BRICS And the Significance of South Asia Country: India

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Quick Background on BRICS
BRICS stands for the first letters of each of the five largest escalating economic countries in the world, which are Brazil, Russia, India, China and South Africa. When it was initially established, BRICS only consist of Brazil, Russia, India, and China, which meant the acronym then was only BRIC. The idea of BRIC was first being introduced by Goldman Sachs in its Global Economic Paper that examined those four countries, and projected that they will occupy a greater economic space and would be able to become the world’s largest emerging economies in the next five decades. BRIC started after the countries’ leaders meeting on the G8 Summit in 2006, and as a formal grouping, BRIC held its first summit on June 16th, 2009 in Yekaterinburg, Russia.

BRICS Fact 01:

BRICS brings together five major emerging economies, In 2015 with 53.4 per cent of the world’s population, BRICS countries accounted for a total nominal GDP of US$16.92 trillion — equivalent to 23.1 per cent of global GDP. In the same year, BRICS accounted for 19.1 per cent of world exports and, between 2006 and 2015, intra-BRICS trade increased 163 per cent from US$93 billion to US$244 billion

-East Asia Forum

 

In the BRIC Foreign Minister meeting in New York, on September 2010, it was agreed that South Africa will become an additional member of BRIC, with the consideration that South Africa’s economy is escalating relatively fast. Thus, in the third BRIC summit on April 14th, 2011 in Sanya, China, South Africa attended its first meeting as a BRICS member country. It is essential to examine the motive of these emerging economic countries, thus, aside from scrutinizing their interests in economics, their mutual interest on the topical global issues is also becoming their main concern of cooperation. Since BRICS’ inception, it holds regular annual summits and the Countries’ Leaders Meeting of the G20 Summit. Its regular annual summits has two main streams of work, which are (i) meetings and international organization coordination that focuses on the practical cooperation of the working groups or the senior officials and (ii) the development of an agenda for multisectoral cooperation amongst its members, which focuses on the organizations’ mutual interests through the member states leaders and its ministerial divisions.
As emerging economic states, BRICS built its foundation by focusing on the economic-financial and political governance spheres. In the BRICS sixth summit on July 2014 in Fortaleza, Brazil, the two essential instruments of its economic-financial sectorial agreement were signed. First signed was the agreement to establish a New Development Bank (NDB) that focuses on financing the infrastructural project and sustainable development in emerging and developing countries. Second was the agreement of the Contingent Reserves Arrangement (CRA) that focuses on promoting the BRICS member states’ support in the situation of an unstable global balance of payment or liquidity pressure. On the other hand, in political coordination, BRICS members are open to cooperate with other states, as well as regional or multinational organizations, so long as said cooperation are strictly non-confrontational.

 

 

India as the New Power
The fast growing economic growth of BRICS countries is also supported by its demographic background. India is located in South Asia, and it shares its border with Pakistan, Burma, China, Nepal, Bangladesh and Bhutan. India is also having Indian Ocean coastal border that benefits India a lot in trading. Even though India shares its borders with a lot of countries that it could very potentially have a conflict with, India is able to manage the multilateral cooperation in a way that maintains the stability of its regional environment. By sharing the borders with China, it is found that it is a strategic tie that eventually supports each other regarding the economic strategic relations.
As the major economic power in the South Asia, India gives big contributions in BRICS’ establishment and summits by actively engage in the topical issue. According to the Global Competitiveness Index of the World Economic Forum, India is reported to become the second most competitive BRICS economy as well as the best performing economy in the South Asia. The success of India in boosting and stabilizing its economic is caused by its successful national enhancement in financial system transparency and the improved fiscal and monetary policies. The government is also successful in managing its huge population by maximizing the potential of its youth who is in the productive age range. Although it has garnered success in boosting its regional economic capacity, India is still struggling to battle the problematic factors and risks of business within the country. For example, a large part of the country is still not connected to the internet, and then it also has quite complicated tax regulations. Other issues that are still plaguing India are high corruption figures, tax rates, and poor public health.

Economic facts 01:

The five essential components to achieve fast growing economic:

  1. Capital
  2. Labour
  3. Energy
  4. Material
  5. Services purchased

-the world economy: Growth and Stagnation, Dale Jorgenson.
India has indeed realized that the global economic and financial challenges that are faced by developing countries can affect them in a similar way, which is why economic cooperation becomes the focus of India participation in BRICS.
In the recent years, India has proven itself in becoming one of the brightest and fastest growing economies in the world, thus, BRICS serves and gives India good opportunities to chair the BRICS summit in October 2016. The focus of its chairmanship is to enhance the people to people connectivity among the member states’ citizens, especially among youth. In the latest BRICS Summit in India, India brings up the theme “Building Responsive, Inclusive and Collective Solutions”. In the summit, India highlighted five key points, which are: (i) Institution Building that focuses on further BRICS cooperation, (ii) Implementation, which focuses on the previous summits’ results application, (iii) Integrating, which focuses on the existing cooperation mechanism, (iv) Innovation, that focuses on the new cooperation procedure, (v) Continuity, which focuses on the continuation BRICS cooperation agreement. In the summit, India is expected to propose the non-tariff barriers trade among the BRICS member countries.
The progress of this strategic economic partnership has come to the further discussion where it needs to emphasize the importance of BRICS’ roadmap for trade, economic, and investment cooperation until 2020. The BRICS members, who are identified by large, fast growing economies that hold a significant role in the regional and global level, needs to strengthen their multilateral and bilateral relations despite of the competitiveness and challenges in the global economy. The crash of oil and commodity price that hit Russia and Brazil, and the domestic turmoil in South Africa and Russia, renders India as the world’s most favoured destination for Foreign Direct Investment (FDI). India, somehow, gave a big impact as the member that provided strategic and economic opportunities among the BRICS member countries. The consistent effort of India to raise the international stature will be very much promising to the future of the new economic power in the world.

 
This article is part of IRIS Magazine: Global Economy
Author: Khansa Aqila Ryantono / Defense 1 2015 President University

See full publication on http://irpresuniv.org/2017/06/12/iris-magz-volume-viii-global-economy/

Those two images taken from: zeenews.india.com and thediplomat.com

 

537521-bricssummit-goa

Leaders of BRICS from left to right are President Dilma Rousseff of Brasil, President of Rússia Vladimir Putin, President Manmohan Singh of Índia,President Hu Jintao of China and President Jacob Zuma of South Africa at Los Cabos in Mexico 18/06/2012.

Leaders of BRICS from left to right are President Dilma Rousseff of Brasil, President of Rússia Vladimir Putin, President Manmohan Singh of Índia,President Hu Jintao of China and President Jacob Zuma of South Africa at Los Cabos in Mexico 18/06/2012.

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