For a fairer sharing of global finances

The recently concluded fifth BRICS- (Brazil, Russia, India, China and South Africa) Summit at Durban has brought to light new contours of world order.

Held in Africa for the first time, it saw the presence of all top leaders of the five countries represented in BRICS—Dilma Rousseff, Vladimir Putin, Manmohan Singh, Xi Jinping and Jacob Zuma.

Alongside deliberations on diplomatic relations, it presented the idea of BRICS bank to focus on infrastructure development because of insufficient long-term financing and foreign direct investment. The need of the hour is to understand the sense and connotation of this idea, from the vantage point of India’s place in the globe.
The contemporary time is defined by globalisation which has generated interplay of continuity and change. Globalisation is a contested concept. Just like there can be competing versions of democracy, and not a perfect version, so is the case with globalisation.

Irrespective of all flipside of governance and equity issues, globalisation is here to stay. It not as an ideology, but as a journey towards undefined destination, where in the process of greater integration, the factors that make it work are namely, reduced costs, quicker communications, and economic liberalisation are irreversible.

When geography is being re-configured, the social, cultural, economic space is no longer mapped in terms of territorial distances. This often gives rise of multilateral alliances and grouping and BRICS can be seen as one of them. The emerging national economies of Brazil, Russia, India, China and South Africa, which comprise BRICS, have a noteworthy substantial standing in the affairs of the world.

Naive faith

The global markets in the era of 1970s witnessed that the naive faith in the Keynesian era was shattered by stagflation. Later, the exchange controls were abolished paving way for free market models of laissez faire being reworked upon in the Reagan and Thatcher era. 'Washington Consensus' was coined by the British economist John Williamson which emphasised sound fiscal and monetary policies, with reliance on market over the State. This pointed towards fragmentation of the national markets, and the need for international institutions to regulate the situation.

The inkling of the BRICS Bank financial safety net was done at the G-20 summit in Mexico. Though its specific location is yet to be finalised, yet this idea goes well for prerequisite for a just world order, that is financial stability.

In the current phase of turbulence with disturbances being caused by weakening of structures of long standing authority by attack from global economic forces, the necessity of the hour is to diversify the points of power away from the current American and European ones.

India is looked as a pioneer, which occupies a central position in South Asia, with its colossal size and population, rich resources. It is often dubbed as what Joseph Nye defines as ‘soft power’ with richness in culture, knowledge, society having the potential to mark a distinct niche for itself, as opposed to being a ‘hard power’ seen in crude military terms.

Existing in global era, the contours of security for the nation are also being expanded from traditional tools like military attack to non-traditional ones like terrorism, pandemics, economic integration amongst others.

India can add more to its feathers in the global terrain. Its diversity and ability to manoeuvre through different issues gives it a distinct place for itself. It can show the way for a new regime where is space for plurality of values and interests.

Long term financing market is also unexplored in the nation’s development spree. Being a developing economy, there are huge infrastructure requirements. Further, the unfettered international regime of existing financial structures of the International Monetary Fund and the World Bank has benefitted only few at the expense of many.

The mutual collaboration at the BRICS bank shall do well to the limitations generated in the global demand for infrastructure funds. It shall also illustrate a way for judicious use of global financial resources, where prominent role by India shall augur well for its role as a financial player.

A good beginning always has a good end. India needs to tap in the potential of the BRICS bank from the vantage point of development, financial stability and above all realise its latent potential of being a global player to guide the financial aspects of a regulatory institution.

(The writer is an assistant professor, University of Delhi)