India’s Uncertain Future in BRICS: Navigating Geopolitical Tensions and Economic Challenges
The Swelling Discord Within BRICS: A Potential Exit by India?
Rumors of India’s imminent exit from the BRICS bloc have gained significant traction in recent months. The irony lies in the fact that while this collective aims to broaden its horizons, internal tensions among its original members hint at a disintegrating narrative. At the heart of this dilemma is India’s growing inclination towards the West, which could potentially result in the departure of a foundational member from the circle.
BRICS’ Expansion and the Underlying Tensions
For much of the past year, BRICS appeared poised for expansion, welcoming six new nations into its fold during the 2023 summit. This development was not merely about numbers; it signified the addition of influential voices like Saudi Arabia and the UAE to its roster. However, beneath this veneer of growth lurked the roots of discord, stemming from India’s role and relationships within the group. The fault lines became increasingly apparent when Russia’s sanctions complicated oil trades, a significant area of collaboration for BRICS members.
The Intricacies of the Oil Deal Controversy
At the heart of this discord was an intricate oil deal between Russia and India, designed as a workaround to circumvent Western sanctions. This arrangement offered substantial financial benefits for India, saving it approximately $7 billion while also paving the way for de-dollarization by facilitating local currency transactions. However, complications arose when Russia proposed compensations in Chinese Yuan, a proposal that India found unpalatable due to its strained relations with China.
India’s Economic Prospects Amidst Geopolitical Tensions
On the economic front, India boasts a robust growth story and promising forecasts for the future. S&P Global recently upgraded its growth prediction for India’s FY25 to 6.8%, underpinned by strong domestic demand and a rebound in exports. This optimistic outlook positions India as the fastest-growing major economy globally. Moody’s echoed this sentiment, projecting a substantial 8% GDP growth for FY24, fueled by government spending and domestic consumption.
Managing Economic Growth Amidst Challenges
The Indian economy’s performance in the December quarter, recording a growth rate of 8.4%, underscores its resilience against fears of slowdown. The manufacturing, electricity, and construction sectors spearheaded this growth surge. Despite this, challenges persist, including the need to contend with restrictive interest rates and regulatory measures aimed at curbing unsecured lending. S&P Global’s projection of rate cuts across several Asian economies, including India, highlights the delicate balance between fostering economic growth and managing inflationary pressures.
India’s Dilemma: BRICS or the West?
As India navigates this intricate geopolitical and economic landscape, the question of its allegiance to BRICS versus a pivot towards the West remains pertinent. Striking a balance between sustaining growth, managing international relations, and implementing domestic economic policies presents multifaceted challenges for India on the global stage.
