BRICS Summit: PM Modi to push for new development bank in New Delhi

The Summit theme will help shape the post-2015 Development Agenda being discussed in the UN, says Modi.

Written by P Vaidyanathan Iyer , Surabhi | Fortaleza/new Delhi | Updated: July 14, 2014 10:53:59 am


The BRICS Summit is also Modi’s first multilateral engagement since he catapulted the BJP at the Centre. (Source: PTI photo) The BRICS Summit is also Modi’s first multilateral engagement since he catapulted the BJP at the Centre. (Source: PTI photo)

Prime Minister Narendra Modi will arrive at Fortaleza Monday evening for the July 15-16 VI BRICS Summit and hope to take the headquarters of the New Development Bank, an alternate to World Bank and promoted by BRICS (Brazil, Russia, India, China and South Africa) countries to New Delhi. To be initially capitalised at $50 billion ($10 billion being contributed by each of the five countries), the bank will have an authorised capital of $100 billion, and cater to the infrastructure and development funding needs of the five countries.

The setting up of the BRICS Bank and that of a $100 billion contingency reserve arrangement to meet short-term liquidity pressures of these developing countries will top the agenda of the VI BRICS Summit being held in Fortaleza and Brasilia over the next two days. India, however, faces a strong challenge from China, which too is keen to base the new development bank’s headquarters in Shanghai.

“We are very keen to have the bank headquartered in New Delhi. This will certainly focus in the discussions,” a senior government official, who is part of the Prime Minister delegation told The Indian Express. Modi is accompanied by his Sherpa, Foreign Secretary Sujatha Singh, Minister of State for Commerce and Industry (Independent charge), Finance and Corporate Affairs Nirmala Sitharaman, National Security Adviser AK Doval, and Finance Secretary Arvind Mayaram.

The BRICS Summit is also Modi’s first multilateral engagement since he catapulted the Bhartiya Janata Party at the Centre with a majority in the Lok Sabha elections in May. He is scheduled to have separate meetings with President Xi Jinping of China and President Vladimir Putin of Russia in Fortaleza on July 15. The second day of the Summit will be held in Brazil capital Brasilia where Modi will interact with heads of state of other South American countries including Argentina, Venezuela, Chile, Colombia, Peru, Uruguay, Paraguay, Ecuador, Guyana, Bolivia and Suriname.

Ahead of his departure, Modi said, he looked forward to discussions to further advance intra-BRICS economic cooperation and its collective efforts to advance global economic stability and prosperity. “I look forward to the successful conclusion of major BRICS initiatives, like the New Development Bank and the Contingent Reserve Arrangement, which have seen significant progress since their launch in New Delhi in 2012. These initiatives will support growth and stability in BRICS and also benefit other developing countries,” he said in a statement.

According to Modi, the Summit theme, “Inclusive Growth; Sustainable Development”, will help shape the post-2015 Development Agenda being discussed in the United Nations. “The Summit is as significant as the Bretton Woods conference for emerging economies now wish to stand up on their own feet,” said a government official. With China willing to contribute more than its $10 billion share to the initial capital, the contribution by member countries could also be discussed. “The issue of the bank’s headquarters is also yet to be finalised,” the official added.

The five emerging economies – which together account for $24 trillion of the world GDP and 40 per cent of the population – are also expected to discuss the need for reforms in the United Nations Security Council. “We hope for an endorsement on not only UNSC reforms but also of the Bretton Woods institutions – the IMF and the World Bank,” said an official.

The Contingency Reserve Arrangement, another major BRICS initiative on the table, will have an initial size of $100 billion. “It will help BRICS countries forestall short-term liquidity pressures and further strengthen financial stability. It will also contribute to strengthening the global financial safety net and complement existing international arrangements as an additional line of defence,” an official said.

Prime Minister Modi stopped over at Berlin Sunday night but could not meet Chancellor Angela Merkel as originally conceived since she was in Brazil to watch her country play Argentina and win the FIFA World Cup Finals. Prime Minister Narendra Modi earlier wished Argentina and Brazil the best for the finals. “It is amazing how the tournament brought fans across the world together,” he posted on Twitter.

On the sidelines of the summit, Modi will also meet South African President Jacob Zuma besides host President Dilma Roussef of Brazil.

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