At BRICS, India Must Bank on the NDB

Key Highlights & Summary

 • Economic-Governance Mismatch: Expanded BRICS accounts for nearly 40% of global GDP and 55% of global population, yet its voting share at the IMF remains disproportionately low.

 • Divergent Geopolitical Identities: The grouping lacks a unified geopolitical stance, split between an anti-West axis (Russia, China, Iran) and a non-West orientation (India, Brazil, South Africa).

 • Performance Gap of the NDB: Established in 2015, the New Development Bank (NDB) has approved $43 billion across 139 projects with $20 billion disbursed, lagging behind the Asian Infrastructure Investment Bank (AIIB) which committed $69 billion across 350 projects. 

• Capital and Sanctions Bottleneck: Western sanctions on Russia limit capital expansion and strain credit ratings. Equality in founder voting shares (minimum 55% collective threshold) creates governance bottlenecks.

 • Promoting Rupee-Denominated Bonds: India seeks to push the long-delayed ₹25,000 crore five-year rupee bond programme to expand local-currency financing and counter Renminbi dominance in NDB issuances.  

Essential Definitions 

• New Development Bank (NDB): A multilateral development bank established by BRICS nations in 2015 to mobilize resources for infrastructure and sustainable development projects in emerging economies. 

• Local-Currency Lending: The practice of issuing loans and bonds in member nations\' domestic currencies rather than hard currencies like the US dollar, mitigating foreign exchange risks. 

• De-dollarisation: The strategic policy aimed at reducing reliance on the US dollar in international trade, reserve holdings, and cross-border financial settlements. 

Legal and Constitutional Framework 

• Agreement on the New Development Bank (2014): The foundational treaty governing the NDB, mandating equal voting power among original founding members and regulating capital allocation. 

• Article 51 of the Indian Constitution (DPSP): Mandates that the State shall foster respect for international law and treaty obligations, encouraging peaceful international trade and financial cooperation. 

• Foreign Exchange Management Act (FEMA), 1999: Statutory framework regulating external commercial borrowings, foreign investments, and cross-border rupee-denominated bond issuances. 

Conclusion Strengthening the NDB provides India with a pragmatic avenue to maximize BRICS\' economic potential without aiding China\'s geopolitical hegemony. Operationalizing local-currency mechanisms like rupee bonds will enhance financial stability for developing nations and fortify multilateral development institutions. 

UPSC Relevance

 • GS Paper II: International Relations (BRICS, global South diplomacy, reform of multilateral financial bodies, and international treaty frameworks).

 • GS Paper III: Indian Economy & Infrastructure (Multilateral Development Banks, currency risk management, local currency trade settlement, and infrastructure financing).