The formation of the New Development Bank (NDB) of the Brazil-Russia-India-China-South Africa (BRICS) grouping is an assertion of the Global South and its significance would be felt beyond the economic domain, K.V. Kamath, the bank’s President told The Hindu .
“To put it another way, it is the rise of the South, and so we are talking about countries of the South coming together and very humbly saying that we can set up an institution on our own and thereafter we (can) take it forward. As we go along, we will clearly look at membership on a wider framework, but I think these countries can be justly proud that this was an effort from the South to start with.” The New Development Bank was not an economic instrument alone, but an initiative that also symbolised an assertion of political sovereignty of the five emerging economies, Mr. Kamat said. “You are absolutely right. For instance, if you look at the currency reserve arrangement that is in place in the BRICS context, it is a commitment of another 100 billion dollars. Plus, when we have looked at the markets, including the domestic and the financial markets, it is clear that there is depth in the markets of the five member economies to raise money locally. I think all his comes together to signpost something that is significantly more than just economic change.”
Mr. Kamath said he fully supported the “Belt and Road” connectivity initiative taken by China to establish new growth engines along the Eurasian corridor.
“We are looking at this initiative taken by China very positively, because the act of investment will create growth for all countries that are touched along the Belt and Road. Thereafter the fruits of this investment will be seen. To me there are several large markets at play here. There is China, there is India and there are all the countries that the Belt and Road will touch. I think this is needed expenditure and it is timely expenditure and someone has taken the lead, and this case it is China.”
Asked if the Belt and Road initiative should be viewed through the geopolitical prism, Mr. Kamath said: “To me it is not being seen in political terms at all. It is an economic initiative and it is an economic initiative for the good of all of us.”
When asked to comment on the relationship between the NDB and the China-led Asian Infrastructure Investment Bank (AIIB), of which, India is also a founding member, Mr. Kamath said the two institutions are complementary rather than competitive.
“I think you have hit the nail on the head. That’s the point I have been trying to make. We will play a complementary and cooperative role. The competition comes in when you are actually in a challenging situation in a scarce market place. Here if we look at the infrastructure market, let us put it at 1 trillion dollars a year. The total NDB funding to this market is 100 billion. So actually I don’t think the word competition should be in our vocabulary.” Mr. Kamath stressed that the NDB and the AIIB “have been very close in terms of working together at the presidential level.”
“Ultimately it is how you act and behave rather than anything documented which leads to a strong working relationship.” The NDB President also praised the World Bank and Asian Development Bank (ADB) for being “extremely open in terms in giving their support and help.”
On neoliberal thinking that markets play a self-corrective and self-regulatory role, Mr. Kamath said that the quantitative easing phenomena, and fixation of sub-zero interest rates “are all interventions, and not market interventions”. He said that the 1997 Asian financial meltdown was a result of “profligacy,” and the 2008 crisis was the result of “greed of a different sort”. “Currently the situation is the result of a whole set of different factors. To me this is to me a case of a huge learning process. We do not know how this spinning wheel will stop.”
