The 6th BRICS summit is the sixth annual diplomatic meeting of the BRICS, a grouping of major emerging economies that includes Brazil, Russia, India, China and South Africa.
It was hosted by Brazil (As the first host country of the current five-year summit cycle) the host city is Fortaleza from 15th-17th July 2014.
BRICS 6th Summit will emphasize on social inclusion and sustainable development.
The main theme of this summit is "Inclusive growth: sustainable solutions".
Though Brazil hosted a four-member BRIC summit in April 2010, 2014 summit has mark its first full BRICS summit. The 2010 summit in BrasÃlia did not officially include South Africa, who was only invited as guests in a prelude to full membership, which they achieved in
December 2010.
In this summit BRICS leaders discussed the Contingent Reserve Arrangement (CRA) and the New Development Bank (NBD).
The CRA is an additional line of defense available to the BRICS countries in scenarios of Balance of Payments (BOP) difficulties.
The NBD will finance infrastructure and sustainable development projects.
Participants
| Member | Represented by | Title |
| Brazil (Host) | Dilma Rousseff | President |
| Russia | Vladimir Putin | President |
| India | Narendra Modi | Prime Minister |
| China | Xi Jinping | President |
| Russia | Jacob Zuma | President |
Prime Minister Narendra Modi’s for first time is participating in a multilateral meeting.
Argentina is participating in the Fortaleza Summit in July 2014(Brazil) in response to an invitation by Russia. Cristina Fernández de Kirchner, President of Argentina attended the summit.
In that meeting, the BRICS countries discussed the possible admission of Argentina as the sixth member country.
New Development Bank was officially inaugurated in the 6th BRICS summit
The New Development Bank (NDB) is a proposed multilateral development bank operated by the BRICS states (Brazil, Russia, India, China and South Africa).
It is an alternative to the existing World Bank and International Monetary Fund.
It was formerly referred to as the BRICS Development Bank but 6th BRICS summit named as New Development Bank (NDB).
The Bank is setup to foster greater financial and development cooperation among the five emerging markets.
It would be headquartered in Shanghai, China. First Chief Executive (President) of NDB will come from India.
NDB will be mirror of World Bank.
But, unlike World Bank, all members countries in NDB will have equal shareholding and equal contribution to the capital in the bank.
History of NDB
An idea about BRICS Development bank was conceived in Delhi in 2012.
The establishment of the BRICS Development Bank was agreed year later by BRICS leaders at the 5th BRICS summit held in Durban, South Africa on 27 March 2013.
On 15 July 2014, the first day of the 6th BRICS summit held in Fortaleza, Brazil, the group of emerging economies signed the document to create the $100 billion BRICS Development
Bank and a reserve currency pool worth over $100 billion i.e. Contingent Reserve Arrangement (CRA).
Both will counter the influence of Western-based lending institutions and the dollar.
Documents on cooperation between BRICS export credit agencies and an agreement of cooperation on innovation were also signed.
The inaugural Chairman of the Board of directors will come from Brazil.
The inaugural chairman of the Board of Governors will be Russian. The first bank regional centre will be located in South Africa and the first Chief Executive (President) will come from India.
It is scheduled to start lending in 2016 and be open to membership by other countries, but the capital share of the BRICS cannot drop below 55 percent.
The NBD will finance infrastructure and sustainable development projects.
The bank also eyes the less developed countries in Africa, with an African regional centre of the bank to be set up in South Africa.
Objectives of the banks
- Among the goals of the Bank is to provide funding for infrastructure projects and create a "Contingent Reserve Arrangement" worth US$100 billion which will help member countries counteract future financial shocks.
- The Bank would also provide assistance to other countries suffering from the economic volatility in the wake of the United States’ exit from its expansionary monetary policy.
This fund will consist of $10 billion of "paid-in capital" ($2 billion from each member to be provided over seven years) and an additional $40 billion to be "paid upon request".
Voting rights are established on the basis of the financial contribution of each country.
The vote of China, Brazil, India or Russia will be enough to authorize the disbursement of funds.
India’s stance in NDB
Prime Minister Narendra Modi before the summit had said that, they will give top priority for the establishment of the BRICS development bank with equal share holding for all the five members.
India is keen on the issue of equal share holding since it doesn’t want a repeat of the distortions that have crept into Bretton Woods institutions like IMF, World Bank and the
Asian Development Bank in which rich countries like the U.S. and Japan have a strangle hold.
Contingent Reserve Arrangement (CRA)
In 2013, the leaders of the BRICS decided to create a U$ 100 billion Contingency Reserve Arrangement (CRA) to tackle any possible financial crisis in the emerging economies.
Each country’s central bank will keep the fund’s reserves as part of its own reserves. It will help member countries tackle over a current account deficit crisis.
Out of the total initial capital of $100 billion, China will contribute $41 billion, Brazil, Russia and India would give $18 billion each, and South Africa would contribute $5 billion.
CRA will be mirror of International Monetary Fund (IMF).
What is purpose of CRA?
In moments of crisis in one of the member countries' economies the contingency fund will be used (begin to operate) acting as a cushion or back-up.
This arrangement will have a positive precautionary effect, help countries forestall short-term liquidity pressures, promote further BRICS cooperation, strengthen the global financial safety net and complement existing international arrangements.
Considering the increasing frequency and magnitude of global financial crises over the past decades, the addition of another fund that major countries can rapidly mobilize in times of crisis is bound to provide investor confidence.
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