The decision to set up a USD 100 billion development bank by the BRICS countries is a strong signal to the rest of the world about the growing economic clout of Brazil, Russia, India, China and South Africa. While BRICS development bank will not undermine the IMF and the World Bank, those wielding political control of the Bretton Woods institutions must realise that we are living in a different world today than the world of the 1940s.
However, the BRICS development bank must find ways to raise resources to the extent of many times over the USD 100 billion, sort of seed capital, since the development requirements of the emerging economies are huge requiring big time resources. India alone needs in excess of USD one trillion in infrastructure. The BRICS bank, will surely, tap the global capital market to raise such resources.
Moreover, the development will bring closer India and China, the two key economies of the world and their increased economic engagement will lead to resolution of political differences as well.
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