india-hosts-first-meeting-of-brics-finance-ministers-and-central-bank-governors

Context: India hosted a Meeting of BRICS Finance Ministers and Central Bank Governors virtually on April 6, 2021. 

  • The meeting was jointly Chaired by Union Minister for Finance & Corporate Affairs and Governor, Reserve Bank of India.
  • Participants included Finance Ministers and Central Bank Governors of the BRICS countries.

About BRICS

BRICS brings together five major emerging economies, comprising 43 percent of the world population, having 30 percent of the world GDP and 17 percent share in the world trade.

  • The acronym BRIC was first used in 2001 by Goldman Sachs in their Global Economics Paper.
  • BRIC started after the meeting of the leaders of Russia, India and China in St. Petersburg on the margins of G8 Outreach Summit in 2006. 
  • The grouping was formalised during the first meeting of BRIC foreign ministers on the margins of UNGA in New York in 2006. The first BRIC Summit was held in Yekaterinburg, Russia, on June 16, 2009.
  • It was agreed to expand BRIC into BRICS with the inclusion of South Africa at the BRIC foreign ministers’ meeting in New York in September 2010. 
  • The five BRICS countries are also members of G-20.

What is the objective of BRICS?

  • Broader commitment to cooperate for strengthening multilateralism, the rule of law and equitable international order. 
  • BRICS leader’s stress “the centrality of the rules-based, transparent, non-discriminatory, open and inclusive multilateral trading”, based on the World Trade Organisation. 

Key points:

  • As 2021 BRICS Chair, India’s approach is focused on strengthening intra-BRICS cooperation based on Continuity, Consolidation and Consensus.
  • BRICS Finance Ministers and Central Bank Governors discussed financial cooperation agenda set by India for 2021 - 
    • Global Economic Outlook and Response to COVID-19 pandemic, 
    • New Development Bank (NDB) Activities, 
    • Social Infrastructure Financing and Use of Digital Technologies, 
    • Cooperation on Customs related issues, IMF reforms, Fintech for SMEs and Financial Inclusion, 
    • BRICS Rapid Information Security channel and BRICS Bond Fund. 
    • the needs and aspirations of BRICS in particular and emerging markets and developing economies in general.
    • greater coordination among BRICS member countries on the issues of 16th general review of Quotas of IMF. 

New Development Bank (NDB)

About:

  • Idea: At the fourth BRICS Summit in New Delhi (2012), the leaders of Brazil, Russia, India, China and South Africa considered the possibility of setting up a new Development Bank to  mobilize resources for infrastructure and sustainable development projects in BRICS and other emerging economies, as well as in developing countries. 
  • Agreement: Following the report from the Finance Ministers at the fifth BRICS summit in Durban (2013), the leaders agreed on the feasibility of establishing the New Development Bank and made the decision to do so.
  • Origin: During the sixth BRICS Summit in Fortaleza (2014), the leaders signed the Agreement establishing the New Development Bank (NDB).
  • The Bank formally came into existence as a legal entity at the inaugural meeting of the Board of Governors of the NDB chaired by Russia and held on the eve of the Ufa Summit in 2015. 
    • During the meeting, the appointment of the President, Mr. K.V. Kamath(Current President), as well as four Vice Presidents and the Board of Directors took place.
  • The NDB became fully operational at the signing of the Headquarters Agreement with the government of the People’s Republic of China in 2016. HQ - Shanghai

Objectives: In the Fortaleza Declaration, the leaders stressed that 

  • the NDB will strengthen cooperation among BRICS and 
  • will supplement the efforts of multilateral and regional financial institutions for global development, thus
  • contributing to collective commitments for achieving the goal of strong, sustainable and balanced growth.

Capital: The authorized capital for NDB is $100 Billion while initial subscribed capital is $50 billion. Initial subscribed capital was equally distributed among the founding members {$10 billion each}. 

Voting power of each member is equal to the number of its subscribed shares in capital stock.

The new leadership in continuing this momentum forward and taking NDB to the next level in terms of lending performance to members, transparency, international credibility and effectively achieving the NDB mandate. She suggested that the focus should also be given to achieve the twin objective of preserving BRICS values and growing NDB into a global development institution.

Source: https://pib.gov.in/PressReleseDetailm.aspx?PRID=170990