Disclaimer :-Please note down the important points and institutions such as BRICS Rating Agency,BRICS Infrastructure Project Development Facility,BRICS Standardisation Research Platform etc that can be helpful to accentuate your answer in exam.
Last year at Ufa, Russia, while addressing the BRICS Summit, Prime Minister Narendra Modi had outlined a 10-point agenda for the future of the bloc. These initiatives were aimed at fortifying the evolving relationship amongst the member states and offering new institutional platforms for scientists, researchers, sportspersons, artists, technocrats and businesses to come together and work collaboratively. As we look back, we are gladdened by the results.
First, the Business Council is discussing the subject of BRICS Rating Agency. The members feel the BRICS business community should have a home-grown institution that matches in quality and credit appraisal with the best in the world while aligning its rating methodology to account for the emerging market business realities and hence providing a more thorough and complete credit rating analysis of companies.
This will facilitate cross–border investors to take a more informed decision and is most important for infrastructure financing. Institutions such as NDB, ADB, World Bank and AIIB should also be engaged for a discussion on this subject.
Building blocks
The second area is from the perspective of infra-financing and relates to setting up of a BRICS Infrastructure Project Development Facility. Such an organisation can provide assistance on the entire gamut of project development expertise including project identification, pre-feasibility, post-feasibility, preparation of DPR and environment and social impact assessment. Through such a platform, projects can be converted from conceptualisation stage to the bankability stage. In countries where such an institution exists, NDB can help enhance such structures and where there are none, NDB can help set up an independent unit.
The third area relates to a BRICS-wide analytical and research institution that can support the market intelligence requirements of small, medium and large companies from our respective countries. Given our stage of development, there is a need for a solid research base with extensive data on emerging economies that can serve as an important reference point for businesses from our countries.
The fourth: while more information and insights will create more business opportunities, we can give further impetus to this by promoting trade in local currencies. Our governments and development banks must discuss and advice how we can expand the scope and scale of pricing in local currency for intra-BRICS deals and transactions and what is the necessary infrastructure that needs to be developed to support such payments.
Boosting trade, farming
Fifth, BRICS Business Council is also discussing a BRICS Standardisation Research Platform, which could serve as a base to exchange information and best practices on institutional and policy mechanisms on various regulations and standards across BRICS countries. Such a platform will help in better harmonisation of trade policies across BRICS countries and also enable removal of trade barriers.
Sixth, there is a need to enhance BRICS co-operation in agri-business, as agricultural development is a key priority of our economies. There is a huge scope of co-operation by way of sharing best practices related to agriculture production, productivity, environment protection and food security and contributing towards research activities in these areas. BRICS nations can work together to manage and disseminate knowledge on sustainable approaches to agricultural mechanisation.
This could include live demonstration of innovative farm machinery/ equipments with institutional mechanism with the agriculture universities.
Seventh, BRICS countries can enhance co-operation in energy and green economy. There is a need to develop a common understanding of a green economy and drive towards a common view in promoting tis area. Also, the countries should accelerate the development as well as transfer of energy efficient and eco-friendly technologies and equipment.
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Steve Ovett, the famous British middle-distance athlete, won the 800-metres gold medal at the Moscow Olympics of 1980. Just a few days later, he was about to win a 5,000-metres race at London’s Crystal Palace. Known for his burst of acceleration on the home stretch, he had supreme confidence in his ability to out-sprint rivals. With the final 100 metres remaining,
[wptelegram-join-channel link=”https://t.me/s/upsctree” text=”Join @upsctree on Telegram”]Ovett waved to the crowd and raised a hand in triumph. But he had celebrated a bit too early. At the finishing line, Ireland’s John Treacy edged past Ovett. For those few moments, Ovett had lost his sense of reality and ignored the possibility of a negative event.
This analogy works well for the India story and our policy failures , including during the ongoing covid pandemic. While we have never been as well prepared or had significant successes in terms of growth stability as Ovett did in his illustrious running career, we tend to celebrate too early. Indeed, we have done so many times before.
It is as if we’re convinced that India is destined for greater heights, come what may, and so we never run through the finish line. Do we and our policymakers suffer from a collective optimism bias, which, as the Nobel Prize winner Daniel Kahneman once wrote, “may well be the most significant of the cognitive biases”? The optimism bias arises from mistaken beliefs which form expectations that are better than the reality. It makes us underestimate chances of a negative outcome and ignore warnings repeatedly.
The Indian economy had a dream run for five years from 2003-04 to 2007-08, with an average annual growth rate of around 9%. Many believed that India was on its way to clocking consistent double-digit growth and comparisons with China were rife. It was conveniently overlooked that this output expansion had come mainly came from a few sectors: automobiles, telecom and business services.
Indians were made to believe that we could sprint without high-quality education, healthcare, infrastructure or banking sectors, which form the backbone of any stable economy. The plan was to build them as we went along, but then in the euphoria of short-term success, it got lost.
India’s exports of goods grew from $20 billion in 1990-91 to over $310 billion in 2019-20. Looking at these absolute figures it would seem as if India has arrived on the world stage. However, India’s share of global trade has moved up only marginally. Even now, the country accounts for less than 2% of the world’s goods exports.
More importantly, hidden behind this performance was the role played by one sector that should have never made it to India’s list of exports—refined petroleum. The share of refined petroleum exports in India’s goods exports increased from 1.4% in 1996-97 to over 18% in 2011-12.
An import-intensive sector with low labour intensity, exports of refined petroleum zoomed because of the then policy regime of a retail price ceiling on petroleum products in the domestic market. While we have done well in the export of services, our share is still less than 4% of world exports.
India seemed to emerge from the 2008 global financial crisis relatively unscathed. But, a temporary demand push had played a role in the revival—the incomes of many households, both rural and urban, had shot up. Fiscal stimulus to the rural economy and implementation of the Sixth Pay Commission scales had led to the salaries of around 20% of organized-sector employees jumping up. We celebrated, but once again, neither did we resolve the crisis brewing elsewhere in India’s banking sector, nor did we improve our capacity for healthcare or quality education.
Employment saw little economy-wide growth in our boom years. Manufacturing jobs, if anything, shrank. But we continued to celebrate. Youth flocked to low-productivity service-sector jobs, such as those in hotels and restaurants, security and other services. The dependence on such jobs on one hand and high-skilled services on the other was bound to make Indian society more unequal.
And then, there is agriculture, an elephant in the room. If and when farm-sector reforms get implemented, celebrations would once again be premature. The vast majority of India’s farmers have small plots of land, and though these farms are at least as productive as larger ones, net absolute incomes from small plots can only be meagre.
A further rise in farm productivity and consequent increase in supply, if not matched by a demand rise, especially with access to export markets, would result in downward pressure on market prices for farm produce and a further decline in the net incomes of small farmers.
We should learn from what John Treacy did right. He didn’t give up, and pushed for the finish line like it was his only chance at winning. Treacy had years of long-distance practice. The same goes for our economy. A long grind is required to build up its base before we can win and celebrate. And Ovett did not blame anyone for his loss. We play the blame game. Everyone else, right from China and the US to ‘greedy corporates’, seems to be responsible for our failures.
We have lowered absolute poverty levels and had technology-based successes like Aadhaar and digital access to public services. But there are no short cuts to good quality and adequate healthcare and education services. We must remain optimistic but stay firmly away from the optimism bias.
In the end, it is not about how we start, but how we finish. The disastrous second wave of covid and our inability to manage it is a ghastly reminder of this fact.