Why in News?

• The External Affairs Minister of India S Jaishankar is in Cape Town (South Africa) to attend a meeting of the foreign ministers (FM) of BRICS - a grouping comprising Brazil, Russia, India, China and South Africa.
• The FMs’ meeting will finalise the agenda for the 15th BRICS (South Africa) scheduled with the theme: “BRICS and Africa: Partnership for Mutually Accelerated Growth, Sustainable Development, and Inclusive Multilateralism”.

What’s in Today’s Article?

• About BRICS
• Significance of BRICS
• Economic Cooperation among BRICS
• What’s on the Agenda of 15th BRICS Summit?
• Looking for Multipolarity - Expanding the Membership of BRICS
• Common Currency
• China and India in BRICS

About BRICS:

• Origin:
  • The BRIC [Brazil, Russia, India and China] idea was first conceived in 2001 by Goldman Sachs as part of an economic modelling exercise to forecast global economic trends over the next half century.
  • In 2006, the group was formalised as BRIC during the 1st BRIC FMs’ meeting on the sidelines of the General Debate of the UN Assembly in New York City.
  • After a series of high-level meetings, the 1st BRIC summit was held in Yekaterinburg, Russia in 2009.
• Expansion of BRIC to BRICS:
  • BRIC FMs at their meeting in New York in 2010 agreed that South Africa may be invited to join BRIC.
  • Accordingly, South Africa was invited to attend the 3rd BRICS Summit in Sanya (China) in 2011.
• BRIC(S) Summits: Since 2009, the head of governments of the BRICS states have met annually at formal summits.

Significance of BRICS:

• BRICS is an important grouping bringing together the major emerging economies from the world, comprising
  • 41% of the world population,
  • 24% of the world GDP and
  • Over 16% share in world trade.
• BRICS countries have been the main engines of global economic growth and have come together to deliberate on three pillars of
  • Political and security,
  • Economic and financial and
  • Cultural and people to people exchanges.

Economic Cooperation among BRICS:

• New Development Bank (NDB): During the 6th BRICS Summit in Fortaleza (Brazil) in 2014, the leaders signed the agreement establishing the NDB.
  • It is a multilateral development bank (headquartered in Shanghai, China) operated by the five BRICS states.
  • NDB has committed $32.8 billion in 96 socio-economic development projects so far.
• The Contingent Reserve Arrangement (CRA): In 2014, the BRICS governments had signed a treaty, which aimed at forestalling short-term balance of payments pressures and strengthening financial stability of the BRICS nations.

What’s on the Agenda of 15th BRICS Summit?

• Two items on the agenda are attracting attention for their potential for a greater geopolitical consolidation of the grouping:
  • A plan to expand the membership of BRICS, and
  • A common currency.

Looking for Multipolarity - Expanding the Membership of BRICS:

• As many as 19 countries (such as Argentina, Mexico from Latin America; Nigeria, Algeria, from Africa; Saudi Arabia, UAE, from West Asia; Kazakhstan from Central Asia; Bangladesh and Afghanistan from South Asia; etc) are in the queue to join BRICS.
• The rush towards BRICS is driven by two basic impulses:
  • There is considerable anti-US sentiment in the world, and all these countries are looking for a grouping where they can use that sentiment to gather together.
  • There is a lot of appetite for multipolarity, for a platform where countries of the Global South can express their solidarity.

Common Currency:

• The idea of a common currency was proposed by Russia’s President at the Beijing BRICS summit last year.
• An insulation from the dollar is a tempting proposal, but not all members believe that it is an idea whose time has come.
• An option is for members to trade with each other in their respective currencies. The India-Russia example has shown, this is not easy either.

China and India in BRICS:

• The war in Ukraine has brought the West together on the one hand and strengthened the China-Russia partnership on the other.
  • China is driving the expansion of the BRICS to challenge US hegemony with multilateralism.
• While India’s presence at the G7 summit in Hiroshima and an informal Quad summit was seen as a sign of New Delhi’s US tilt, it attaches significant importance to the BRICS and Shanghai Cooperation Organisation (SCO).
  • India called on BRICS nations to demonstrate their sincerity in reforming multilateral institutions, including that of the UN Security Council.
  • However, one view on the expanding membership is that it could sideline India’s role in the group.