Narendra Modi govt’s pitch: India for BRICS bank HQ, Indian as its president

The development bank is likely to be officially launched during the July 15-17 BRICS Summit at Fortaleza in Brazil.

New Delhi | Published:June 5, 2014 10:24 am

The Centre is pitching for the headquarters of the proposed BRICS bank to be based in India as well as for its first president to be an Indian citizen.

The move – if accepted by the five-country grouping of Brazil, Russia, India, China and South Africa – could be seen as yet another major foreign policy accomplishment by Prime Minister Narendra Modi after the praise he earned for inviting the leaders of SAARC member countries for his swearing-in ceremony.

The development bank is likely to be officially launched during the July 15-17 BRICS Summit at Fortaleza in Brazil. The visit to Brazil is likely to be Modi’s first foreign trip as the Prime Minister. The countries are yet to come to a consensus on three main aspects: funding, headquarters and the first president, finance ministry sources told FE.

“We are keen on the headquarters and the first president, but nothing has been finalised now. Negotiations are going on,” an official said. The sources said barring Brazil, all the other member countries want the first presidentship (for a five-year term) and headquarters of the bank to be theirs. As agreed earlier, the negotiations have to follow a consensus based approach to all aspects of the bank, including management, location, the capital, its operations and related processes.

Regarding the capitalisation of the bank, the sources said India and Brazil are for each member country contributing equally to the corpus, though some other countries want to have a different structure and higher capital.

The negotiations are also on the initial corpus, either $50 billion or $100 billion, and whether countries that are not members of the grouping can pitch in at a later stage.

China is learnt to be pitching for a higher corpus. Since the funding of the bank will be from the taxpayers’ money, the national budget of each member country will have to make allocation for the bank’s capital. After the launch, the bank will take a year or two to start operations.

At the fifth BRICS Summit in March 2013 in Durban (South Africa), the leaders of the member countries agreed that setting up the development bank was feasible and viable. The leaders, in a statement, said, “developing countries face challenges of infrastructure development due to insufficient long-term financing and foreign direct investment, especially investment in capital stock.”

The leaders said, therefore, new bank should have “substantial” initial capital so that it can effectively finance infrastructure and sustainable development projects in BRICS as well as other emerging and developing countries. The new bank will supplement the existing efforts of multilateral and regional financial institutions for global growth and development, they said.

They had noted that emerging economies are keen to develop their versions of the World Bank and the International Monetary Fund against the backdrop of mounting criticism of the BRICS and increasing capital outflow from developing markets. In earlier summits, the BRICS nations had also called for reforms in the IMF and World Bank including in selecting the heads and also in the ways in which development issues are dealt with.

Arun S | The Financial Express|

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  1. S
    Surendra Shrivastatva
    Jun 5, 2014 at 9:30 am
    An ambitious man, PM Narendra Modi appears to realize that if he wants to make a success of his government, he will have to lead the nation from the center and not from the extreme right where he had built his base in the BJP.
    Reply
  2. S
    Surendra Shrivastatva
    Jun 5, 2014 at 9:30 am
    Does Mr Narendra Modi 2.0, a very different figure in 2014 Indian government from the ogre some of us had feared and demonised for years? It is still too early to tell, but the initial signs are encouraging.
    Reply
  3. S
    Surendra Shrivastatva
    Jun 5, 2014 at 9:30 am
    His overwhelming majority, won on the back of a highly personalized campaign which led many to vote for Narendra Modi rather than for the BJP, has also liberated him from the party's and his own past positions.
    Reply
  4. S
    Surendra Shrivastatva
    Jun 5, 2014 at 9:30 am
    Just as Narendra Modi remade himself from a hate-figure into an avatar of modernity and progress, he is seeking to remake the BJP from a vehicle of Hindu chauvinism to a natural party of governance. This will mean a change in both language and tone, as he has demonstrated from day one.
    Reply
  5. S
    Surendra Shrivastatva
    Jun 5, 2014 at 9:29 am
    Mr Narendra Modi cordial welcome to, and subsequent bilateral meetings with, the leaders of these and other neighbouring countries reured them that the Modi government would not feel obliged to live up to the belligerence of the Modi campaign.
    Reply
  6. S
    Surendra Shrivastatva
    Jun 5, 2014 at 9:29 am
    Mr Narendra Modi, the new Indian PM, converted routine oath ceremony into a g, ont 4,000-guest ceremony on the forecourt of Rashtrapati Bhavan, the presidential palace, and invited his foreign guests to attend the televised coronation.
    Reply
  7. S
    Surendra Shrivastatva
    Jun 5, 2014 at 9:30 am
    Prime Minister Narendra Modi would hardly be the first opposition leader to temper his views and conduct once in office, but there seems to be something more fundamental involved here in 2014.
    Reply
  8. S
    Surendra Shrivastatva
    Jun 5, 2014 at 9:29 am
    The gesture instantly disarmed many across the borders who had been alarmed by his combative rhetoric during the campaign, in which he had promised robust action on the borders, ailed stani sponsorship of terrorism and warned some 30 million Bangladeshi illegal immigrants in India that they should be prepared to pack their backs on the day of his victory.
    Reply
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