BRICS 15 Years On Talking Business

has collapsed after a devil fitting fire. Firefighters tackled the blaze

at the 300-year-old welding. Now on BBC News, it's time for Talking

Business. In October the leaders of Brazil,

Russia, India, China and South Africa came together

here in India. The BRICS grouping was formed

to challenge the old world order and reshape the global economy

but what has the alliance achieved That's what we'll be discussing

on this week's Talking Business. I'm Yogita Limaye in

the Indus Art Gallery in Delhi. India is the fastest-growing major

economy in the world with a growth Government spending,

low oil prices and economic reforms have all contributed but problems

like corruption and generating employment for the large population

remain big challenges. Still, it's quite a turnaround

from just a few years ago when many had pegged India to be

the first BRICS to fall, but other members of this club

of emerging economies Brazil's economy crashed

spectacularly in the past two years with low commodity prices,

also a very serious Analysts believe when this recession

is over a year from now, Brazil's economy will have

contracted almost 10%. The bad news is that recovery

is set to be very slow because unemployment and inflation

are still running very high. Slow growth, rising inflation,

a volatile currency and investor Mining and manufacturing showing

signs of trouble and social All these have raised

concerns of a credit ratings The Russian economy kept contracting

this year but at a slower rate. The most optimistic predictions call

for a 0.5% growth rate Russian budget may have become less

dependent on selling oil and gas Two thirds of Russian foreign trade

are energy exports and with oil prices relatively low,

balancing state books may be difficult but on top

of that there are western sanctions. Experts debate to what extent

they harm the economy but they don't The Chinese economy is growing

but at a slower rate. It's in transition from

an export-led model to one driven Out with clothing manufacturing,

in with service industries. It's mostly money owed by one arm

of the Chinese government to another, leading some to suggest

that fears of a Chinese debt So with so many different

problems and a grouping that is in quite a nascent stage,

what can be achieved? We will discuss that

with our panel of experts here. Arvind Vohra, the chief editor

of Gionee India, Narendra Murkumbi, the co-founder and managing director

of Shri Renuka Sugars, Alka Acharya, professor

at Jawaharlal University in Delhi and Brahma Chellaney,

professor at the Centre Mr Murkumbi, can I come

to you first? You're an Indian company

with significant assets in Brazil. Do you feel like the BRICS grouping

has helped your business? So far not really because I think

it's a label invented by an Englishman for an American

investment bank and was not The first real signs of the grouping

being useful and effective for business is in the creation

of the BRICS Bank and if that is going to assist projects

across the BRICS countries, especially those investments

from one BRICS country to another, that would probably

be very interesting. You're a Chinese manufacturer that

wants to make in India and sees it Has the BRICS grouping

being beneficial to your company? BRICS is a word, it stays

at the back of your mind. You Feel good being a part of that

group because it seems elitist As far as our business is concerned,

China is a big market and for us as a group we look at India

as a second home. Being at partner to Gionee

and being brought up in this country, my idea is to get a bite

of the mobile manufacturing that is currently in China and bring

it to India. What has this grouping

really achieved? We've seen the eighth

BRICS summit this year. We start by saying what was

it meant to achieve? If you go back to whence it

all began, it was essentially a coinage by a gentleman

who was looking at new investment destinations and that was not

why BRICS came about, so we need to make a distinction

between the acronym that came from Jim O'Neill and the grouping

which came about because some countries, the BRIC and then BRICS

countries, got together with a very different purpose and that purpose

was to see how to leverage themselves as growing economies

better in the current global economic and commercial

architecture which gives On paper BRICS is an

attractive concept. It brings together five countries

that represent more than a quarter of the Earth's land mass,

over 41% of the world's population, nearly a quarter of the global GDP

and nearly half of the world's The BRICS is the first important

non-western initiative It symbolises the

partnerships of the world. You can call BRICS the R5

after the names of the currencies of its member states -

the rand, the real, the ruble, In reality, though, BRICS

as a grouping still searching for a common identity

and a common mission. It brings together very disparate

countries who have little in common, they don't even

have common interests. They have very different

political systems, very different economies and very

different national interests. For example, what is common

between the world's largest autocracy, China, and the world's

largest democracy, India? Their relationship is adversarial

so creating a common mission in these circumstances

requires effort. Right now BRICS is

more of a talk shop. It brings together the leaders

of its countries for an annual summit meeting but for BRICS to be

an important institution globally, it has to come up with common goals

and a common action plan. Thus far it's still struggling

to create an institutional Do you think it's irrelevant

at this point? I think what this grouping helped us

as, within our global corporate, India has become more significant

than it was before the grouping was there and you definitely don't

ignore it, and at the same time you somehow feel if you're not

there you're missing a big chunk of business and as you pointed out,

the amount of potential this area has, logically this will happen,

so in my opinion the grouping should be playing a catalyst role

but as you said where is the role? For businesses like yours,

for it to mean something on the ground and not just

in theory, what is needed? What we're looking forward

to the second phase of BRICS is some kind of preferential access,

I mean like the professor just mentioned, 25% of world GDP,

41% of population, so these five countries are to come closer

together economically, that's the easy thing,

politically I think we are very disparate and should not even go

there but economically we can be much closer and together as five

economies who were not part We could be a bigger force

in the global economy and I see that as the next step for this group,

and the creation of the bank is the first real sign,

it is real money, $3 billion that has been committed and part has been

invested and that would kick off some kind of definite economic

grouping which could The only institution that

brics has created so far is the BRICS development bank,

but it's largely been hijacked by Because the interests of the other

four member states of BRICS are largely symbolic,

they underscore the rising economic clout, the emergence

as global powers. China doesn't need that

recognition as it has already It needs to push its financial

interests and it has essentially turned the development bank

into a tool for advancing Its interests primarily are centred

on making its currency, the renminbi, an international

currency which one day could rival It is now lending money to other

BRICS countries in renminbi, so lending and trading

in renminbi gives China clout, it gives it certain standing,

it allows it to put its economy over us but apart from that one

institution that has been created, BRICS has yet to create

an institutional structure seven years after the first BRICS

summit was held. In the next part of the programme

we will focus more on India and China, the two countries that

are still seeing fast-paced growth and we'll be asking whether perhaps

they need to look at new alliances, but before we continue

the discussion, here are some thoughts from our comedy consultant

Colm O Regan on this When I heard that this

week's talking point would be about the BRICS,

I knew that even though the programme is a business

programme and will be talking about the economies of Brazil,

Russia, India, China and South Africa, that I would do

the programme while standing I know you're not the kind of people

who are interested in buying a brick or if you do you buy

them by the million. You are more interested in the brick

countries and the person who coined the phrase,

Jim O'Neill. The whole rationale

for it was to symbolise the growing importance of big emerging economies

in the world economic system and highlighting

how unrepresentative I'm tempted as ever to try and chime

in with Jim's analysis with some construction work brick-based puns

of my own, something about cementing But I know instead it's Jim's views

you want to hear. Compared with 15 years ago,

the BRICS countries are all at least as big in terms of share of global

GDP that I envisaged and in some cases, especially China,

way bigger than Did the BRICS turned out

as he expected? Anybody that thought these countries

would always grow at the same rate either has no experience of thinking

about these things or was just Country's growth rates are driven

by their working age population But my question for Jim

is if he was thinking of constructive terminology to coin

a phrase, why did he pick BRICS? Why didn't he pick TILES,

Middle Eastern countries, Turkey and Iran, Lebanon

or Egypt, or TROUGHS. I can't think of

anything for TROUGHS. The core concept of BRICS came

around in my head from when 9/11 happened, which was about three

weeks before I first wrote about the BRICS and that told me

when that horrible event took place, strangely I thought there

is something beyond the horror of the terrorist attack,

there is something badly wrong with the world and for the world

to sustain globalisation, it has to stop being essentially

the same as Americanisation, which is what increasingly

it was becoming. But is Jim worried about the fact

that the growth rates of some Even though China has its own

problems, China today is way ahead of where I thought it would be,

including this decade, so even though China has slowed,

it has not slowed by as much India today is growing

at a faster rate in China. If you look at Brazil in the past

few months there are some signs, and the markets smell this,

that Brazil might be a better place for having gone

through this turmoil. Russia, enormous problems

and they still need to get to grips with the country that is dominated

by oil and gas and too many lazy decisions based on the assumption

oil prices would stay high forever. So there you have it,

macro economics explained with the help of a humble

rectangular lump of clay. Colm there and you can see more

of his films on our website. We were talking about how India

and China are the two economies in this grouping that

are still fairly fast-paced but they're actually competing

with each other much of the time, so do you think they can ever come

together with a common If you see the amount of trade

between China and India, especially in electronics,

it's phenomenally large... This brings me to the

core of the concern. That is when I subscribe to both

of what you said, can this forum lead to a situation wherein that

lopsidedness can change? Can we cooperate with one part

of the world which might need services from us while we may not

realise we have fairly big institutions now out

of India operating in China. We are not looking at the size

of the opportunity. There is a lot China

can bring to the table Manufacturing, the way it has moved

from China to Vietnam, Can favourable relationships plug

those gaps and that is where A common concern in four

of the five BRICS member states China manipulates its currency,

it has hidden export subsidies and these two actions artificially

lower the price of Chinese exports and this strategy of China

is blighting manufacturing in the BRICS member states,

especially in India and Brazil. Chinese dumping is really inimical

to India's economic interests. Do you think there is a need

for India to consider other alliances rather

than putting energy into BRICS? India does not need to quit

the BRICS but it has to bear in mind that BRICS has limited utility,

that China, even as it seeks to promote its economic interests

in the BRICS grouping, has its protectionist

barriers to Indian and other BRICS members' exports,

for example India-China trade, India's trade deficit with China has

doubled in just the last two and a half years on Prime

Minister Modi's watch. The difficulty India is facing

in getting access to the Chinese market for its products,

so India has to be realistic. I think these annual summit meetings

of BRICS are more useful not in terms of advancing the BRICS

agenda because there is no They are useful in having bilateral

meetings on the sidelines as between India and China

on the various disputes and concerns that bedevil the China-India

relationship, so the summit meetings have some utility but more in terms

of bilateral interactions. If we look at it in terms

of a process of transition that is under way, I think these

countries are trying to engage with each other first and resolve

some of the more important issues before, I think this informality

itself gives it a dynamism which can There is an enormous scope in doing

trade directly in each other's currencies, in fact

that is what China and Russia have signed this huge gas deal,

India and Russia used to do business in rupee-ruble trade and these

are ways in which they are trying to bypass the restrictions

that come in. I would completely go along

with what has just been said that India and China are the linchpin

of this in part emerging age and dynamic but that

investment has to diversify, we need to think in terms

of joint ventures. That is not moving fast enough

and we don't have anything If you look at China,

American trade they were as bad in terms of the deficit

as we are today so we need to see The fact of the matter is China

can't do without the Indian market, and we can't do

without the China market. If India has to get

its back in place. How do we get this together

is the question. Did you think it's more important

to look at bilateral trade or bilateral agreements rather

than look at a grouping The most important relationship

of every BRICS member state is not with another BRICS member

but with the United States, and the BRICS members share

a common frustration about the status of the dollar

as the world's reserve currency. They don't have a common

response to diminishing the status of the dollar

and that is what They are frustrated over

dollar's dominance status, they want to weaken that currency

status but then you evolve a common approach, you begin

with a common action plan. The entire BRICS trade

is still quite thin and everybody's main trading partners are the US

and Europe, and the fact it is so small,

the way it is so small is the real potential in the place

where you can see maximum result. If you were to facilitate intra-

BRICS investment, that would be the fastest kind of result

you would get out of this grouping. The relevance of BRICS is now

becoming significant in the wake of three factors,

the global financial crisis which has shaken up the western

world, we don't know how and how the western tectonic plate looks,

that Brexit has is in a crisis, the capacity

of these countries to invest in emerging economies

is growing less. The second thing is the hegemony

of the dollar and it's not just now, it's with the post World War II

order and the setting up of the institutions that has been

a consistent effort by these developing countries

to find their place at the table. Third, the fact mentioned earlier

that this is the largest population on Earth combined and I think

the commonalties here are immense because let's not forget these

are all not developed economies, in various ways, different

countries differently placed. The challenges are similar

in terms of how you provide employment to people,

how you provide them with decent affordable housing, how you give

them health and education. Investment in infrastructure,

I think these countries are talking about how we use our resources

amongst ourselves but at the same time developed world is also looking

towards BRICS to provide the kind It's been a mild day out there and

we're set for a mild night but where we see breaks in the cloud we could

see mist and fog patches.