Story continues below this ad

2. The acronym BRIC was first used in 2001 by Goldman Sachs in their Global Economics Paper, ‘The World Needs Better Economic BRICs’. The paper projected that Brazil, Russia, India, and China would be among the world’s largest economies in the next 50 years or so.

3. As a formal grouping, BRIC started after the meeting of the leaders of Russia, India and China in St. Petersburg on the margins of the G8 Outreach Summit in 2006. The grouping was formalised during the first meeting of BRIC Foreign Ministers on the margins of the UNGA in New York in 2006.

4. The first BRIC Summit was held in Yekaterinburg, Russia, in 2009. It was decided to include South Africa at the BRIC Foreign Ministers’ meeting in New York in 2010, and accordingly, South Africa attended the 3rd BRICS Summit in Sanya, China, in 2011.

The rationale for creating BRICS

1. In the past, India and other Asian and African countries have criticised the dominance of European and Western countries at international forums and institutions, such as the United Nations. They have argued that this leads to a lack of representation from voices of the ‘Global South’, a term used to refer to countries that have not traditionally been at the centre of international agenda-setting.

2. It also came amid a solidification of the United State’s status as the sole superpower after the USSR’s collapse in 1991, and a realisation of countering its influence.

3. With the economic rise of countries such as India and China in recent decades, the creation of their own forums has been utilised as an alternative. G20 is one example, which was more expansive in its memberships as compared to the G8 grouping (later G7 after Russia was expelled over its annexation of Crimea in 2014).

4. Similarly, BRICS came about to enhance cooperation between these five countries. This includes aspects of political cooperation through meetings, and economic cooperation such as through the New Development Bank, which is meant to provide financial support to developing markets for infrastructure and other projects.

BEYOND THE NUGGET: New Development Bank

1. The New Development Bank (NDB) is a multilateral development bank established by BRICS countries. The idea of setting up NDB was first conceived in 2012 during the BRICS Summit in New Delhi, India. The agreement to establish it was signed on July 15, 2014, and became operational on July 21, 2015, during the BRICS Summit held in Fortaleza. This is known as the Fortaleza Declaration.

2. The Bank has an initial authorized capital of 100 billion dollars and an initial subscribed capital of 50 billion dollars. The initial subscribed capital was $50 billion, equally shared among the five members.

3. “India’s contribution to the BRICS New Development Bank (NDB) stands at $2 billion, paid in seven instalments from the fiscal year 2015-16 to 2021-22. As of now, 20 externally aided projects with loan amounts of $4.867 million funded by the NDB are ongoing in India,” stated Union Minister of State for Finance Pankaj Chaudhary in Parliament on December 2024.

Reducing reliance on US Currency

4. In an attempt to reduce reliance on the US dollar and to internationalise the Indian rupee, the Reserve Bank of India (RBI) allowed invoicing and payments for international trade in Indian rupees in 2022, after sanctions were imposed on Russia amid the war in Ukraine.

5. According to a report prepared by Russia last year titled ‘BRICS Chairmanship Research on the Improvement of the International Monetary and Financial System’, BRICS “do not seek to replace the US dollar as a medium of exchange” due to its significant share in the global economy. Instead, BRICS aims to “offer a viable alternative that will aid the market in its perpetual mission for efficiency” and foster greater prosperity, promoting universally beneficial and inclusive economic globalisation.

6. The report highlighted that the current cross-border payments infrastructure “lacks competition” and struggles to meet participants’ demands. International trade experts have noted that ever since the US weaponised the global financial infrastructure by excluding Iran (in 2012) and Russia (in 2022) from the Society for Worldwide Interbank Financial Telecommunication (SWIFT), countries worldwide have been seeking to reduce their dependence on the US dollar and the US-led global financial system.

(Source: What is the group, its significance for India, Trump renews tariff threat to BRICS countries, India has contributed $2 billion to BRICS Bank: Finance Ministry)

Subscribe to our UPSC newsletter. Stay updated with the latest UPSC articles by joining our Telegram channel – IndianExpress UPSC Hub, and follow us on Instagram and X.

🚨New Year Special: Click Here to read the January 2025 issue of the UPSC Essentials monthly magazine. Share your views and suggestions in the comment box or at manas.srivastava@indianexpress.com🚨

© IE Online Media Services Pvt Ltd

Expand