India must refurbish its growth story to raise its profile in Brics and the world

No one’s saying, ‘Move over, Bretton Woods, Brics is here’. But Brics nations – Brazil, Russia, India, China and South Africa – certainly grabbed eyeballs at their Durban summit by firming up plans for a new development bank to fund infrastructure and a $100 billion contingency reserve arrangement to provide themselves financial succour in times of trouble.The dressing on the side is a business council with great potential to boost trade and investment.
Clearly, the grouping’s come a long way since its Yekaterinburg outing in 2009. Brics nations account for 21% of world GDP and have combined foreign exchange reserves of around $4.4 trillion. Though still an informal bloc of emerging economies, they symbolise a global power shift not yet adequately reflected in decision-making structures of international institutions like the World Bank and IMF or multilateral forums like G-20. In that sense, Durban signals their commitment to realising a planetary economic order that both reflects 21st century realities and is geared to the needs of developing countries.
For India, moves to institutionalise Brics interaction bear some risks, though. With massive investment and infrastructure requirements, India’s had reason to back a development bank outside the West-dominated global financial edifice. But China’s big bucks could help it acquire a steamrolling presence in such an organisation, and its willingness to chip in financially on behalf of others deepens misgivings. If voting rights are tied to contribution size, India will have to match up – which it’s not equipped to do – or accept its neighbour’s beefed-up clout within the grouping. Moreover, closer economic cooperation in Brics mustn’t end up being conflated with automatic like-mindedness on all geopolitical issues. India will have to tread cautiously there.
Brics economies must also work hard individually to push domestic growth. Over a decade ago, China, India, Russia and Brazil were dubbed future Atlases of the world economy and magnets for global capital. Today, slowdown and investor skittishness are realities. In India’s case, talk about rivalling a manufacturing giant such as China will remain talk unless our economy’s deep structural warts are removed to boost industry and create skilled jobs. For instance, the industrial development zones the commerce minister speaks of require junking of restrictive labour laws. Nor can difficult access to land, clearance-related regulatory tangles, uncertainty about tax regimes or stringent caveats to FDI policies please investors. Put simply, India needs big-bang reforms to lift investor mood and revert to high-trajectory growth. Global power ambitions must be backed by economic muscle.