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Best of BS Opinion: India could face trade and investment challenges
India has made notable improvements in its logistics ecosystem, driven by advancements in port infrastructure, multimodal connectivity, digital integration, and a renewed emphasis on trade facilitation, notes our second editorial, reading from the World Bank's recent report on country-wise performance. Trade-facilitation reforms, including digitisation, pre-arrival processing, and the Authorised Economic Operator (Aeo) programme, are steadily reducing average release times (ARTs), especially for imports. Exports, though, face longer clearance times. Given that logistics costs in India are 14-18 per cent of gross domestic product, much higher than the global benchmark of 8 per cent, further reforms are needed for India to become a reliable export hub and an attractive destination for global manufacturing.
Our first columnist Laveesh Bhandari ponders the use of artificial intelligence to cut through the Gordian knots of governance. He argues that given AI's speed, if used for research, many tasks can be completed in a few weeks or days, perhaps even less. Besides, considering the information and intellectual gap between the top and bottom levels of government, AI can empower lower-level officials to enhance the ability of the higher-ups. India also has a unique opportunity that many others do not in the form of Digital Public Infrastructure, which has access to granular data and thus can be used for decision-making. However, challenges exist in the form of AI's hallucination, inherent reasoning biases, and unevolved ethical and moral core. And given that many governmental decisions only have smaller impacts individually, the human-AI interface needs to be different depending upon the scale of the potential impact. Thus, frequency and impact should be two key dimensions to assess AI, he says, and that by unpacking the problem we can better identify how AI should be used and derive the consequent benefits.
The world, and India, is facing a demographic time-bomb in more ways than one. Not only will there be hundreds of millions looking for active work, there will also be millions more who will need caregiving as they exit the workforce but continue to live for many more years without paying work. Arun Maira points out that the care of these seniors will fall upon the young, but with limited earnings and ever-rising private healthcare costs, instead of societal assets, they are likely to be seen as economic liabilities. Worse, there is no solution in sight. The writer argues that it may be time to reimagine society as a 'caring' enterprise instead of a 'paying' one. We should not damage the quality of a society to grow the economy. Instead, the economy must be redesigned to improve the quality of society.
Sanjeev Ahluwalia unpacks what he calls the 'Das Principles' in his review of Abhijit Das' Strategies in GATT and WTO negotiations. The book defends the benefits of trade multilateralism at a time that United States has been damaging the basic framework of the World Trade Organisation (WTO) with its (read Trump's) unilateral tariffs against all and sundry. Das also points out that China played the game well by not trying to change developed nations' rules but by taking advantage of them. On the other hand, he says, India's WTO negotiators brilliantly defended 'perceived' national interest, but did they even read the national interest correctly? In our aversion to political risk, India successfully resisted externally driven trade and investment reform, even at the risk of scoring long-term self-goals.
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Mint
17 minutes ago
- Mint
ETFs are eating the world. The right—and wrong—ways to invest.
A few months ago, you needed big bucks to tap the opaque world of private credit. Not anymore—thanks to the magic of exchange-traded funds. Firms like Apollo Global Management have long dominated the private-credit space, traditionally requiring at least $250,000 or a high net worth to access its funds. But Apollo recently teamed up with State Street to launch the SPDR SSGA IG Public & Private Credit ETF. State Street, which is managing the fund, said it's 'democratizing access to private markets." Since it's an ETF, which trades like a stock, anyone with an account at, say, Robinhood or Fidelity can now buy a sliver of Apollo's $600 billion private-credit portfolio. Apollo is hardly the only firm using ETFs to drum up business. Wall Street has ETF fever. Firms are now packaging just about everything in the funds, including Bitcoin and other cryptocurrencies, leveraged bets on individual stocks like Nvidia, and even bonds that would pay out sharply if a natural catastrophe strikes. All of it has led to a Cambrian fund explosion. More than 4,000 ETFs are listed on the New York Stock Exchange—compared with just 2,400 individual stocks. Fund companies launched more than 700 ETFs last year, including 33 that track cryptocurrencies, more than 130 'buffered" ETFs, and dozens of ETFs that magnify bets on indexes like the S&P 500 or stocks like Nvidia and Palantir Technologies. Most of the new ETFs are small and nichey, holding less than $100 million in assets each, and dozens of ETFs shut down every year after failing to catch on. But the industry is still raking in assets. ETFs have taken in over $2 trillion of net inflows over the past two years, bringing total assets to nearly $11 trillion. They now hold one out of every three dollars invested in long-term funds, excluding money markets. Some of the money flowing into ETFs has come out of traditional open-end mutual funds, which have lost $1.2 trillion due to outflows in the past two years. While investors are flocking to ETFs for their tax efficiency and other advantages, ETFs are also tackling mutual funds where it really hurts: active management. More than $1 trillion now sits in active ETFs that trade stocks and other securities. Cathie Wood's ARK Innovation ETF is a prominent example. But there are now more than 1,300 active ETFs, including funds from big companies like T. Rowe Price Group, GMO, and JPMorgan Chase. Bond manager Pimco alone has amassed $31 billion in fixed-income ETFs. The deluge shows no signs of letting up. President Donald Trump and congressional Republicans are laying the groundwork to deregulate financial markets, make crypto mainstream—including stablecoins from companies like Circle Internet Group—and open the $12 trillion world of private equity and credit to the broader public. Hundreds of new ETFs are awaiting a go-ahead at the Securities and Exchange Commission, including around 70 new crypto ETFs and plenty of active stock-picking ones. The flood of ETFs raises questions for investors: Should you buy any of the new ones, stick with basic index funds, or use a mix? With so many products, there is a lot to learn, especially about novel funds that employ aggressive strategies or aim to expand the ETF empire to new frontiers. Here's how to get the most out of ETFs—and avoid the pitfalls. Launched in the early 1990s, ETFs were initially designed to track popular stock indexes like the S&P 500. The $600 billion SPDR S&P 500 Trust, launched in 1993, remains one of the largest ETFs, and most of the industry's assets are still concentrated in funds that track major indexes, sectors, and foreign markets. The top four ETF issuers—Vanguard, BlackRock's iShares, Invesco, and State Street—control $9 trillion in assets, staking a commanding lead over everyone else. Just below the giants is a long and growing tail of ETFs snaking through every market crevice. Investors who want exposure to oil, for instance, gravitate to the U.S. Oil Fund. The SPDR Gold Shares is the leading choice for the precious metal. In crypto, the iShares Bitcoin Trust ETF has become the biggest of the bunch, holding $75 billion in assets. Regardless of what they own, most ETFs owe their popularity to convenience, low costs, and tax efficiency. A big difference from mutual funds is intraday liquidity. You can buy or sell ETFs like a stock. Orders for mutual funds, by contrast, are priced once at the 4 p.m. market close. Liquidity is a big reason ETFs are so widely used by hedge funds, and it can be helpful if there's a big market move and you want to sell a position quickly. Crucially, most ETFs are more tax-efficient than mutual funds. While the details are complicated, ETF portfolio managers are rarely obliged to sell underlying shares of a stock or other asset. Instead, they continuously work with trading firms to swap holdings and shares as needed. Under normal market circumstances, the process keeps a fund's net asset value aligned with its holdings, avoiding the added complexity of closed-end funds, which often trade at wide discounts or premiums. These arcane details of ETFs have big tax consequences, since security swaps, unlike sales, don't register capital gains to a fund. That means ETF investors typically don't have capital-gains tax bills until they sell their shares, avoiding a big hassle (and expense) of traditional mutual funds, which have to distribute a portfolio's gains each year. ETFs can also be extremely low cost, though fees creep up for products using bespoke strategies. The average annual management ETF fee is below 0.16%, according to Morningstar, less than half the 0.4% average charged by mutual funds. Among active stock ETFs, fees average 0.42%, still well below the 0.57% average for active equity mutual funds. Firms launched more than 500 active ETFs last year, accounting for 70% of new launches and 25% of flows, according to research firm Trackinsight. Many of the new products involve niche strategies, such as buffered ETFs, which use options to give investors exposure to the stock market while capping gains and losses. Firms like Fidelity and T. Rowe Price have dabbled in active ETFs, but they remain quite small; T. Rowe Price Capital Appreciation Equity, the firm's largest ETF, with $4.6 billion in assets, hit the market in 2023. It was designed to build on the success of the storied T. Rowe Price Capital Appreciation mutual fund, which remains an order of magnitude larger, with $66 billion. Fund companies don't want to cannibalize their mutual funds with lower-cost ETFs. But they may be now be more inclined to launch copycats, thanks partly to an obscure patent expiration. Vanguard, which held the patent until 2023, no longer has a lock on creating ETFs by simply creating an additional share class of an existing fund. Nearly 60 fund firms have filed with the SEC to launch funds following Vanguard's approach, with approvals expected to start this year. 'There's no question the ETF share class structure will be a game-changer," says Nate Geraci, an investment advisor and president of the ETF Store. Whether to own an active ETF comes down to the same issues that plague mutual funds: The vast majority underperform their benchmarks long term, and finding consistent winners is devilishly hard. Consider the rise and fall of Wood's ARK Innovation ETF, known by its ticker, ARKK. Soaring more than 150% in 2020, the fund raked in assets, reaching a peak of $28 billion. But as money flowed in, Wood gravitated to larger-cap stocks and performance fizzled; the fund lost 75% of its value in 2021 and 2022 and has underperformed the Nasdaq Composite by more than 100 percentage points over the past five years. While the Nasdaq's five-year cumulative return is 108%, ARKK's is minus 2%. ARK Investment Management President Tom Staudt says changes in the fund's composition were the result of mergers in tech and gains for ARKK's holdings. Beyond stock ETFs, the rest of the industry's assets sit in everything from bonds and commodities to crypto and other alternatives. Bond ETFs now hold nearly $2 trillion in assets. The biggest ones—Vanguard Total Bond Market and iShares Core U.S. Aggregate Bond—track the U.S. market, holding Treasuries and other U.S. government bonds, along with investment-grade corporate debt. They can be solid core holdings for investors who use bonds to diversify their portfolio. Fixed-income ETFs also delve into everything from high-yield 'junk" to preferred securities and municipal bonds. Several of them have a long record of beating indexes. Top performers from Pimco, for instance, include Pimco Active Bond and Intermediate Municipal Bond Active. One can also find solid ETFs for Treasury inflation-protected securities, such as JPMorgan Inflation Managed Bond, and in high yield with the VanEck Fallen Angel High Yield Bond. Granted, bond ETFs can have structural flaws. Many individual bonds trade infrequently, especially outside highly liquid Treasury markets. As a result, the ETFs, which may own thousands of securities, rely on mathematical models to estimate their underlying value in real time. In times of market stress, ETF share prices and theoretical values have diverged. In March 2020, during the early days of Covid, the $30 billion iShares iBoxx $ Investment Grade Corporate Bond ETF closed more than 5% below the estimated value of its portfolio during the trading day. If something like that happens again, it's best to wait until the market stabilizes—which usually happens quickly—before buying or selling, says Aniket Ullal, head of ETF Research at CFRA. 'The models can be a little bit stale," he says, and share prices will eventually converge to underlying holdings. Similar issues arise in ETFs aiming to track commodities, crypto, and other alternatives, as their markets aren't always liquid or transparent and ETF companies use workarounds. Commodity ETFs, for instance, generally hold futures contracts to track things like oil and copper. In most cases, futures substitute for the real thing because it isn't practical to own, say, millions of bushels of corn. Commodity futures are imperfect, though. Because prices for oil futures often drift above or below spot prices, the USO Oil Fund's returns frequently deviate from oil spot price returns. In 2020, Covid-fueled dislocations led near-month oil futures to briefly trade at negative prices. USO lost 75% of its value in the first five months of that year. USO experienced a 'black swan event" in 2020, says Katie Rooney, chief marketing officer at USCF Investments, the fund's sponsor. 'Nevertheless, we made an extra effort to communicate with investors at the time, and USO continued to meet its investment objective." One way around the futures problem is for a fund to be structured like a trust and take ownership of the commodity. While it doesn't work for commodities like oil or copper, it does for gold. The $101 billion SPDR Gold Shares owns gold bars sitting in a vault, and the ETF's price directly corresponds to the value of the bullion. Crypto is a new and untested class of ETFs. The first wave used futures and other derivatives to track Bitcoin, but the SEC in 2024 allowed ETFs to track spot prices and own tokens directly in digital vaults, creating Bitcoin 'trusts." If you're going to invest, stick with the largest and most liquid ETFs backed by blue-chip firms. That would include the iShares Bitcoin Trust and the Fidelity Wise Origin Bitcoin fund. Crypto ETFs are rapidly moving beyond Bitcoin. The second-largest token, Ethereum, now has 20 ETFs tracking its moves, including funds like iShares Ethereum Trust and Grayscale Ethereum Mini Trust. More crypto ETFs are seeking approval from the SEC, tracking tokens like Litecoin, XRP, and Solana, as well as more playful ideas like Dogecoin, Bonkcoin, and even President Trump's personal meme coin. Not all of these will see the light of day, but a Trump-backed SEC is expected to be far more amenable than the agency was under President Joe Biden's SEC chair, Gary Gensler. 'I think you'll sense SEC staff trying to work with the ETF industry to facilitate new types of products, to facilitate innovation," says Brian Murphy, a former SEC attorney and partner at Stradley Ronon. Private assets are also showing up in ETF wrappers, including venture-backed companies that have yet to go public. The ERShares Private-Public Crossover ETF, for example, has nearly 10% of its assets in Elon Musk's SpaceX, along with stakes in private companies such as Klarna and Anduril. Bear in mind that these ETFs provide watered-down access to private securities. Industry rules limit ETFs to holding 15% in private, illiquid assets, and the funds tend to be padded with publicly traded stocks or other securities. The ERShares ETF has more than 80% of its assets in familiar Big Tech names like Nvidia, Oracle, and Meta Platforms. One risk: Private assets are opaque and their values are based on educated guesses rather than broad market price discovery. The ERShares ETF's website pegs SpaceX's value at $185 a share, the same as in December, despite a public feud between Musk and Trump, which hit Musk's other big company, Tesla, hard. The ETF's stakes in SpaceX and other private holdings are also held in a special-purpose vehicle, which charges fees that aren't disclosed to investors. 'We will price SpaceX or Klarna up or down when there is clear evidence the price has changed" or when a 'consensus" price event such as a tender offer emerges, says fund manager Joel Shulman. Whether ETFs can be jury-rigged for private investments is debatable. And investors are taking a leap of faith about how they might trade in a crisis. The SPDR SSGA IG Public & Private Credit ETF has a contract with Apollo as a trading partner, guaranteeing that the ETF will always have at least one place to buy and sell. Whether Apollo would buy back the ETF's assets at full price or a deep discount in a crisis situation isn't known. 'As much as I champion ETFs, not every asset class belongs in an ETF, and I would suggest private credit might fit into that category," says Geraci. Few ETFs are riskier than those using leverage (or borrowed money) to magnify price movements in indexes or individual stocks. Not only is there more daily volatility, but investors won't come close to the returns of a double- or triple-digit move in a stock or index long term. Consider the recent performance of ProShares ETFs designed to magnify bullish and bearish bets on the Nasdaq 100. The UltraPro QQQ is designed to triple the index's daily return, rising 3% on a day when Nasdaq 100 is up 1%. The UltraPro Short QQQ aims to deliver the reverse, rising 3% when the index falls 1%. The Nasdaq 100 has managed to deliver a 8.4% total return year to date. The ProShares 3x long ETF is up 5.5% and the 3x short ETF is down 35.5%. What gives? The funds are designed for single-day movements, and beyond that, all bets are off. A phenomenon known as 'volatility drag" tends to kill their returns over longer periods, especially in rocky markets. ProShares declined to comment. Such complexity has earned leveraged ETFs a bevy of critics. 'I don't think anyone should own them," says Bryan Armour, Morningstar's director of ETF and passive strategies research for North America. As a group, the funds now hold nearly $120 billion in assets, and leveraged ETFs have expanded to single stocks, including eight ETFs pegged to Nvidia alone. Steer clear unless you're a trader with a strong stomach. While the ETF world includes some wild beasts, the place to start is with low-cost index funds as the core of your portfolio. The Vanguard Total World Stock ETF, for instance, owns a portfolio of U.S., developed country, and emerging market stocks for an annual fee of just 0.06%. The Vanguard Total World Bond ETF offers a similar play on fixed income. Using them in combination can give you a full slate of U.S. and international stocks and bonds in just two funds. Investors who want to go deeper can check out the Select Sector SPDR ETFs that break the S&P 500 into 11 industries, including tech and energy. If you are more interested in dividends, take a look at the Schwab US Dividend Equity ETF or, for a slightly different take, ProShares S&P 500 Dividend Aristocrats, which targets companies that have paid and raised dividends for the past 25 years. When shopping for ETFs, follow some simple rules, says Herb Morgan, chief investment officer of Cantor Fitzgerald Managed ETF Portfolios. Stick with funds that track liquid assets and use established index funds, not 'gimmicky" ETFs developed to sell a product. While newer funds boast back-tested performance that might look good, he notes, investors shouldn't expect it to last, given the long history of most funds falling behind major indexes. The oldest and simplest advice is still the best: 'All things being equal, go for the low price," Morgan says. Write to Ian Salisbury at
The Wire
19 minutes ago
- The Wire
Empowering India's Credit Evolution: TransUnion CIBIL Credit Conference 2025 Explores Inclusive Finance and Economic Empowerment
Mumbai, Maharashtra, India – Business Wire India • Credit Conference 2025 designed to drive growth, financial inclusion, and ease of doing business in India • Leaders from banking, FinTech, and policy convened to discuss data-driven credit inclusion and the path to a credit-ready India • Expanding creditworthiness to support India's financial goals under the Bharat@2047 vision was a key theme As India's credit growth reaches new segments and geographies, the focus is shifting towards enabling access to financial services supported by data-driven insights, transparency, and informed risk management. This transformation, along with collaborating to extend financial inclusion in India, saw industry leaders, policymakers, and innovators convene at the TransUnion CIBIL Credit Conference 2025 to explore how data, trust, and collaboration in the financial ecosystem are reshaping the way India lends, borrows, and builds resilience. From veteran bankers and fintech pioneers to policy architects and development finance experts, the event spotlighted voices shaping the future of India's credit lending ecosystem. Underpinning the conference was a celebration of the growth of India's credit landscape over the last 25 years, during which TransUnion CIBIL has played a pivotal role in this evolution through data, scale, and reach. Some of the most impactful outcomes of India's evolving credit landscape include: • Over 714 million individuals have gained access to formal credit, positively impacting households across the country, over the past two decades • 1,036 million consumer loans have been facilitated, including 52 million housing loans and six million education loans, in the last 25 years • 118 million women consumers in the last 10 years have entered the credit mainstream for the first time, unlocking opportunities that were previously unavailable to them • 34 million MSME loans have been disbursed in the past 25 years, powering the growth of India's future • Since 2004, more than 3,172 million credit reports issued by TransUnion CIBIL have helped more than 4,000 financial institutions make better-informed lending decisions • Retail delinquencies (balance-level, at 90 days or more past due) have improved by 130 bps in the last 10 years Speaking at the conference, Mr. M. Rajeshwar Rao, Deputy Governor, Reserve Bank of India, said, 'Credit reporting and TransUnion CIBIL have grown together in India and the company has made a significant contribution in expanding the footprint of credit reporting in the country. Credit reporting systems today operate as a key element in the national financial architecture, encouraging greater credit access, supporting financial inclusion, enabling effective supervision, and enhancing financial stability. This silver jubilee therefore, also represents a significant milestone in TransUnion CIBIL's ongoing contribution to strengthening this framework. This also gives us an occasion to reflect on how the information gap between the credit institutions and the borrowers has been addressed over time and the possible way ahead.' Additionally, the Deputy Governor, said, 'At the heart of a sustainable credit landscape lies an empowered consumer which is enabled when we have a financially aware and literate customer. While regulations mandate transparency and awareness, the responsibility needs to be fulfilled by all of us. Financial literacy cannot be achieved through a one-time campaign; it has to be a sustained commitment for all the institutions and entities involved. The setting up of Credit Information Companies was in one sense the starting point of this journey of financial inclusion and democratisation of credit. Even as the journey continues, the role of the CICs remains integral and important in realizing the vision of total financial Inclusion.' Mr. Bhavesh Jain, MD & CEO, TransUnion CIBIL, said, 'India's credit ecosystem is becoming more inclusive, transparent, and future-ready. Reliable data empowers lenders to take strategically informed decisions which in turn support borrowers in building and strengthening their financial profiles. Our focus remains to enable all stakeholders to navigate this transformation responsibly and sustainably.' Mr. Deepak Parekh, Former Chairman, HDFC Limited, said, 'One needs to position the role of a credit bureau as one that protects the customer, works for the customer, and helps prevent the customer from getting into financial difficulties. The credit score is like a medical report—and based on the report, one is diagnosed, if required. It is true when experts say that the credit score is the mirror of one's credit behaviour. Checking it regularly is like monitoring blood pressure or cholesterol levels—a preventive financial health measure we must all adopt. Trust, and only trust, remains the most critical aspect of financial services. Customer centricity is the only differentiator among credit bureaus.' Mr. Amitabh Chaudhry, MD & CEO, Axis Bank, said, "We must invest in financial literacy, helping borrowers understand credit health and long-term financial planning. This is not just a regulatory obligation, it is a moral imperative if we want to build a Viksit Bharat. Banks, bureaus, fintechs, and regulators must work together to harvest alternate data, build smarter risk tools, and create credit systems that say 'yes' more often, responsibly, creatively, and at the speed of India's aspirations." Mr. K V Kamath, Chairman, Jio Financial Services Limited, said, "As India moves from a $4 trillion to an $8 trillion economy, the task ahead won't just double, it will expand exponentially. With a rapidly growing aspirational class and the rise of new technologies like AI, the demand for trusted, curated data will become even more critical. This marks the beginning of a new chapter for TransUnion CIBIL, one that's closely tied to India's next wave of growth,' The CIBIL Score continues to play a key role in how creditworthiness is evaluated by banks, NBFCs, and FinTechs. To enhance market transparency, at the conference TransUnion CIBIL shared deeper insights from the latest Credit Market Indicator (CMI) Report, an essential resource for lenders, economists, and policymakers to monitor credit trends in retail lending. The conference devoted special attention to one of India's key drivers for growth, the MSME sector. An MSME Day special edition of the MSME Pulse Report was shared, giving in-depth insights on credit participation and sectoral performance. The recently launched CreditVision® CIBIL Commercial Rank (CV CMR), complementary to the Company Credit Report (CCR), was also introduced. These tools help assess credit behavior across enterprises, improving underwriting accuracy and deepening access to finance for MSMEs. The conference concluded with a shared vision for building a financially confident and credit-aware India. Speakers emphasized the need to strengthen creditworthiness across a broader borrower base through improved data access, financial literacy, and ecosystem-wide collaboration. 'As India progresses towards the goals outlined in Bharat@2047, expanding the credit-ready population, especially in semi-urban and rural regions, will be instrumental in unlocking economic growth,' said Jain. 'By enabling lenders to better assess risk and empowering individuals and small businesses to build and improve their credit profiles, TransUnion CIBIL's insights continue to play a catalytic role in putting more capital in the hands of individuals and small businesses. A more inclusive credit ecosystem is not only vital for economic progress, but also foundational to a future where opportunity reaches every corner of the country.' The conference commenced with the traditional lighting of the diya, symbolizing knowledge, progress, and a shared commitment to inclusive financial growth. The ceremony was led by Chris Cartwright, CEO, TransUnion; Venkataramanan Anantharaman, Chairman, TransUnion CIBIL; Ketaki Bhagwati, Independent Director, TransUnion CIBIL; Sanjay Prasad, Independent Director, TransUnion CIBIL; Todd Skinner, President – International, TransUnion; and N.S. Kannan, Independent Director, in the presence of industry leaders and stakeholders. About TransUnion CIBIL India's pioneer information and insights company, TransUnion CIBIL, makes trust possible by ensuring each person and business entity is reliably represented in the marketplace. We do this by providing an actionable view of consumers and businesses, stewarded with care. We have developed technology and innovative solutions across core credit, risk and advanced analytics. As a result, consumers and businesses can transact with confidence and achieve great things. We call this Information for Good® — and it leads to economic opportunity, great experiences, and personal empowerment for millions of people and MSMEs in India. We serve the financial sector as well as MSMEs and individual consumers. Our customers in India include banks, credit institutions, NBFCs, housing finance companies, microfinance companies, telecom companies and insurance firms. For more information visit To View the Image, Click on the Link Below: (L-R) Venkataramanan Anantharaman, Chairman, TransUnion CIBIL; Chris Cartwright, CEO, TransUnion; Ketaki Bhagwati, Independent Director, TransUnion CIBIL; Sanjay Prasad, Independent Director, TransUnion CIBIL; Todd Skinner, President – International, TransUnion; and N.S. Kannan, Independent Director. (Disclaimer: The above press release comes to you under an arrangement with Business Wire India and PTI takes no editorial responsibility for the same.). This is an auto-published feed from PTI with no editorial input from The Wire.
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First Post
23 minutes ago
- First Post
Brics bigger than G7: Expansion boosts global clout but Trump, China pose challenge
Brics has expanded from initial four to eleven members and has sought a greater say in the world's affairs in recent years, but the group has faced a challenge to its relevance from US President Donald Trump's direct threats and attempts by China to turn the group into an anti-West bloc to take on the United States. read more Over the past two decades, Brics has evolved from a forum of four emerging economies to a group of 11 nations that its supporters say is ushering true multilateralism in the world. Critics, however, say that the bloc is just a Chinese tool to unseat the United States to become the world's foremost superpower. The idea of Brics emerged in 2001 when then-Goldman Sachs Chief Economist Jim O'Neill argued that Brazil, Russia, India, and China had the potential to reshape the global economic landscape by 2050 due to their large populations, rapid economic growth, rising global influence, and rapid upward social mobility. STORY CONTINUES BELOW THIS AD In 2006, the four countries came together to form Bric — South Africa joined in 2010. With the expansion in 2024, the group has 11 members. Brics has positioned itself as a non-Western alternative for supporting economic growth and cooperation. Even though the group's influence has risen, challenges have also risen and the group now finds itself as a critical juncture. Brics is bigger than G7 but faces tough challenges In 2015, Brics launched New Development Bank (NDB) to fund infrastructure and development projects in developing countries. With initiatives like the NDB and the Russia-led grain exchange, and collaboration in other areas of emerging technologies and economies, Brics has positioned itself as an alternative to Western-dominated financial institutions like the International Monetary Fund (IMF) and World Bank. But, even as Brics continues to attract new members, the group is far from replacing IMF or World Bank and stares at formidable challenges — both internally and externally. Internally, the very purpose of Brics is under question as China has sought to become the leader of the group and turn it into an anti-Western bloc. Russia has supported China to the hilt in this quest. The two countries are already part of an anti-Western alliance also comprising Iran and North Korea (the so-called CRINK bloc) and want to make Brics an extension of that bloc — while the CRINK bloc clashes with the West militarily, Brics takes on the West economically. Externally, Brics has faced strong opposition from US President Donald Trump, who has dubbed any move by the group to dethrone the US Dollar as a red line. He has threatened Brics members with 100 per cent tariffs if they move towards a Brics currency or dedollarisation. With such challenges that put the very basis of the group in question, Brics stands as a unique blend of opportunities, aspirations, and challenges, and India as a founding member and a competitor of China has its own share of challenges. STORY CONTINUES BELOW THIS AD A non-Western group or an anti-Western group? India has gone to great lengths to explain to the West that Brics is not an anti-Western group and that it supplements Western institutions like the IMF and World Bank and does not seek to replace them. But China and Russia continue to push the group as an anti-Western bloc. Brics is definitely a China-dominated group as China is the largest economy and contributes to 40 per cent of the bloc's gross domestic product. Moreover, NBD is headquartered in Shanghai even as five initial members —Brazil, Russia, India, China, and South Africa— are equal shareholders of the bank. The presence of ironclad partners Russia and China (and Iran as well) in Brics further adds to the anti-Western impression of the bloc. However, India's presence in the group and, more importantly, its status as a founding member counterbalances the China-Russia influence. India has so far prevented the bloc from turning into an anti-Western bloc. In March, External Affairs Minister S Jaishankar dismissed fears of Brics trying to replace the US Dollar. Instead, India considers the strength of the US Dollar essential for global stability, said Jaishankar. 'I don't think there's any policy on our part to replace the dollar. As I said, at the end of the day, the dollar as the reserve currency is the source of international economic stability. And right now, what we want in the world is more economic stability, not less,' said Jaishankar. STORY CONTINUES BELOW THIS AD India has also used its status as an equal shareholder at NDB to prevent the bank from turning into an extension of the Belt and Road Initiative (BRI). As China is not just working to dethrone the United States, but is also looking forward to suppress India's rise, India's continued presence and assertion of its role as a founding member in Brics is a must. Anushka Saxena, a China researcher at the Takshashila Institution, previously told Firstpost that India's involvement in Brics and Shanghai Cooperation Organisation (SCO) is a must to ensure these institutions work for stated purposes and not become China's tools. 'In Brics, India's priorities lie in making sure that principled guidelines are laid out to set benchmarks for membership, in creating space for consensus-building against the possibility of China's influence-peddling, and in attempting to retain the image and brand value of Brics as a community of developing market economies demanding more voice in global governance,' she said Saxena. STORY CONTINUES BELOW THIS AD 'Similarly, in the SCO, India's role as a disruptor is vital. If China and Russia continue to propagate the idea that these groupings are anti-West, India's presence becomes necessary to maintain the balance and act as a bridge with the West,' Saxena further said.
