

Conclusion

BRICS has its limitations, but it remains relevant for India as a platform to advance the interests of the Global South and promote a multipolar world. India should use BRICS alongside stronger engagement with the West to pursue strategic autonomy and its long-term development goals.

UPSC Prelims and Mains Practice Question

With reference to BRICS, consider the following statements:

1. The New Development Bank provides financing for infrastructure and sustainable development projects.
2. The Contingent Reserve Arrangement is intended to provide liquidity support to member countries during financial stress.
3. BRICS has established a common currency for trade among all its member countries.

Which of the statements given above are correct?

(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3

Answer: (a)

Mains Practice Question

Q. BRISC reflects both the growing aspirations of the Global South and the contradictions of an emerging multipolar world. Critically examine the relevance of BRICS for India’s strategic and economic interests. (250 words)

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