The Union Finance Ministry provided a cautious and non-committal response to a question in Parliament regarding India’s stance on a potential joint currency for BRICS nations. This comes amid recent threats from US President-elect Donald Trump to impose 100 per cent tariffs on BRICS nations if they attempt to establish a currency to rival the US dollar.
“We require a commitment from these countries that they will neither create a new BRICS currency nor back any other currency to replace the mighty US dollar, or they will face 100 per cent tariffs and should expect to say goodbye to selling into the wonderful US economy,” Trump had posted on Truth Social earlier this week.
The BRICS bloc—comprising Brazil, Russia, India, China, and later South Africa (which joined in 2010)—was initially formed in 2006 to enhance economic and political collaboration among emerging economies. Over time, additional nations like Iran, Egypt, Ethiopia, and the United Arab Emirates have also become part of BRICS.
Significantly, the 16th BRICS Summit, held at Kazan in Russia from October 22 to 24, 2024, highlighted the importance of enhancing economic cooperation among member nations to reduce reliance on the West.
India’s answer to the BRICS Bridge
Russia urged members to take concrete steps toward establishing the “BRICS Bridge,” a proposed international payments system. This initiative was proposed as an alternative to the dollar-based trading system and a sanctions-resistant payments network—leveraging central bank-issued digital currencies backed by fiat currencies.
The query about India’s position on the BRICS currency initiative was raised by Congress MP M.K. Raghavan from Kerala through an unstarred question in Parliament.
In response, Minister of State for Finance Pankaj Chaudhary referenced a report titled BRICS Chairmanship Research on the Improvement of the International Monetary and Financial System, prepared under Russia’s BRICS chairmanship. The report explores various aspects of the current monetary system and possible alternatives, including cross-border payments, investments, sovereign reserves, development mechanisms, and the Global Financial Safety Net.
It also discusses how existing technologies could be leveraged to develop an alternative currency.
However, the minister avoided taking a definitive stance, stating only that the report had been “taken note of” by BRICS Finance Ministers, Central Bank Governors, and Leaders. The response left India’s position on the matter ambiguous.
Chaudhary also outlined India’s involvement with the BRICS New Development Bank (NDB). India has contributed USD 2.0 billion to the NDB, paid in seven installments from FY 2015–16 to 2021–22.
There are about 20 ongoing externally aided projects in India, lifted by a USD 4.87 billion loan from the NDB. These projects span sectors such as infrastructure, water conservation, water supply, flood area management, and rural connectivity improvement.