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.
Recently, our Prime Minister Mr Narendra Modi was in Ufa Russia for the SCO meet and there was lot of chaos in media and all political parties about the long awaited meeting of PM Narendra Modi and the Pakistan PM Nawaz Sharif.
Let us throw some light on this issue to understand that why India was so keen to become a member of SCO.
History of SCO
Shanghai Cooperation Organisation or Shanghai Pact was formed on 26 April 1996 and its headquarters is at Beijing,China.It is a political,economic and military organisation which was founded in Shanghai by the leaders of China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan,and Uzbekistan.
After the inclusion of Uzbekistan in 2001 the renamed themselves as Shanghai Six.
The decision to include India, along with Pakistan, as permanent members of the Shanghai Cooperation Organisation (SCO) has been announced during the SCO Summit (9-10 July) at Ufa, Russia. The process for formal inclusion into SCO will take place in 2016.
They are the observer state currently.
Objective of SCO
- Strengthen relations among member nations.
- promote cooperation in political affairs, economics and trade, scientific-technical, cultural, and educational spheres as well as in energy, transportation, tourism, and environmental protection.
- safeguard regional peace, security, and stability; and (v) create a democratic, equitable international political and economic order. (credits: official website)
So what if India becomes the member of SCO?
- India’s relations with central Asian countries will strengthen.
- China and Pakistan as we all know has strong friendship and ties now had to solve the Border issue with India.
- With both India and Pakistan joining SCO there are great chances of starting of long pending projects like Iran-Pakistan-India oil pipeline and the proposed project between Turkmenistan, Afghanistan, Pakistan and India has been stalled may finally take off.
- Everybody knows that US supports Pakistan and China is it’s Financial and Diplomatic mentor because of this India always feels cornered out.But with the emergence of SCO Pakistan will lower down it’s bad attitude towards India and with the pressure from China and Russia it will work mutually with India and resolve outstanding issues.
With the emergence of SCO, Asia is on its way of reclaim its status as a global power center that it once was and India will have a major role to play.
I would also say that SCO can be an answer to the US led NATO that Asians are now emerging and maybe as the next Superpower.
The new initiative of Government of India is Digital India has recently launched by PM Narendra Modi. It aims at ensuring the government services are made available to citizens without any or through less paperwork.
The one thing which is the most useful for Rural India is the setting up of an Online National Agriculture Trading market to help farmers of India and increase the agriculture.
By 2019, the two way platform will be created between Farmers and Buyers. This will be done through the broadband connectivity across the rural India.
Let us look at some of the important points which will impact Farmers in big way through this initiative.
- Farmers now have many available options to sell their produce.
- They will have the options to sell and buy fruits and vegetables and other produce across India through online platform.
- Currently Farmers have to sell their produce to few mandis and market committees and they charge high amount of tax from them.
- Farmers can sell their produce to mandis or to online platform.
- The direct link between seller and buyer will erase out the mediators which will increase the profit margin of farmers and it will also benefit the end product customer also.
- This online trade will be free of cost so its a service with no cost again it will boost producers income.
- An agency would be setup to monitor the smooth functioning in online trading, it will also look after the transportation facilities after the online purchase/sell.
According to me its a good initiative but GOI has to face some challenges to make this plan successful. A proper training program,uninterrupted services,electricity,availability of smart phones,tablets and computers to almost every farmer can be big challenge.