The sixth Summit of heads of state/government from 5 BRICS countries is taking place today at Fartaleza, Brasil. The Indian Prime Minister Shri Narendra Modi is attending his first multi-lateral meeting of this club of large economies outside the OECD. In the course of this Summit, the leaders of Brasil, China, Russia, India and South Africa are moving towards creating two new global financial institutions. A New Development Bank and a Currency Stabilisation Fund is to be announced at the end of the Summit.
The new Bank and the Fund initiated by BRICS countries are likely to challenge the hegemony of the Bretton Woods institutions---the World Bank and International Monetary Fund. When the emerging economies joined the G20 club in the wake of the financial crisis of 2008, there was an expectation that the governance of World Bank and IMF would be reformed to take into account the new political economy of the world order. However, reforming the governance of these institutions (along with the regional development banks) has been difficult as the control of G7 countries has not altered.
In the context of these new global financial institutions emerging from the BRICS Summit today, it is likely that the relations of power between the financiers and recipients may shift in the coming period. The BRICS initiated Bank and the Fund are following a new paradigm of ‘south-south cooperation’ which is posited to be distinct from the OECD framework and Busan agreements. The strategy for global development cooperation of the BRICS countries is said to be need-based, recipient-driven, non-conditional and mutually beneficial, a paradigm that is likely to challenge the existing OECD approach.
The new government in India under the leadership of Prime Minister Modi is following the mantra of ‘maximum governance’. How does this mantra now apply to the governance of BRICS? How the future Bank and Fund created by BRICS today would be governed in a manner that is transparent and accountable to not only the share-holders but also to other stake-holders, like recipients? In defining India’s niche in this new club of large economies, Prime Minister Modi would have to remember that India’s USP (unique selling proposition) is its ‘knowledge industry’. He had spoken eloquently about advancing the use of India’s ‘soft power’ in the new world order. How does India’s ‘knowledge industry’ contribute to global development? In so doing, it will be important to remember that ‘knowledge industry’ of India is not just about informatics, computers and space technologies; India’s communities have enormous indigenous knowledge in matters related to ecology, natural resources, holistic health, culture of diversity, and the spirit of ‘vasudhev kutumbakam’ (world is family). Indian intellectuals, artists and musicians, civil society organisations and spiritual leaders have all contributed enormously to global development over decades. It is this tapestry of relationships that India can bring to a new approach to global development cooperation.
The first budget of the new government presented in Delhi last week did not mention about the forthcoming BRICS Summit and the two new global institutions being launched. How will the principle of ‘maximum governance’ be applied to India’s participation in trans-national decision-making structures (like the BRICS Summit)? Should the Indian parliament not debate India’s position and financial contributions to these two new global institutions? Should there be a public debate on use of Indian public resources on development of other countries? Will it be desirable to have a consultation with Chief Ministers of various states in the spirit of ‘cooperative federalism’ pronounced by the Prime Minister (especially since some of the states continue to receive funds from the World Bank and Asian Development Bank)? Should the experience of educational and health institutions and larger Indian civil society of working overseas be not brought into the conversation about such new global mechanisms of development cooperation?
If the agenda of good governance is to succeed in India, then it is imperative that the principles of ‘maximum governance’ be equally applied to the functioning of BRICS as they are applied to the functioning of Gram Sabha at the village level.
Rajesh Tandon
Founder-President, PRIA, New Delhi
July 15, 2014