Which one among the following was a major decision taken at the fifth BRICS summit held recently ?

1. The Bretton Woods Institutions: IMF and World Bank (basic)

To understand the modern global economy, we must travel back to July 1944. As World War II neared its end, delegates from 44 allied nations gathered at Bretton Woods, New Hampshire (USA), for the United Nations Monetary and Financial Conference. Their mission was to prevent the economic chaos that followed WWI and to build a stable international monetary system. This conference gave birth to two pillars of global finance, famously known as the "Bretton Woods Twins": the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD), which is the founding arm of the World Bank Indian Economy, Nitin Singhania, Chapter 18, p.512.

While born together, the twins have very different roles. Think of the IMF as a global financial supervisor and emergency lender. Its primary goal is to maintain exchange rate stability and help member countries navigate Balance of Payments (BoP) crises—situations where a country doesn't have enough foreign currency to pay for its imports or debt Indian Economy, Nitin Singhania, Chapter 18, p.528. In contrast, the World Bank is a development agency. Originally meant to reconstruct war-torn Europe, it now focuses on long-term economic development, infrastructure, and poverty reduction in developing nations Indian Economy, Vivek Singh, Chapter 13, p.396.

Governance in these institutions is unique. Unlike the UN General Assembly where every country has one vote, power in the Bretton Woods institutions is weighted. Votes are based on the financial contribution (Quota or Shares) of the member nation. Consequently, decision-making is heavily influenced by Western industrial powers, with the United States holding an effective veto power over key decisions India and the Contemporary World – II, NCERT, p.75.

Feature	International Monetary Fund (IMF)	World Bank (IBRD)
Primary Role	Monetary cooperation & Exchange stability	Economic development & Poverty reduction
Lending Type	Short-term loans for BoP support	Long-term loans for projects/reforms
Main Funding	Quotas subscribed by members	Borrowing from international bond markets

Sources: Indian Economy, Nitin Singhania, International Economic Institutions, p.512; Indian Economy, Nitin Singhania, International Economic Institutions, p.528; Indian Economy, Nitin Singhania, International Economic Institutions, p.552; Indian Economy, Vivek Singh, International Organizations, p.396; India and the Contemporary World – II, NCERT, The Making of a Global World, p.75

2. South-South Cooperation and the IBSA Forum (basic)

To understand the current landscape of international finance, we must first look at South-South Cooperation. Historically, global aid followed a 'North-South' model, where wealthy, developed nations (the North) provided assistance to developing ones (the South). However, South-South cooperation flipped this script. It is a manifestation of solidarity among nations of the Global South, based on shared colonial histories and common development challenges. Unlike traditional aid, which often came with strings attached, South-South cooperation is built on the principles of sovereignty, non-interference, and mutual benefit.

A shining example of this is the IBSA Forum, established in 2003, bringing together three vibrant democracies from three different continents: India, Brazil, and South Africa. What makes IBSA unique is its focus on being a 'bridge' across the Atlantic and Indian Oceans. A key instrument of this forum is the IBSA Trust Fund. Each member contributes US$ 1 million annually to this fund, which is used to implement poverty alleviation and hunger-reduction projects in other developing countries Indian Economy, Nitin Singhania, Poverty, Inequality and Unemployment, p.32. This fund is notably managed by the United Nations Office for South-South Cooperation, showing how these nations leverage international systems to help the world's least developed countries.

This spirit of cooperation eventually paved the way for more robust financial institutions. For instance, the Contingent Reserve Arrangement (CRA) was created by the BRICS nations (which include the IBSA trio) to provide a financial safety net against short-term liquidity pressures. The CRA is a direct alternative to the traditional 'lender of last resort' model, which many developing nations felt was biased toward Western interests Indian Economy, Nitin Singhania, International Economic Institutions, p.530. By creating their own mechanisms, these countries are ensuring that their voting rights and economic voices are proportionate to their actual share of the global population and economic growth Indian Economy, Nitin Singhania, International Economic Institutions, p.528.

Feature	North-South Cooperation	South-South Cooperation (e.g., IBSA)
Nature	Donor-Recipient relationship	Partnership among equals
Focus	Financial aid and conditionalities	Knowledge sharing and technical exchange
Governance	Dominated by G7 / Western powers	Egalitarian; often equal voting rights

Sources: Indian Economy, Nitin Singhania, Poverty, Inequality and Unemployment, p.32; Indian Economy, Nitin Singhania, International Economic Institutions, p.528, 530

3. Regional Development Banks: The ADB and AIIB (intermediate)

To understand the landscape of modern finance, we must look at Regional Development Banks (RDBs). While the World Bank operates globally, RDBs like the Asian Development Bank (ADB) and the Asian Infrastructure Investment Bank (AIIB) focus their resources on specific geographic needs. These institutions are essentially specialized lenders that provide long-term finance to sectors where commercial banks often fear to tread due to high risks Indian Economy, Nitin Singhania, Chapter 10, p.181. The Asian Development Bank (ADB), established in 1966 and headquartered in Mandaluyong, Philippines, is the elder statesman of the two. It was created to foster social and economic development in Asia. A unique feature of the ADB is its membership; although its focus is Asia, it includes members from across the globe, such as the United States Indian Economy, Nitin Singhania, Chapter 18, p.530. Like the World Bank, it operates on a weighted voting system, meaning a country’s influence is tied directly to how much capital it subscribes. This has historically given significant power to Japan and the U.S. In contrast, the Asian Infrastructure Investment Bank (AIIB) is a much newer player, commencing operations in 2016 with its headquarters in Beijing Indian Economy, Vivek Singh, Chapter 13, p.400. The AIIB was born out of a perceived discontent with the Western-dominated IMF and World Bank. While it focuses heavily on infrastructure — ranging from energy and transport to urban development — its membership is remarkably broad. It currently boasts over 100 members, and notably, membership is open to any country that is already a member of the World Bank (IBRD) or the ADB Indian Economy, Nitin Singhania, Chapter 18, p.532.

Feature	Asian Development Bank (ADB)	Asian Infrastructure Investment Bank (AIIB)
Established	1966	2016
Headquarters	Manila (Philippines)	Beijing (China)
Primary Focus	Social and Economic Development	Infrastructure Connectivity
India's Role	Founding Member	Founding Member (2nd largest shareholder)

For a UPSC aspirant, it is crucial to remember that while China is the largest shareholder in the AIIB, India holds the second-largest share and significant voting power. Both banks serve to bridge the massive "infrastructure gap" in Asia, yet they represent different eras of geopolitical cooperation.

Sources: Indian Economy, Nitin Singhania, Money and Banking, p.181; Indian Economy, Nitin Singhania, International Economic Institutions, p.530; Indian Economy, Nitin Singhania, International Economic Institutions, p.532; Indian Economy, Vivek Singh, International Organizations, p.400

4. The G20 and Global Financial Governance (intermediate)

The G20 (Group of Twenty) emerged as the premier forum for international economic cooperation following the Asian Financial Crisis of 1997-98. Its primary mission is to bring together systemically important industrialized and developing economies to discuss and manage risks to the global economy. Established in 1999, it consists of the finance ministers and central bank governors from 19 countries and the European Union Indian Economy, Nitin Singhania, Chapter 18, p.547. Because its members represent approximately 90% of global GDP, 80% of world trade, and two-thirds of the world’s population, the G20's decisions carry immense weight in shaping global financial governance.

While the G20 provides the political and strategic direction, it relies on institutional heavyweights like the International Monetary Fund (IMF) to monitor the pulse of the global economy. The IMF tracks international monetary stability and advises countries on potential risks through two major publications: the World Economic Outlook (WEO) and the Global Financial Stability Report (GFSR) Indian Economy, Nitin Singhania, Chapter 18, p.514. The GFSR is particularly crucial as it identifies structural imbalances and financial risks that could destabilize global markets, providing the data necessary for G20 leaders to coordinate their policies Indian Economy, Nitin Singhania, Chapter 18, p.519.

To implement this global vision of financial stability at the domestic level, India established the Financial Stability and Development Council (FSDC) in December 2010. The FSDC is a non-statutory apex-level body chaired by the Union Finance Minister Indian Economy, Vivek Singh, Money and Banking - Part II, p.133. It acts as a bridge between various regulators (like RBI, SEBI, and IRDAI) to enhance inter-regulatory coordination and promote financial sector development. This domestic architecture mirrors the G20’s global objective of maintaining a resilient financial ecosystem.

Feature	G20 (Global Forum)	FSDC (Indian Context)
Nature	Deliberative forum for economic cooperation	Non-statutory apex forum for financial stability
Key Participants	Finance Ministers & Central Bank Governors of 19 nations + EU	Finance Minister, RBI Governor, and heads of SEBI, PFRDA, IRDA
Output	Policy coordination & consensus-building	Financial Stability Report (FSR) published via RBI Indian Economy, Nitin Singhania, Money and Banking, p.173

Sources: Indian Economy, Nitin Singhania, International Economic Institutions, p.547; Indian Economy, Nitin Singhania, International Economic Institutions, p.514; Indian Economy, Nitin Singhania, International Economic Institutions, p.519; Indian Economy, Vivek Singh, Money and Banking - Part II, p.133; Indian Economy, Nitin Singhania, Money and Banking, p.173

5. Evolution of BRICS: From Acronym to Geopolitical Bloc (intermediate)

The transformation of BRICS from a catchy investment acronym coined by Goldman Sachs into a formidable geopolitical bloc is one of the most significant shifts in 21st-century global governance. Initially, the group focused on economic cooperation, but the 2012 New Delhi Summit marked a turning point where members proposed creating their own financial institutions. This was driven by a deep-seated frustration with the Bretton Woods institutions (the IMF and World Bank), which were perceived as being too Western-centric. For instance, despite accounting for nearly half the world's population, BRICS nations held less than 15% of the voting rights in the IMF Indian Economy, Nitin Singhania, Chapter 18, p.528.

The institutional backbone of this bloc was formalized during the 5th BRICS Summit in Durban (2013), where leaders agreed to establish the New Development Bank (NDB). Headquartered in Shanghai, the NDB was designed to mobilize resources for infrastructure and sustainable development projects, not just within BRICS but in other emerging economies as well Indian Economy, Vivek Singh, Chapter 13, p.401. Unlike the World Bank, where voting power is tied to shareholding, the NDB started with a unique model of equal voting rights for all founding members, ensuring that no single nation could dominate the others.

To further safeguard their economies against global financial volatility, the bloc created the Contingent Reserve Arrangement (CRA). This is essentially a $100 billion financial safety net designed to help members manage Balance of Payments (BoP) crises or short-term liquidity pressures Indian Economy, Nitin Singhania, Chapter 18, p.530. While China contributed the largest share ($41 billion), the CRA remains a symbol of South-South cooperation, providing an alternative to the often stringent conditionality of IMF bailouts. Through these institutions, BRICS evolved from a discussion forum into a collective force capable of challenging the existing global financial architecture.

Sources: Indian Economy, Nitin Singhania, Chapter 18: International Economic Institutions, p.528, 530; Indian Economy, Vivek Singh, Chapter 13: International Organizations, p.401

6. The 5th BRICS Summit: Birth of the NDB and CRA (exam-level)

The 5th BRICS Summit, held in Durban, South Africa (March 2013), marked a transformative shift for the BRICS grouping. It evolved from being a diplomatic talk-shop into a cohesive economic bloc capable of building its own financial architecture. The primary motivation was a shared frustration with the Bretton Woods institutions (the IMF and World Bank), which were perceived as being heavily biased toward Western interests. For instance, while BRICS nations represent nearly half the global population, their voting rights in the IMF remain significantly below their economic weight, hovering under 15% Indian Economy, Nitin Singhania, Chapter 18, p. 528.

The Durban Summit’s most significant outcome was the formal decision to establish the New Development Bank (NDB). Unlike the World Bank, where voting power is determined by capital contribution (leading to Western dominance), the NDB was founded on the principle of equality. Each of the five founding members was given an equal share and equal voting power, ensuring that no single nation could dominate the bank's agenda Indian Economy, Vivek Singh, Chapter 13, p. 401. The bank’s mission is to mobilize resources for infrastructure and sustainable development projects, not just within BRICS, but in other emerging economies as well.

Alongside the NDB, the summit laid the groundwork for the Contingent Reserve Arrangement (CRA). If the NDB is the BRICS version of the World Bank, the CRA is their answer to the IMF. It serves as a financial safety net, providing short-term liquidity support to member nations facing Balance of Payments (BoP) pressures Indian Economy, Nitin Singhania, Chapter 18, p. 530. Together, these two institutions represent a landmark in South-South cooperation.

Feature	New Development Bank (NDB)	Contingent Reserve Arrangement (CRA)
Primary Role	Long-term financing for infrastructure projects.	Short-term liquidity support for currency/BoP crises.
Global Parallel	World Bank (IBRD)	International Monetary Fund (IMF)
Total Capital	$50 Billion (Initial subscribed)	$100 Billion

Sources: Indian Economy, Nitin Singhania, Chapter 18: International Economic Institutions, p.528, 530; Indian Economy, Vivek Singh, Chapter 13: International Organizations, p.401

7. Solving the Original PYQ (exam-level)

Now that you have mastered the evolution of the BRICS grouping from a diplomatic forum to a formal institutional powerhouse, you can see how this question tests the institutionalization phase of the bloc. In your learning path, we explored the concept of South-South Cooperation and the collective desire to create an "alternative global architecture" to challenge the dominance of Bretton Woods institutions. The fifth BRICS summit in Durban (2013) serves as the historical bridge where the theoretical need for an alternative lender became a concrete policy reality, directly leading to the landmark decision to create the New Development Bank (NDB).

To arrive at the correct answer, (A) Establishment of a new development bank, you must distinguish between aspirational dialogue and structural outcomes. While BRICS leaders frequently discuss global governance, the term "major decision" in a UPSC context usually refers to a tangible, multi-lateral commitment. As highlighted in Indian Economy, Vivek Singh (7th ed. 2023-24), this specific summit was the turning point where the feasibility study commissioned in New Delhi was finalized into a formal agreement. This move was designed to bypass the perceived biases of the IMF and World Bank, providing a $100 billion financial safety net through the Contingent Reserve Arrangement (CRA), as detailed in Indian Economy, Nitin Singhania (ed 2nd 2021-22).

UPSC often uses common themes as distractors to test your precision. For instance, Reformation of the United Nations is a perennial topic in every BRICS communique, but it is an ongoing diplomatic demand, not a decision the bloc can unilaterally implement. Similarly, Common military exercises (Option C) and Cultural exchanges (Option D) represent either security cooperation or soft power initiatives that lack the macroeconomic significance of a development bank. Always look for the landmark institutional breakthrough when a question asks for a "major decision" of a global summit.