BRICS countries enthusiastic about development bank

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India and other members of BRICS grouping have agreed to establish a task force to come up with recommendations to set up a developmental bank, a move that has received 'good vibrations' from the World Bank and IMF.

"The fact that there would be a task force to elaborate on the proposal for a BRICS-led developmental bank has been agreed upon. We are all very enthusiastic about this," Kaushik Basu, the Chief Economic Advisor to the Finance Ministry, told PTI in an interview.

There will be both policymakers from BRICS (Brazil, Russia, India, China and South Africa) and experts who will partake in this, he said.

"The exact structure of such a task force or experts group will soon be worked out," Basu said, referring to the decisions made by the BRICS Finance Ministers when they met here on sidelines of the annual Spring meeting of the World Bank and the IMF.

"I have to say, contrary to earlier BRICS meetings, this time it was evident that all five countries are very enthusiastic about the importance of the new development bank. On this even from the World Bank and the IMF we have received good vibrations -- I have had conversations with several leaders of the Bank and the Fund," Basu said.

They recognise that today's global economy is so large that another new development bank does not really take away from any existing bank; "there is space for much more; indeed there is need for much more," he noted.

In his address to the BRICS Finance Ministers' meeting, Finance Minister Pranab Mukherjee had proposed that a Working Group be set up comprising representatives from the finance ministries, central banks and other experts co-chaired by India (as the current BRICS chair) and South Africa (as the next BRICS chair).

"The Working Group may decide on its own composition, work plan and processes and report back to us by our next meeting in November 2012, so that we are in a position to report back to the leaders by the next BRICS Summit," Mukherjee had said. The proposals were accepted by BRICS.

Basu, who was part of the official Indian delegation to the IMF-World Bank meeting let by Mukherjee, said this is a very special year for India.

"We are chairing BRICS, we are chairing the G-24. The presidency of both is with us. So for the Finance Minister this was one of the most important meetings. And within G-20 certain fora like the Framework Working Group is co-chaired by India and Canada. So India was a central player in the IMF-World Bank meeting this Spring and we have had our hands full," he noted.

"I was there at the BRICS and G-24 Finance Ministers' meetings. Our FM was in the chair in both these," Basu said.

It was a robust round of discussions that took place, ranging from issues like quota revision in the IMF, building up new firewall to fight regional crisis, building up IMF resources so that the IMF can step in more effectively, to the crisis in Europe, he said.

"There are themes and ideas that we have been pushing. It has been pointed out that the multiple crises that we are seeing -- in southern Europe, Iceland, USA -- must not be viewed as isolated incidents," he said.

"They reflect something major going on in the world, possibly a shift of the centre of gravity of the world from the currently industrialised countries to the new emerging economies; and when the centre of gravity of a huge body, like the earth, shifts you will get a lot of turmoil," Basu noted.

"This shifting of the centre of gravity to the emerging economies places a big responsibility on us. So we need to come together and provide a global leadership. This came up in various meetings like the BRICS, G24 and MIC (Middle income Countries)," Basu said.