BRICS group of nations inked a pact to set up a new $100 billion development bank and emergency reserve fund. The agreement to create the bank was signed during the 6th BRICS Summit being held in Fortaleza, Brazil. BRICS group includes Brazil, Russia, India, China and South Africa.
To begin with, the bank will start operating with $50 billion in initial capital with the five BRICS contributing $10 billion each.
According to the pact, the capital of the bank will be divided equally among the five participating nations and the headquarters of the same will be in Shanghai, China. The chairmanship of the bank will be rotational and its first President will come from India for the first 6 years. The Bank will also have a regional office in Johannesburg, South Africa.
The governing body of the bank will be formed by BRICS Finance ministers or central banks’ governors to manage the CRA. The BRICS CRA will not be open to outsiders. Initially, the bank will focus on infrastructure projects in the BRICS countries.
Capital contribution from BRICS nations
- China: $41 billion
- Brazil, Russia and India: $18 billion each
- South Africa: $5 billion
Future benefits of BRICS Development Bank:
The creation of the $100 billion development bank will help the developing countries to:
- Effectively deal with short term liquidity pressures
- Encourage further BRICS cooperation
- Complement existing international arrangements
- Consolidate the global financial safety net
India’s Prime Minister Narendra Modi met Chinese President Xi Jinping in Brazil during the BRICS Summit. Mr. Modi pressed for a solution to the boundary issue, saying if the two sides could resolve the vexed issue in an amicable manner; it would set an example for the world on peaceful dispute resolution.
In a major development, China invited India to attend a summit of Asia-Pacific Economic Cooperation (APEC) in November 2014. APEC is a forum for 21 nations that envisages promoting free trade and economic cooperation throughout the Asia-Pacific region.
The Union government is establishing a National Centre for Research & Development in Bulk Drug (NCRDBD) at National Institute of Pharmaceutical Education and Research (NIPER), Hyderabad, to fill the significant void in R&D in bulk drugs. The government has approved the project which will cost over Rs 52 crore and require an operating cost of over Rs 37 crore for 5 years.
The role of bulk drug sector is critical to overall efficiency and cost competitiveness of the pharmaceutical sector. There are around 2,500 bulk drugs manufacturing units in India. The estimated turnover of the bulk drug industry in 2012-13 was around $ 12.5 billion. The industry has registered a Cumulative Annual Growth Rate (CAGR) of 17% in the last 3 years and has a share of about 10% of the global bulk drugs market of about $ 110 billion. However, the import of bulk drugs has recorded a CAGR of 18% during last 3 years pointing an increasing level of dependence on foreign supply for this vital input of pharmaceutical sector.
The condition looks more complicated taking into account the fact that more than 60% share in imports of intermediate for Active Pharmaceutical Ingredients (APIs) is imported from China.
The BRICS summit – a multilateral forum comprising of the upcoming economies of Brazil, Russia, India, China and South Africa – will be the first occasion that the Prime Minister will be interacting with world leaders after assuming office in May 2014.
The 2-day summit will be held in the cities of Fortaleza and Brasilia in Brazil.
India’s key agendas for this summit:
- BRICS BANK: The key agenda will be establishing a new development bank on the lines of the World Bank and Asian Development Bank. The idea was first talked about at the BRICS meet in New Delhi in 2012.
- CONTINGENT FUNDS: With a corpus of $100 billion the proposed bank will finance projects for infrastructure projects in emerging, developing nations and will compete with the west dominated IMF and World Bank.
- Who will host BRICS BANK: With both India and China vying to host the headquarters for the proposed bank, the contentious issue will be discussed.
- INDIA-CHINA on security: India is likely to take up the matter of security of India’s Northern and Eastern borders that it shares with China. PM Modi, who will have bilateral meetings with all BRICS leaders, will meet Chinese President, Xi Jinping.