How will India benefit from the Development Bank of BRICS?

Today, let’s talk about the potential of New development bank (NDB) of BRICS and how it will impact India.We also try to look and understand what was the need of creating this BRICS NDB when we have World bank and IMF.


BRICS countries are Brazil, Russia, India, China and Russia decided to create a bank to help the poor countries by providing loans to them.It’s headquarters will be at Shanghai and first president will be from India.Mr K.V Kamath has been announced its first President. BRICS currently have decided to create a 100 billion dollar pool and same amount as reserve.

What was the need to create BRICS-NDB ?

The question arises that what was the need to create this bank when we have World Bank and IMF.

To understand this issue let’s go back to the 2008 when Global recession affected most part of the world and India was one of them.At that time India initiated the idea of creating a bank with five developing countries or you can say five emerging power of the world to fight with these kind of crisis in future.

BRICS is an answer to the US led World Bank and IMF which has some harsh and biased policies towards poor nations specially eastern countries. BRICS countries has 40% of world population and 20% of economic output yet it has only 11% of voting right at the IMF and US doesn’t want to change this status quo despite of several logical attempts by BRICS nations.

BRICS will also help in reducing the dependency on US dollar.Till now, huge dependency on dollar was ultimately filling the Federal Reserve Bank ( America’s central bank).

IMF and World bank also don’t ask for collateral from the countries while giving the loans instead they ask poor nations to change their economic planning according to them which ultimately benefits the US and UK.

What benefits will India gets from BRICS-NDB?

  • India and China both are talking a lot to grow trade among each other but rivalry between them has shown declining figures in trade from past few years. So,coming together in BRICS these two countries will try to sort out their differences and increase the business and trade activity.
  • Since, we all know about middle east crisis and instability in west Asia and India is the third largest importer of energy supply and India and Russia is talking about gas pipeline from Russia to India from 2005 so this project also can take off.
  • With the major shift in policy World bank has stopped funding for coal projects in developing countries and instead they are supporting poor countries so that they can make them dance on their tunes. India is largely dependent on coal energy but can’t fund for it so BRICS will help India in this major sector also.
  • NDB could urge countries to adapt solar energy panel and cleaner energy methods and will provide cheaper loans for these kind of projects.
  • To improve the durability of NDB bank trade among these countries should be healthy so it will improve trade.
  • The bank could focus on utilizing its funds on climate projects and educate poorer countries on climate change policy.

Problem with the NDB

There is one problem with NDB i.e China.

  • China is taking advantage of this bank to advance it’s own projects.
  • China is the biggest contributor and has the biggest economy so it will dominate in policy making.
  • China can pressurize BRICS to make Yuan it’s official currency.

But these things can be easily handled if India works with proper diplomatic approach by making such policies that every single member countries have equal rights.


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