India & Brics: Comparative Analysis

Introduction

The 2008-09 crisis provided a fertile ground for emerging economies of the world to cooperate and collaborate to hedge against such a scenario. Thus, BRIC (and later BRICS) was born. However, each country had a fixed agenda to come together. Russia viewed the association as a mechanism to challenge the global governance architecture dominated by the US and its allies.

China viewed the association as a key measure in furthering its economic and political ambitions. Brazil saw BRICS as a vehicle through which it could transform itself from a regional Latin American power to a global power. South Africa, with an aim to move on from its past of apartheid, saw the association as a mode to legitimise its standing in the world as the tallest leader in Africa. India saw BRICS as a ladder that would allow it to make the jump from the geo-economic ‘blue collar’ to the high table of global management.

Despite the divergent rationales in joining the bandwagon, BRICS countries have consistently been able to find common grounds to deliberate despite differences. Collective weight of BRICS’ opinion becomes even more significant as BRICS, together, represent over 3.1 billion people, or about 41% of the world population and contributes to 25% of the Global GDP. Past few years have seen an accelerated pace of BRICS collaboration. Some recent developments:

• Setting up the Contingent Reserve Arrangement (CRA) to provide mutual financial support, and as a contribution to the global financial safety net
• Expanding trade: BRICs share of the world exports rose significantly from the years of 1996 to 2008, from 9% to 17%.
• Establishment of New Development Bank: In the sixth BRICS summit in Brazil, the member countries, signed an agreement to create a development bank on the lines of Asian Development Bank and the World Bank.
• India attaches high importance to the BRICS for promoting global economic growth, peace and stability. Co-operation on the economic front is one of the focus areas of India's policy. But there is still a lot of potential that remains to be explored.

Russia’s relevance in BRICS

Russia, the world's biggest country, fringes European and Asian nations and in addition the Pacific and Arctic seas. Despite the fact that Russia was a superpower amid the Cold War, the crumple of the Soviet Union left it monetarily weaker.

It has regularly been addressed if Russia ought to be a piece of BRICS at all and be viewed as an up and coming superpower alongside alternate countries that constitute BRICS.

The BRIC gathering's first formal summit, held in Yekaterinburg, initiated on 16 June 2009,with Luiz Inácio Lula da Silva, Dmitry Medvedev, Manmohan Singh, and Hu Jintao, the individual pioneers of Brazil, Russia, India and China, all going to. The way that the principal summit was held in Russia, builds up the significance that Russia had in the arrangement of BRICS.

In 2008, amid a two-sided meeting between President Medvedev and Lula, a visa-waiver understanding was marked that enables Brazilian and Russian visitors to visit every others' nations without the problem of applying for a visa. Russia is taking a shot at building up comparative concurrences with alternate BRICS individuals.

Russia's economy is 20% littler than Brazil's and 20% bigger than India's. Without Russia, BRICS would be more skewed toward China. Likewise, Russia's political weight is more noteworthy than her economy would recommend, and this helps make BRICS more adjusted.

The BRICS nations were initially chosen in light of the examples of quick development, yet now Russia's economy isn't developing quick. It has an ostensible GDP of $1,560.7 Bn and the development rate is likewise restricted to a terrible 1.1.% The administration spending is just $414.0 bn while the normal spending is $800.574 bn.

In spite of being a noteworthy oil and arms exporter, Russia had fares of just $259.3 bn in 2017. This could be a direct result of the falling oil costs and unnecessary spending on geopolitics. The uncontrolled level of debasement in the nation is another factor that disabled people the economy.

Likewise, Russia does not show up as a main five exchanging accomplice of any BRICS nations, despite the fact that different BRICS nations effectively exchange with each other. For China, Russia is the ninth biggest exchange accomplice. For the other three nations - not even in top ten. This proposes Russia does not have much impact on different BRICS nations.

Brazil among the BRICS nations

In organizing the World Cup in 2014 and the Olympics in 2016, the Brazilian economy may seem, by all accounts, to be all good. Once the focus of Latin America, Goldman Sachs financial expert Jim O'Neill thought Brazil deserving of the now-well known "BRICS" moniker in 2001, putting it among powerhouses Russia, China, India, and South Africa. However, lately, Brazil has experienced a fall; 0.1% GDP development in 2014 took after by 3.8% and 3.3% decreases in 2015 and 2016 respectively.

The blend of falling commodity prices and adverse government policies are at fault for this downturn. Government debts have swelled to a great extent because of expanded spending on pensions and tax cuts for businesses. The development of public debt has just been quickened by high interests, leaving the Brazilian central bank in a mess.

Promotion of exports is a practical shot at recovery. In spite of the fact that Brazil's exports fell when item costs declined in 2014, the weakening Brazilian peso has enabled Brazilian manufacturing to be aggressive. Brazil's positioning of 123rd in the World Bank's ease of doing business index puts it at a peculiar position in worldwide markets, particularly contrasted with another assembling monster in Latin America, Mexico, which is positioned 47th.

Regardless of whether Brazil wins in its clash of promoting manufacturing exports, it is uncertain if it will be sufficient to balance other monetary inadequacies. For instance, rising joblessness from around 6 percent in late 2013 to over 13 percent as of February 2017 has ambushed the development of private consumption, which perceptibly started to back off in late 2014. Furthermore, high Inflation and credit downsize from Moody's and Fitch have additionally added to stagnating foreign direct investment.

As of late, investors appeared to have recovered confidence in BRICS nations as Brazil has bounced back, Russian oil costs have settled, India has driven a series of monetary reforms, and China's cash has fortified. All things considered, the development of rising economies has kept on outpacing Developed countries, which is the idea behind the novel "BRICS" grouping. The time since 2015 marked the first significant divergence in the growth rate trends between developing and developed countries. Not only does this have all the earmarks of being an arrival to BRICS nations standards, it likewise shows increasing investment opportunities compared to developed nations.

In spite of extreme circumstances lately for BRICS countries – and Brazil specifically – it doesn't create the impression that their long-run development potential has been smothered. With maybe the special case of an undeniably politicized Russia, extensive developing economies have the potential of being in an astute position to catch the prevalence of worldwide financial development soon, particularly as they keep on pursuing organized commerce endeavours. In the event that O'Neill was right in seeing their long-run development potential, it creates the impression that ongoing occasions may have been nevertheless a pothole in the BRICS countries' race to the top.

India’s Stand among the BRICS nations

India’s position among the BRICS nations today can be ascertained by the following parameters that make her stand out

1. Highest GDP growth rate- Despite disruptive measures like demonetisation & implementation of Goods & Service Tax, India has had the highest GDP growth rate among the BRICS since 2014. The year 2017 is the only exception (growth rate 6.72) since the year saw the immediate impact of demonetisation and GST. In times to come, India is expected to lead the pack with growth rates of 7.37% and 7.8% in 2018 and 2019 respectively. The only other significant competitor is China with projected growth rates of 6.5% and 6.3% in the same two years. Other BRICS economies typically grow at rates below 2% .This underscores the latent potential the country’s economy possesses for growth.
2. Large demographic dividend- More than 50 % of Indian population on 1.3 billion lies below the age of 25 years and 65% lies below 35 years. The median age of the country is 27.9 years, older to South Africa at 27.1 but younger to Brazil (32), China (37.4) and Russia (39.2). But only China has a population size compared to India. The working aged human capital in India is more than any other country in the world. Hence, if appropriately and adequately skilled, the Indian youth can be drivers of economic growth sustained over a long time.
3. Best destination for foreign investment – With a huge domestic demand for goods fuelled by rising middle class aspirations expected to sustain for times to come, India is a potential market for overseas investors. This is a characteristic unique to India only. In all other BRICS nation, the domestic demand has either saturated or is declining.

Areas where India can improve are as follows

• Gender Gap – India’s rank in World Economic Forum’s Global Gender Gap report for 2017 was 108 out of 144 major and emerging economies. All other BRICS economies viz South Africa (0.756), Russia (0.696), Brazil (0.684) and China (0.669) have Gender Gap Indices better that of India (0.669). Even the Indian female labour force participation is abysmally low at 27%, which is the lowest among BRICS nations. Promoting a gender inclusive workforce is one of the prime objectives of NITI Aayog’s action agenda for 2017-2020. Major reasons for this include disincentive for women to work as the average household incomes rise. If India actually has to reap it’s potential demographic dividend, policies must encourage female participation in the labour force.
• Human Development Index – Every other country viz Russia (0.804), Brazil(0.754), China(0.738) and South Africa (0.666) have a Human Development Index superior to that of India(0.624), ranked 131 out of 188 countries as per the latest reports of United Nation Development Program’s Human Development Report released in March 2017. Being a composite statistic of per capita income, life expectancy and education, it is often claimed as a more reliable measure of development of a country. India has a far way to go on this front apart from ensuring sustainable economic growth.
• Environmental Initiatives – The very fact that there are 14 Indian cities in world’s top 15 most air polluted cities is enough evidence that India needs to put prime focus on environmental friendly development. Apart from that India ranks 177 out of 180 countries worldwide on Environment Performance Index, needless to say the worst amongst BRICS economies. India’s recent targets for Paris Climate Change Convention of reducing carbon emission per unit GDP by 33-35% from 2005 levels and to generate 40% of it’s installed electric capacity by 2030 from renewable sources in addition to increasing forest cover by 5 million hectares with an equivalent improvement in quality of green cover by 2030 underlines the commitment of the nation to the issue. The only other nation with such ambitious targets happens to be China, another BRICS member.

China’s role among the BRICS Nations

Since the beginning, BRICS has witnessed the relationships of its members, develop and evolve with the changing geopolitical climate. Today, the BRICS is majorly being dominated by China, the world's second largest economy. As the country hosts the annual BRICS summit at the east coast city of Xiamen on Sept. 3, an event which will not only be of personal importance to the Chinese president Xi Jinping, who once was Xiamen's mayor, but also a chance for the nation to enhance its global stature.

Over time, China has been a key factor in achieving cooperation among the BRICS members. Recently it’s each member has pledged $10 billion to their New Development Bank, which will begin lending next year. It released a joint roadmap for economic and trade cooperation and formed a $100 billion contingency fund to provide aid to members tackling balance-of-payments issues.

The Chinese government has gone further and asked the remaining BRICS to institutionalize their cooperation and not merely focus on domestic growth. China believes that a stronger BRICS bonding would help to safeguard the needs of all developing nations. The country is also leading the effort to revamp the global economic framework and pushing for these reforms to the IMF’s system.

This dominance has been further consolidated by the heavy reliance of member countries on China. Russia maintains close ties with China because of its constant feud with the West. Almost all of the iron ores and soybeans produced in Brazil are exported to China. China is also South Africa’s biggest export market, amounting to around $12 billion while the second best United States of America operates at $5 billion. Despite such initiatives, the remaining BRICS partners fear such aids may morph quickly into domination and control.

Even though India can make do without the presence of China owing to its main partners for trade being the United States and the United Arab Emirates, India is substantially dependent on China for its imports. Imports accounting to $59 billion arrived into India from China in 2015. The bilateral relations have soured recently due to territorial disputes. For China to continue the initiative of deepening the BRICS bond, it should aim to act as a guiding force for the group, taking up an outlook which leads to increase in equality and targets convergence. It should take up an approach that is pragmatic and the same time humble which in turn will allow China to lead the cause of inclusive development.

South Africa’s stand among the BRICS nations

On 24 December 2010, South Africa was formally invited to join group BRIC and the group was renamed as BRICS with “S” standing for South Africa. Since BRICS is founded, it has expanded to various fields as in trading, industries, international co-operation and security, science, energy, water, agriculture and environmental affairs and among many other sectors. In 2018, it will be 10th anniversary of the BRICS Partnership which will be hosted in Johannesburg, South Africa between 25-27th July’ 2018.

Intra-BRICS trade has grown from USD 567 billion in 2010 to USD 744 billion in 2017. And South Africa-BRIC trade has grown from USD 28 billion to USD 35 billion over the same period. Both South Africa exports to and imports from other BRICS countries has grown at a faster rate than South Africa’s global trade, thus it shows South Africa has great importance from other BRICS countries in South Africa’s trade case. Combined, the BRICS countries account for 15.4 percent of South Africa’s global exports, and 25.4 percent of the country’s imports. There is a great potential of increased trade.

South Africa’s membership of BRICS has been one of the crucial nation and resembles the democracy of including African Country - South Africa. South Africa is a key platform for promoting trade from African Continent and investment. South Africa is expected to attract USD 100 billion investment over the next five years. But in order to achieve this will require leveraging trade and investment partnerships to achieve this objective.

South Africa is relatively well represented as a destination country (In Africa Nations) for Intra-BRICS Investment. In 2016 it attracted 6.2percent of Intra-BRICS investment, at Rands - 34.5billion. This mainly came from India and China.

Opportunities

BRICS countries provide platform for developing technology and provide investment opportunities. Investment promotion aims to create and develop hi-tech industries and move South Africa towards a knowledge economy. South Africa’s objective should be to promote investment into South Africa’s special economic zones.

BRICS provides an opportunity for collaboration among BRICS countries on the Industrial Revolution and Digital Revolution which will help to share and exchange views on regulations and policies to shape markets, including learning best practice from other BRICS members to ensure businesses in the respective countries can effectively participate in the Digital Industrial Revolution.

South Africa’s participation in BRICS, gives it an opportunity to build its domestic manufacturing base, enhance value-added exports, promote technology sharing, support small business development and expand trade and investment possibility. This can be achieved through active participation in BRICS.

Conclusion

We have seen that the BRICS nations represent 40% of the entire population of the world and account for $20 Trillion of the GDP. Being a part of this association is an important step in India’s journey to becoming a global superpower. The major achievements of BRICS include expansion of trade, their steady increase in the share of world exports from 9% to 17% from 1996 to 2008 and have almost tripled in the last twenty years. Moreover, the potential of the BRICS nations both in terms of economy and development put them in a position to be global leaders,having more say in matters of global governance.

However, BRICS has been facing problems of late and the slowing of their growth can be attributed to the slowing down of the chinese economy,the inability to sign any agreements with US that has obstructed economic expansion of BRICS nations, as well as the recession that has hit Russia and Brazil had a huge negative impact on the once growing economy and disparity between China and the other countries. China has the largest share of the total exports of BRICS(38%) which has made China a dominant nation in this association and Indo-China ties have witnessed deterioration over the last few years.

India has always assumed an important role since the beginning of BRICS. It gives a lot of importance to promote global economic growth, peace and stability. For India, BRICS is a platform to build relations with other countries. It has also tried to use this platform as a means to resolve the conflicts with China. Cooperation with BRICS helps India in addressing most of its issues including combating terrorism. Once the US started to recover from its financial crisis, BRICS has been on a steady decline. Despite this, India has been doing well owing to its recent policy reforms and the Indian Rupee is performing the best among all the BRICS currencies.

The growth of the Indian economy is at 7.4% while that of the other advanced countries of the world is at 2-3%. India is moving towards a period of sustained growth and needs focus on investments and infrastructure. The flagship initiatives by the government are helping it progress on the path towards growth. While India seems to be at a strong place today with respect to the other BRICS nations, we still have a long way to go to finally be known as a global leader.