The number crunchers are saying that if the proposed $100 billion New Development Bank and Contingency Reserve Arrangement proposed by the BRICS nations in Fortaleza, Brazil suceeds, India's status will soon get elevated in the world. But the experts are also saying that with this new development bank, there will be few challenges too. And here are five major challenges:
Is China factor a big challenge?
China, world's number 2 economy is known to have a significant influence in any venture it gets involved. And with China being a part of this BRICS new development bank venture, it is seen as a big challenge for the same. Experts fear that China will try to assert greater influence over the $100 billion bank to expand its political clout overseas. It is also said that in future, China might try to increase its hold in this new venture by bringing in new member countries from its sphere of influence.
Will this new development bank pose a challenge to the World Bank and IMF?
As the developing world has been complaining about the World Bank and the International Monetary Fund to be US and European-centric, it is being said that the BRICS have thus come up with the new development bank.
A joint statement from the BRICS leaders said, "Based on sound banking principles, the NDB will strengthen the cooperation among our countries and will supplement the efforts of multilateral and regional financial institutions for global development."
Will this Bank help in developing these countries and the world?
BRICS countries account for a population of nearly 3 billion and account for nearly one quarter of the world gross national income. As this bank has come up to help fund infrastructure and sustainable development projects as per the summit declaration, will it be able to improve the gross national income by bringing development in the BRICS nations?
Will the BRICS nations be able to maintaining their share?
China already has the largest share of the new reserve fund, also launched on Tuesday and known as the Contingent Reserves Arrangement. It pledged $41 billion while Brazil, Russia and India promised $18 billion each and South Africa $5 billion.
It may be easy for each of these nations to contribute this share at present, but in future what if a country faces economic slowdown because of which the same is not able to give its share? This might ultimately increase the dominance of the most powerful of the member countries who will then have a bigger say in the functioning of the bank.
How will it be implemented and how will it be safe from corruption?
The major challenge which comes with every new plan is its implementation. And after this major concern comes the problem of corruption. The member countries haven't yet revealed as to how they will implement their plans and how will they curb graft, which ends up gobbling the major chunk of the funds allocated for development purpose, to ensure proper utilization of funds.