The group of five rapidly emerging economies, Brazil, Russia, India, China and South Africa, or BRICS, is likely to finalise a proposal to establish a common BRICS Development Bank during the fourth BRICS summit. The leaders of the BRICS countries are also expected to sign the much-awaited deal on enabling credit facility in local currencies paving the way to boost intra-regional trade.
Proposals for a common bank and a credit facility in local currencies were mooted during the third BRICS summit in China last year.
Commerce & industry and textiles minister Anand Sharma said, “There is large untapped growth potential of intra-BRICS trade and investments, which we are looking to exploit. The BRICS Development Bank is in the advance stages of concluding agreements on extending credit facility in local currencies and a multilateral letter of credit confirmation facility agreement to facilitate further consolidation of trade and investment ties. Such intra-BRICS initiatives would not only contribute to enhanced intra-BRICS trade and investment, but also facilitate our economic growth in difficult economic times.”
At the fourth BRICS academic forum earlier this month, the idea of a common development bank, or an investment fund, which can assist in the development of BRICS and other developing countries, was again mooted. However, according to Sudhir Vyas, secretary for economic affairs in the ministry of external affairs, the proposal to have a BRICS investment bank to fund infrastructure and development is still being considered by BRICS’ leaders, and it might take time for the idea to see the light of day.
Indian industry lobbies such as the Federation of Indian Chambers of Commerce and Industry and the Confederation of Indian Industry have urged BRICS leaders to focus on operational modalities to establish financial institutions such as a development bank or a common investment fund.
Bipul Chatterjee, deputy executive director, CUTS International, a Jaipur-based think tank, said, “The common BRICS bank would be a major development. If there is an intra-regional bank, it would be good for all developing countries. This summit is likely to see an agreement on cooperation among banks. The credit facility deal is another important aspect of this summit. Money is there in these five countries, but credit facilities, which are extremely important to boosting trade, are not good.”
G K Pillai, former commerce and home secretary and chief adviser to the BRICS Trade & Economic Research Network, had earlier said the group should start building consensus for a common candidate from the group of developing countries for the next director-general of the World Trade Organisation..