BRICS’s plan to float a common currency & India’s reaction to it

The BRICS alliance with Brazil, Russia, India, China & South Africa is planning to float a new currency to settle international trade payments to challenge the global reserve status of the US dollar. The bloc of the five nations is likely to jointly decide on floating a new BRICS currency during its next summit in August, 2023 to be held at Johannesburg in South Africa. Although all other countries constituting BRICS, including Brazil, Russia, China, and South Africa seem to be on the side of issuance of a common BRICS currency, India seems to be the only country that has not shown interest in the plans to launch a new currency.

India’s Stand

India’s External Affairs Minister, S. Jaishankar in a press conference held on Monday, 3rd July, 2023 said that India has no plans for a BRICS currency. He declared a month before the summit that India might back out from creating the new currency. Instead, India is focused on strengthening its national currency, the Rupee, and making Rupee stronger will be the top priority of the Indian government, Jaishankar had stated.

Justification for this stand

1. India is the only country in the bloc that is doing well in terms of GDP on its merit. As such, the country needs no support from BRICS and can survive without the new BRICS currency, it is claimed.
2. India also has good relations with the U.S. and Europe with trade and military deals worth billions of dollars. Country does not want to risk its trade with Western powers, believing in the yet-to-be-released BRICS currency.

Efforts to expand the bloc

The bloc which earlier included Brazil, Russia, India, and China has not expanded since the inclusion of South Africa in it in 2010. The increasing relevance of the global south has become an important development during the current year as the BRICS has embarked on expanding the bloc. Reportedly a host of Middle Eastern and African nations have expressed interest in joining the bloc. It is obvious, with the vast national resources held by China and Russia, nations who want to join, see the benefit of joining the BRICS Alliance, which ultimately aims to challenge the US dominance.

India, however, is likely to press for deciding well-defined criteria for the proposed addition of new members to the BRICS grouping of emerging nations, instead of extending membership solely on the basis of recommendations by present members. If BRICS nations decide on taking in new members, India therefore would want formulation of well-established criteria for qualification.

Changing Scenario since BRICS appeared on the International Stage

The US which enjoyed the global superpower status post-World War II is today being challenged by BRICS. Efforts in this direction seem to be afoot as the BRICS embarks on expanding the bloc with a goal to dominate world trade by 2050.

The bloc took a massive step with the establishment of the New Development Bank in 2014, set up with $50 billion in seed money. The New Development Bank floated assumes significance as it provides competition to the International Monetary Fund (IMF), an organization known for conducting operations based on political interest of the developed west. However, over the years BRICS is developing into much more than an economic bloc & trying to establish itself as representing a voice of the global south.

Reportedly, China remains the main force driving the BRICS expansion process with the intention of dethroning the U.S. dollar. The Chinese government is pushing nations around the world to join the bloc and accept the soon-to-be-released currency with the intention of dethroning the U.S. dollar from its global reserve status. Russia and China are also said to be fast-tracking a payment technology that could make trading with the yet-to-be-released BRICS currency easier.

Suspected Agenda of China

Reports suggest that China is using BRICS as a weapon in its quest to dethrone the U.S. dollar as the global reserve currency. The Chinese government is said to be eyeing for the U.S. dollar collapse with BRICS is believed to be the stepping stone to turn the idea into a reality. However, the other three countries India, Brazil, and South Africa seem to be skeptical about the prospects of China dominating the world. They fear that Xi Jinping could impose his vision of the global order, when the new currency appears on the international stage.

India particularly is skeptical about the intentions of China for the following reasons:

• India is wary of China’s power & her prowling nature, and hence wants to remain alert of thepossibility of China, a communist & authoritarian country using BRICS for her self-interest.
• India feels theBRICS alliance is becoming China-centricmaking the communist nation the recipient of international trade deals.
• India feels, Xi Jinping ledChina is trying to become a global economic and military superpower and BRICS could be the stepping stone to achieve her goal.
• China is pressurising several countries to settle trade using Chinese Yuanto outdo every other member of BRICS to enable China to follow her plan of action & impose Xi Jinping’s vision of the global order, once the new currency reigns on the international stage.
• China and India have been at odds for more than a decade now despite being together as members in BRICS. It is noteworthy that India previously banned Chinese goods from entering the country and placed a ban on Chinese apps, including TikTok, a short-form video hosting service and Shein, the Chinese online fast fashion retailer.

India is therefore rightfully worried that Beijing is using the platform of BRICS for imposing President Xi Jinping’s vision on the countries of the world by dethroning the US dollar & becoming a global economic & military superpower.

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