BRICS: INDIA’s COSTLY TIMEPASS:Dr RAJIV KUMAR

1042013

The fifth BRICS summit concluded in Durban, South Africa on Wednesday the 26th when most Indians were celebrating Holi, more mindful of water shortages in Mumbai than the creation of the BRICS Bank! The news about the bilateral meeting between our prime minister and the newly installed Chinese president Mr Xi  Jinping grabbed more space and attention than the formation of the BRICS bank or the creation of CRA (Contingent Reserve Arrangement) with a corpus of $100 billion to assist members that face adverse market pressures against their currencies. I support the stand of the large majority of Indians to virtually ignore the BRICS process because BRICS is germane neither to India’s over-riding domestic concerns nor indeed to its foreign policy objectives.

Prime Minister Manmohan Singh valiantly tried but in vain to infuse some purpose by enunciating a five point charter for collaborative effort. Quite expectedly, it was pitched at a high level of generality that made it rather inane. On the other hand, the existential problem faced by BRICS was spelled out by Vladimir Putin. With his tongue firmly in cheek, the Russian President likened the five to a grouping of Africa’s big game trophy animals- the lion, leopard, elephant, buffalo and rhinoceros.  All five strong in themselves, unable to accept another as leader and most importantly so widely diverse in their features that any coming together seems highly improbable. One wonders why then we have had five summits already?

In our book titled ‘In the National Interest, A Strategic Foreign Policy for India’, my co-author Santosh Kumar and I have argued for focusing our foreign policy on achieving and sustaining high rates of economic growth and generating more job opportunities. Having followed the BRICS (BRIC until 2011 when South Africa, a late entrant joined the grouping) process since its inception and having been present both at Sanya (2011)  and Delhi (2012), I am not at all convinced that the BRICS process serves in any way this principal policy goal. What is the additionality or value added achieved in meeting together the heads of four countries over and above that accrue from timely and well prepared bilateral summits? Can the CRA actually come to our rescue if the Rupee comes under pressure as our current account deficit continues to widen and the credit rating agencies (god forbid) downgrade our standing to non-investment status? Would the highest policy attention of the PMO not be better and more effectively focused on ensuring that our exporters become more competitive and the foreign trade policy does not remain an annual ritual but instead gets a strategic focus that is backed by coordinated inter-ministerial action to provide better infrastructure and more conducive labour market conditions for Indian exporters to raise their dismal share in global export markets? I will be very surprised to hear any one argue that the BRICS process helps India to pursue its goal of rapid of inclusive growth, which should be our exclusive policy concern for the time being.

It can be argued that it is unfair to evaluate the contribution of the BRICS process to our country’s economic growth, critical as it may be. However, we must remember that India’s aspirations of becoming a global power or a player are directly and strongly dependent on its economic performance.

One has to ask how the BRICS process serves the interests of India’s external policy in an admittedly multi-polar global community. The BRICS is seen by the rest of the world as an opportunistic assembly of five countries that have very few if anything in common between them. Other emerging economies question its legitimacy and argue for others like Indonesia, Turkey and Mexico being included and there is no valid argument against this except the existence of a clever acronym create by an American banker!  Until recently a strong common feature among the BRICS was their rapidly growing economies. With the collapse of the growth momentum in Brazil, India and South Africa, this is no more the case. Any assumption of BRICS continuing to account for an increasing share global growth is fraught with all kinds of downside risks. This becomes painfully true if one was to consider the BRICS economic performance excluding China. With such huge variations in their resource endowments, their current priorities, the dissimilarity of their macro-economic conditions and much more so of their political dispensations, it will be miraculous if BRICS could sustain global interest in the summit process.

The real gainer from BRICS is clearly China. Prior to Sanya, the process was a desultory affair with hardly any serious attention given to it by the geo-strategic community. How many of us remember the town in which it was organized in Russia? (BTW the town was Yekaterinburg!) . As an emerged global power, China needs as many forums as it can have to display its rising prowess and show-off, specially to the Americans in the hope of converting its significant and growing economic clout into global political and strategic  clout. I will be grateful to anyone who can explain how our participation in such multilateral forums serves the interest of either building a stronger bilateral relationship with China or to attract the attention of other emerging and developing economies to our own accomplishments in building a market based economy with a vibrant democracy combined with breath taking diversity.

The five countries have been unable to take even one meaningful tangible economic initiative since their inception. The much hyped BRICS Bank has expectedly emerged with a whimper as have so many previous such attempts at creating alternatives to the Bretton Woods twins. Extending the Putin analogy, the Indian elephant would do well to keep its eyes firmly on the ongoing dance of the eagle and the dragon and working to distance the two from each other.

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Author is Senior Fellow Centre for Policy Research and former Director of ICRIER.