Plan to set up NDB Institute to spot projects for utilising New Development Bank funds will be discussed too
After the BRICS Bank, the five-member bloc of emerging nations is considering setting up a credit ratings firm in its efforts to challenge western hegemony in the world of finance. The credit rating agency for emerging markets, as it is tentatively called, is likely to take shape at the BRICS Summit to be hosted by India in October. The idea of a non-western ratings firm for the emerging markets has been in discussion among the leaders of the BRICS nations -Brazil, Russia, India, China and South Africa -for the past few years, said officials with knowledge of the plan.
Another proposal to be taken up during India's presidency at the BRICS is setting up of the NDB Institute in India to research on and identify projects for utilising the $100 billion that the New Development Bank (NDB) formed by the BRICS nations has in its disposal. The big three -Moody's, Fitch and Standard & Poor's -together account for 90% of the global ratings market. The criteria used by them for rating emerging eco nomies has often come under critical evaluation, these officials said. Emerging economies claim that western ratings firms are biased, optimistic on developed nations and pessimistic on the developing ones.
Russia in particular and China have been perturbed by the western ratings firms. Russia alleges that the western firms had deliberately lowered Moscow's rating after the Ukraine crisis.Sources here said a BRICS ratings firm could also assist other emerging countries, including Egypt which is keen to join the grouping.
As economic growth is largely happening in Asia and in non-western countries, there should be a ratings firm for these emerging markets, the officials said. Contours of the new ratings firm are expected to be unveiled at the India Summit, scheduled to be held October 15-16 in Goa.
A credit ratings setup comprising specialists with deep understanding of the BRICS and developing countries will be able to rate infrastructure and sustainable projects in the emerging economies. The Asian Development Bank estimates that in the next decade, Asian countries will need $8 trillion in infrastructure investments to maintain current economic growth rates. India's Narendra Modi government is desperate to boost the country's infrastructure and has created National Infrastructure Investment Fund (NIIF) where fund rich UAE is putting funds. And the Prime Minister's trip to Qatar early June en route to the US might see Doha also putting in some investments in NIIF.
Creation of NDB, the BRICS Bank, was India's brainchild. While its headquarters is based in Shanghai, the proposed NDB Institute will be located in India and give Delhi a stake in identifying or suggesting infrastructure projects that NDB can fund in BRICS countries and elsewhere.
Besides, a BRICS Railway Research Institute and Agriculture Research Institute are also expected to be unveiled at the October Summit. India hopes to house both. Preparatory meetings are under way in various Indian cities ahead of the summit in what is the first such move to popularise BRICS outside Delhi. More than 90 events will be held in the run-up to the summit with the objective of connecting youth and people and involvement of state governments, according to people familiar with the matter.
The Economic Times New Delhi,16th May 2016
Comments
Post a Comment