India to helm BRICS' $100 billion development bank | Business Standard News

India to helm BRICS' $100 billion development bank | Business Standard News

Online comments posted on July 16, 2014:

Let us first remove the misconception that this development bank is an alternative which will take over the role of the Bretton Woods twins, the IMF and the World Bank in the geographical area covered by BRICS nations. At least initially, the declared objective of the new development bank is to support members of BRICS group and other developing countries in meeting long term investment needs in infrastructure and providing emergency assistance to developing countries in removing poverty. Viewed from this perspective, the new institution’s initiatives will only supplement the role being played by IMF and World Bank and there is enough unattended space for the new bank.
There are limitations in the ‘already impaired’ vision of the rich and poor cannot wait in the sidelines for their basic needs to be met after all the greed of the rich and the powerful are satisfied.
The diversity in the systems of governance in the countries that constitute BRICS should not be seen as a disadvantage. It should take us back to the principles of peaceful coexistence preached by Jawaharlal Nehru and make us think about channeling our efforts to make the world a better place to live, not only for the people in developed countries and those belonging to the upper strata of ‘economic divide’ in other countries.

Success of BRICS Development Bank will pave the way for improving relationship among BRICS nations, creating more opportunities for absorption of surplus capital within the group and channeling resources within the region to needy developing countries.
Nations which have ‘tasted’ poverty and problems related to poverty in the recent past will be able to appreciate the problems of the survivors of  an estimated eight million human beings who die across the world each year, because they are too poor to stay alive.
In his book ‘The end of poverty’ (Penguin, 2005), Jeffrey D Sachs made the following observation on capital needed to alleviate extreme poverty:

“At the most basic level, the key to ending extreme poverty is to enable the poorest of the poor to get their foot on the ladder of development. The development ladder hovers overhead, and the poorest of the poor are stuck beneath it. They lack the minimum amount of capital necessary to get a foothold, and therefore need a boost up to the first rung. The extreme poor lack six major kinds of capital:

    Human capital: health, nutrition, and skills needed for each person to be economically productive
    Business capital: the machinery, facilities, motorized transport used in agriculture, industry, and services
    Infrastructure: roads, power, water and sanitation, airports and seaports, and telecommunication systems, that are critical inputs into business productivity
    Natural capital: arable land, healthy soils, biodiversity, and well-functioning ecosystems that provide the environmental services needed by human society
    Public institutional capital: the commercial law, judicial systems, government services and policing that underpin the peaceful and prosperous division of labour
    Knowledge capital: the scientific and technological know-how that raises productivity in business output and the promotion of physical and natural capital”

The twin objectives of supporting infrastructure development and creating a Contingency Reserve Fund to assist needy developing countries accepted by the BRICS leadership while going ahead with the setting up of a new development bank in themselves carry the theme which can be developed into a transparent vision statement which could be supportive of financing and pursuing the above needs.

Incidentally, a less tech savvy leader from India would have got entangled in the issue of ‘where the headquarters should be?’ and missed to clinch a better resources-sharing.

M G Warrier, Mumbai



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