Sunday, March 31, 2013

The geographically and culturally diverse BRICS nations have finally decided to unite. These nations would establish a new development bank to finance infrastructure. This proposal was ratified at a summit yesterday. A US$ 100 bn Contingency Reserve will also be created. This will help tackle any financial crisis in emerging economies. A Business Council was also arranged in order to encourage investment, expand business cooperation and trade among member countries.

Developing nations, India being a prime example, are facing challenges in terms of infra development. There are insufficient avenues for long term financing and foreign direct investment. Creating long term capital stock is difficult. Such patient investment is hard to come by. BRICS nations require over US$ 4.5 trillion over the next 5 years for infra needs. If these nations work together, they can surely become a huge force to reckon with in the years to come. Well, we really hope that this arrangement goes as per plan. And not the way of the European Union.