BRICS SUMMIT (NEW DELHI, MARCH 2012)

 BRICS group is the first one of major developing countries that does not involve any developed country. BRICS nations absorb 53 per cent of all inflows of overseas capital and account for 18 per cent of global trade.

The term BRIC (excluding South Africa which joined in 2010) was coined by Goldman Sach’s chief economist Jim O’ Neill in 2002 who predicted that they would become the biggest economies in the world by 2027. But, even as they reach the halfway mark, the BRICS already account for half of the globe’s economic growth. This fast pace of growth has thrown up huge opportunities for investors. A 100 US dollar invested in 2001 would be worth 674 in 2012 if invested in Brazil’s stock marked, 451 in China 459 in India and 414 in Russia against 112 that would have been earned from investing in America.                                                                                                                                         

BRIC was formed in 2009 and its first meet took place in 2009 in Russia. The fourth meet place in New Delhi, India in March 2012. Major resolutions of this meet were as follows:

(1)    To reform the world’s aging financial system to reflect the growing role of the BRICS. The slow pace of the IMF quota and governance reforms and BRICS focus on recasting global financial system in favour of emerging and developing economies was the heart of the resolution.  

(2)    BRICS should start to settle their trade contracts using local currencies which will take another step towards breaking the US dollar’s hegemony over global trade. Russia and China have already introduced mutual settlements of trade contracts in their respective national currencies and a similar deal was signed with India. The summit saw the signing of two pacts on promoting trade transactions in local currencies, which included the enabling master agreement for (a) extending credit facilities in local currencies and (b) BRICS multilateral letter of credit confirmation facility agreement

(3)    BRICS nations agreed to explore setting a joint BRICS Development Bank – a proposal floated by India, similar to the World Bank or the European Bank for Reconstruction and Development that would invest in infrastructure and promote deeper economic integration between the members.

(4)    Setting up of a BRICS exchange in Futures.

(5)    An ambitious target to scale intra-BRICS trade from 230 billion US dollars to 500 billion dollar by 2015.

The BRICS report was prepared by experts from all BRICS countries under the leadership of Kaushik Basu, India’s Chief Economic Ad visor. The report maps out synergies among economies of BRICS countries to accelerate mutual trade and investment.

While most of the deals signed were economic, the BRICS are also pushing world order. They want a bigger say in the IMF as well as the UN where they feel they play a junior role that is not representative of their growing economic clout on the world stage. In this regard, the Delhi summit marked an advance as the five countries managed to harmonies a common minimum position to advocate dialogue and diplomacy to resolve the Iranian unclear impasse and warned the West against any escalation of the conflict that will flow from military adventurism.