CIVIL 20 PROPOSALS FOR STRONG, SUSTAINABLE, BALANCED AND INCLUSIVE GROWTH

"In the run up to the St. Petersburg G20 summit the Civil 20 initiated preparing a report and recommendations to G20 focused on surmounting the risks originating from growing income inequality. A special Task Force, bringing together experts from G20 member countries has been established to draft the report. Presented and discussed within the Russian G20 Presidency Civil Society Track (www.g20civil.com), the report provides an independent analysis and proposals for a dialogue between a wide range of stakeholders and the G20 governors on the G20 concerted policies and actions to improve economic equality within their countries and beyond."

India Chapter by Vivan Sharan and Samir Saran: http://www.g20civil.com/upload/iblock/d28/Civil20-Proposals-on-SSBI-Growth.pdf

Left out to Center: Why BRICS is important to Brazil, Vivan Sharan and Samir Saran, Global Times, 24 March, 2013

http://www.globaltimes.cn/content/770242.shtml#.UdMdZfmw284

Brazil has a prominent role to play in the global governance architecture. The country has sustained structural economic growth on the back of favorable demographic drivers, growing middle class consumption and broad scale socioeconomic transformation. As a result, the business environment in the country has steadily improved; and the number of people living in extreme poverty has halved over the last decade. 

It is time for the country to place commensurate emphasis on consolidating its position as a regional leader; and as a key stakeholder on the global governance high table. BRICS provides the perfect platform to marry the dual imperatives. 

Brazil boasts of one of the world's largest domestic markets and a sophisticated business environment. It ranks 53rd on the World Economic Forum's Global Competitiveness Index (2001-12), and is ahead of the rest of the BRICS nations in the availability of financial services among other key indicators of financial market penetration. 

Brazil's upwardly mobile middle class and its elite have inexorably embraced the liberal globalisation framework, promoted by the developed world. Consequently, since the 1990s, they have shown a greater willingness to engage with the international system, and accept transnational regulations and norms. 

As a willing signatory to international norms, ranging from those around mitigation of climate change to preventing nuclear proliferation, Brazil has often broken its own historical typecast of being defensive. What superficially seems to represent a systemic re-prioritisation requires deeper investigation. 

According to the Economist Intelligence Unit, domestic savings rates in the country are below 20 percent. Middle-sized industries still largely rely on external markets for raising money and channelling investments. By default, international perception about the Brazilian economy is an important component of national strategy. Furthermore, the Latin American identity is one that successive governments have strived to shed.

Being part of the BRICS grouping has helped Brazil leverage its "emerging market" identity and dehyphenate from its Latin American identity which had its own convoluted dynamics in any case. This is evident both in the global economic and political spheres. 

BRICS has provided Brazil with a platform to engage with the international system more progressively. It can now navigate the international rules based architecture, with greater bargaining power and seek greater representation in institutions of global economic and political governance. 

Using the BRICS identity, Brazil no longer has to drive a wedge between its development and growth imperatives. It can shield its poor from international regulations, without fear of it's "investment worthiness" being diluted. It can participate at the global high table, while simultaneously catering to nuanced regional imperatives.

The recent death of Hugo Chavez was termed "an irreparable loss" by Brazilian President Dilma Rousseff.  This serves as an example of the ideological flexibility, which the country employs to engage with a neighborhood that is strictly divided on the Venezuelan president's legacy. 

Indeed fine balancing tactics are not new to Brazilian foreign policy, also termed "a study in ambivalence." The pluralistic construct of BRICS fits perfectly with Brazil's strategic outlook on its neighborhood and the world. Brazil has taken on more regional commitments over the same 20-year period during which it has enhanced its engagements with the international system. This is evidenced from increased participation in regional working group meetings, official summits and informal gatherings by the government. 

There are numerous accounts of Brazil's deployment of regional priorities as a bargain chip. Through Mercosur, Brazil has been able to successfully negotiate trade agreements in favor of its national interests. It is a pivotal founding member of the five-member trading bloc. 

In the on-going negotiations for a Free Trade Agreement with the EU, Brazil has pulled out all the stops, shielding its local industries from cheaper foreign made imports; with support from other members including Argentina. 

Similarly, common interests rather than common ideologies dictate the BRICS agenda.  Brazil's membership of the grouping is in complete consonance with its regional and global strategic imperatives. 

Aside from the adaptive flexibility that the informal BRICS grouping offers, it allows Brazil great latitude in bringing specific agendas around innovation, intellectual property rights and green growth at its core. 

Brazil is home to nearly half of the world's biodiversity; the overarching sustainable development agenda is not surprisingly a national priority. Similarly, Brazil has the opportunity to use mechanisms such as the BRICS Exchange Alliance for attracting investments. 

While the current framework enables investors to trade in cross-listed futures indices, if there is political will, the mechanism could eventually encompass various products with different underlying assets including equities. Another relevant sector specific example is commercial aerospace cooperation, where Brazil has unmatched expertise within the grouping.

There are in fact multiple opportunities for Brazil within BRICS, not limited to the economic sphere. In many ways, the grouping brings Brazil from the left corner of the world map to the center, where the geopolitical theatre is most active; in Asia and the Indo-Pacific. 

However, there are two oddities in the Brazilian agenda which would require circumnavigation if Brazil is to be brought to the heart of the geopolitical discourse. 

The first is to moderate its insistence on pursuing "euro-styled" agendas such as interventionist doctrine "responsibility to protect," with an ambiguously defined alternative "responsibility while protecting." Sovereignty matters to other BRICS, and there is some time before supra-national initiatives would pass muster. 

And the second is to shed its reluctance on the agenda for creation of a BRICS-led Development Bank. In this instance Brazil, with its considerable Development Bank experience, can help shape a credible institute that will empower billions south of the equator.

Need to Create Viable Investment Avenues, Hindustan Times, March 01, 2013

http://www.hindustantimes.com/India-Budget-2013/Chunk-HT-UI-IndiaBudget2013-Reactions/Need-to-create-viable-investment-avenues/SP-Article1-1019256.aspx

The finance minister, P Chidambaram, managed to present a fairly balanced Union Budget. The stock markets initially treated the budget as a non-event. There were no big unforeseen surprises and it was relatively measured given that we are in a pre-election year. It is hard to ignore that the global economy continues to be in turmoil. The  Central statistical organization (CSO), in its advanced estimate pegged India's GDP growth at a modest 5% for the current fiscal. Committed solutions are required to comfortably decouple from global trends.

The announcement that the fiscal deficit has been reigned in well within the targeted levels to 5.2% is good news. A continued commitment to eliminating the revenue deficit over a fixed time horizon is even better news. After over a decade of expansion of the real economy and domestic consumption, the Indian economy is now at a veritable crossroads. The government has to urgently create viable investment opportunities and support long term gross capital formation.

Households must be able to derive value from productive assets, and Chidambaram rightly noted that they "must be incentivised to save in financial instruments". The proposals to introduce inflation linked instruments and create a new debt segment in national exchanges will certainly aid such objectives; and concomitantly contribute to the sustainability of the current account deficit.

However, an unwavering systemic emphasis on well regulated, competitive and transparent markets with reduced transaction costs is still required. Industrial growth, particularly manufacturing sector growth must underpin resilient GDP growth. The Micro, Small and Medium Enterprises (MSME) sector has a crucial role to play in enabling this, and the extension of benefits for a period of 3 years after graduation to a higher category bodes well for increased participation and interest in the sector.

In consonance with popular sentiment, Chidambaram laid out a three-pronged development approach, emphasising empowerment of women, the youth and the poor. Some of the initiatives that are circumscribed within this approach include the setting up of a public sector women’s bank with an initial capitalisation of Rs. 1,000 crore; a Nirbhaya fund of a Rs. 1,000 crore; emphasis on skill development and the development of a skill-based curriculum; and the assurance that Direct Benefits Transfers will roll out “during the term of the UPA”. While the existing 173 Centre-sponsored schemes will be reduced to just 70, subject to review every two years, the Rs. 5.5 lakh crore figure for planned expenditure reflects an approximate 30% jump over revised estimates.

Within the context of revenue generation imperatives to offset increased expenditure, the fact that both direct and indirect taxes have remained relatively untouched, is certainly progressive. The budget is not practically feasible unless there is enhanced private sector participation, stability of long term capital inflows, expansion of the tax base, and effective control of the price level. This in turn requires recalibration of priorities — and a shift from short term focus to a medium term focus, and a tempered pre-election budget is a step in the right direction.

More than just a catchy acronym: six reasons why BRICS matters Global Times | By Samir Saran and Vivan Sharan

http://www.globaltimes.cn/content/754826.shtml

There have been heated discussions over the role of BRICS recently. Ian Bremmer, President of the Eurasia Group, a political risk consulting firm, wrote an eye-catching article in the New York Times in late November, proclaiming that BRICS is nothing more than a catchy acronym. 

The BRICS nations represent over 43 percent of the global population that is likely to account for over 50 percent of global consumption by the middle class - those earning between $16 and $50 per day - by 2050. On the other hand, they also collectively account for around half of global poverty calculated at the World Bank's $1.25 a day poverty line. 

What, then, is the mortar that unites these BRICS? 

First, unlike NATO, BRICS is not posturing as a global security group; unlike ASEAN or MERCOSUR, BRICS is not an archetypal regional trading bloc; and unlike the G7, BRICS is not a conglomerate of Western economies laying bets at the global governance high table. BRICS is, instead, a 21st-century arrangement for the global managers of tomorrow.   

At the end of World War II, the Atlantic countries rallied around ideological constructs in an attempt to create a peaceful global order. Now, with the shifts in economic weights, adherence to ideologies no longer determines interactions among nations. 

BRICS members are aware that they must collaborate on issues of common interest rather than common ideologies in what is now a near "G-0 world," to borrow Bremmer's own terminology.

Second, size does not matter and it never has. Interests do and they always will. Intriguingly, Bremmer expresses his concern over China being a dominant member within BRICS. 

Clearly, Bremmer has chosen to ignore the fact that the US accounts for about 70 percent of the total defense expenditure of NATO countries or that it contributes nearly 45 percent of the G7's collective GDP.

Third, BRICS is a flexible group in which cooperation is based on consensus. Issues of common concern include creating more efficient markets and generating sustained growth; generating employment; facilitating access to resources and services; addressing healthcare concerns and urbanization pressures; and seeking a stable external environment not periodically punctuated with violence arising out of a whim of a country with means.

Fourth, it is useful to remember that the world is still in the middle of a serious recession emanating from the West. As Bremmer himself points out, systemic dependence on Western demand is a critical challenge for BRICS nations. Indeed, it is no surprise that they have begun to create hedges. The proposal to institute a BRICS-led Development Bank, instruments to incentivize trade and investments, as well as mechanisms to integrate financial markets and stock exchanges are a few examples. 

Fifth, through the war on Iraq, some countries undermined the UN framework. The interventions in Libya reaffirmed that sovereignty is neither sacrosanct nor a universal right. While imposing significant economic costs on the world, they failed to produce the desired political outcome. By maintaining the centrality of the UN framework in international relations, BRICS is attempting to pose a counter-narrative.

Sixth, in the post-Washington Consensus era, financial institutions such as the IMF and the World Bank are struggling to articulate a coherent development discourse. BRICS nations are at a stage where they can collectively craft a viable alternative development agenda. 

In the Fourth BRICS Summit in New Delhi in March 2012, there was clear emphasis on sharing development knowledge and further democratizing institutions of global financial governance within the cooperative framework. 

BRICS is a transcontinental grouping that seeks to shape the environment within which the member countries exist. 

While countries across the globe share a number of common interests, the order of priorities differs. Today, BRICS nations find that their order of priorities on a number of external and internal issues which affect their domestic environments is relatively similar. 

BRICS is pursuing an evolving and well thought out agenda based on this premise. And unlike Bremmer, we are not convinced that they are destined to fail.