Prime minister Narendra Modi leaves for Brazil on Sunday for attending the five-nation summit of BRICS nations which is expected to construct a new economic order by setting up of a development bank to gradually replace the West-dominated financial institutions like the International Monitory Fund (IMF) and the World Bank.
This is first opportunity for Modi to represent India at a multilateral engagement and also to interact with world leaders. An earlier plan to have a meeting with German chancellor Angela Merkel in Berlin was put off because of German leaders will be in Brazil to cheer their team at the Fifa World Cup final.
The BRICS involving Brazil, India, Russia and South Africa has evolved into an important coalition in the multi-polar international order though its efficacy has been questioned in the wake of growing domestic socio-economic problems. Modi will be accompanied by a high-level delegation that includes minister of state for finance Nirmala Sitharaman, national security adviser AK Doval, foreign secretary Sujatha Singh and finance secretary Arvind Mayaram.
The summit will provide opportunity for Modi to have bilateral meetings with Chinese president Xi Jinping, Russian president Vladimir Putin, South African president Jacob Zuma besides host president Dilma Roussef of Brazil.
Officials say India will be hoping for an endorsement of the need for UN Security Council reforms and also those of the Bretton Woods institutions like the World Bank and International Monetary Fund. On July 16, the BRICS leaders will move to the Brazilian capital, Brasilia, where they will meet leaders of South America, who have been invited by the hosts to be observers at the summit.
The discussions at the summit would also centre around contribution from each member-state for the BRICS development Bank and also about its headquarters — whether Shanghai or New Delhi. Officials here said the setting up of the Development Bank and Contingency Reserve Arrangement (CRA) agreed in 5th BRICS Summit in Durban are the stepping stone to undercut the IMF and the World Bank. But the issues like the quantum of contribution to the bank still remains undecided and many countries have reservations about each other proposals. India wants each member to contribute $5 billion each with the total corpus of $50 billion, as was put forth by former prime minster Manmohan Singh at the last summit.
South Africa, however, wants that each member-state should contribute according to the size of their economy, which means China will dominate the institution, raising fears in India.
Also there is the issue of whether the bank will have a 'virtual secretariat' or a physical secretariat and where will be it located. India and South Africa are pushing for the bank's headquarters to be located in their countries, but if China comes up with largest donation, its headquarters may go to Shanghai. There is also issue whether the bank will lend only to BRICS countries or will it also lend to other developing and poor countries as well.
On the CRA, the countries have already agreed with modalities with China being the largest donor with contribution of $41 billion, India and Russia and Brazil contributing $18 billion each and South Africa making a contribution of $5 billion.
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