BRICS SUMMIT MAY DECIDE ON A CREDIT RATING AGENCY
By Nitya Chakraborty
India, as the host of the eighth BRICS summit at Goa on October 15 and 16 this year, is proposing a draft to set up a BRICS credit rating agency with the aim of ending the domination of the western dominated international credit rating agencies like Standard & Poor’s and Moody’ Investors Services. The proposal has already been discussed by the finance ministers of the five member countries Brazil, Russia, India, China and South Africa and there is a possibility of a memorandum of understanding on this credit rating agency being signed at the Goa Summit.
This will be a credit rating agency mainly for the emerging economies since these countries have suffered due to the double standards being followed by the western dominated credit rating agencies. The emerging economies have been complaining these western agencies for arbitrarily downgrading the rating of the developing countries resulting in rise in the cost of borrowings. Indian officials say that the objective is to set up an impartial rating agency so that the emerging economies get correct evaluation of their economic status. All the BRICS members have been subjected to the partial evaluation of their economic status by the US dominated rating agencies so far.
Another proposal to be taken up by India at the Goa summit is establishing high standard arbitration mechanisms to settle intra-BRICS disputes so that the member countries and their companies have not to go to the forums dominated by the developed countries. The idea is that once this mechanism is set up, such arbitration practices under BRICS could be made part of the bilateral investment treaties with other countries.
For the next BRICS summit, India is also readying a list of priority projects to invite investments from BRICS countries. The prospective projects for investments, mainly in the field of infrastructure, are expected to give a thrust to Indian Prime Minister Narendra Modi’s “Make in India” programme. The initiative, is expected to raise the level of trade and economic cooperation among BRICS (Brazil, Russia, India, China and South Africa).
According to officials, India’s list of projects is likely to be similar to the one Russia prepared last year during its chairmanship of BRICS, which included around 60 projects. In the run up to the Goa summit, India would hold a number of meetings at different levels of various sectors, to prepare for the 8th BRICS summit. “We will adopt a five- pronged approach during our chairmanship. It will comprise Institution Building, Implementation, Integration, Innovation, and Continuity with Consolidation,” Indian officials say.
India is chairing the rotating summit for the second time after it hosted the 4th BRICS summit in March 2012, in New Delhi. The previous BRICS summit was held in July 2015, in Ufa, under Russian President Vladimir Putin’s chairmanship. The Ufa declaration adopted the strategy for economic partnership and, as a follow up, India is working on a programme to develop trade, investment and economic cooperation in a number of fields, including manufacturing, minerals processing, energy and agriculture.
The Indian Prime Minister had, at Ufa, proposed a 10-point programme for consensus between member-countries, to hasten the process of closer cooperation between BRICS nations, in the present global economic slowdown. The programme takes into account the immediate issues confronting the BRICS member-countries. The main objective of the theme of India’s chairmanship, ‘Building Responsive, Inclusive and Collective Solutions’ (BRICS), is to ensure BRICS work closely to find solutions to issues confronting the group’s economies.
India wants to build on initiatives started by Russia and chart new pathways for growth. “Developing continuity is crucial for BRICS,” Indian sources said.
At the Ufa summit, both Putin and Modi expressed their commitment to the progressive development of cooperation within BRICS and strengthening its role in the global economy. During 2016, India plans to launch greater cooperation among BRICS in services and in ways to deal with non-tariff measures restricting goods trade between BRICS member-countries. The BRICS Contact Group on Economic and Trade Issues (CGETI) met in April to discuss trade and economic issues, including India’s list of priority projects, and a proposal to establish a mechanism to expeditiously resolve non-tariff barriers. In services, the meeting exchanged opinions to intensify cooperation in different mutually beneficial fields including education, travel, tourism and health. The CGETI has prepared the agenda for BRICS Trade and Economy Ministers. The final action plan document will be finalized at the last meeting, to be held with the 8th summit.
As BRICS chair in 2016, India is pursuing a pro-active economic policy, aimed at enhancing mutual cooperation among member-countries. It plans to push for an agreement on business visa liberalization and issuing business travel cards during the summit. Visa liberalization is expected to allow businessmen multiple-entry business visa for a longer period of time. India is also working on a programme for cooperation in the field of micro, small, and medium enterprises (MSME).
Modi, who is taking a special interest in making the summit a success, with an “Indian imprint,” has instructed concerned officials to work on his 10-point programme, to boost cooperation between the BRICS nations. People-to-people interactions, business, youth, and sports are the priority areas. In the run up to the summit, India is also planning to hold a Trade Fair and an Investor Forum to promote programmes such as “Make In India,” “Smart City Mission,” “Digital India,” and “Start-up India.” (IPA Service)