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Daily Mains Question – GS 2 – 28th July 2025

  • Writer: TPP
    TPP
  • Jul 28
  • 4 min read
Daily Mains Question – GS 2 – 28th July 2025

Welcome to your daily Mains Model Answer — crafted to examine the evolving dynamics of global governance, a crucial theme in GS Paper 2 under International Relations. Today’s question explores how the BRICS grouping challenges the Western-led liberal international order through strategic initiatives such as de-dollarisation and the establishment of alternative financial and developmental institutions.

Since its formation, BRICS (Brazil, Russia, India, China, South Africa) has sought to contest the dominance of Western-dominated institutions such as the IMF, World Bank, and WTO. These multilateral bodies, shaped post-World War II, reflect the values and interests of the United States and its allies. However, as BRICS expands and consolidates its influence, it aims to create a new framework that represents the interests of the Global South. This discussion connects with GS Paper 2 (International Relations and Global Governance) and GS Paper 3 (Economic Development and Global Financial Systems).


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QUESTION

Examine the role of BRICS in reshaping global economic governance. How do its initiatives in de-dollarisation, alternative financial institutions, and development models challenge the existing Western-dominated international order?

Answer: The BRICS grouping, comprising Brazil, Russia, India, China, and South Africa, has emerged as a significant force challenging the established Western-led liberal international order that has shaped global governance since the end of World War II. BRICS seeks to address the imbalances in the existing global economic system, which is dominated by institutions like the IMF, World Bank, and WTO, largely driven by the interests of the United States and its allies. As the Global South gains a more prominent voice through BRICS, the group’s efforts in de-dollarisation, establishing alternative financial institutions, and promoting inclusive development models reflect its goal to provide a platform for countries that were marginalized in the postwar system. These efforts pose a direct challenge to the Western-dominated economic and financial order, advocating for a more equitable global economic system.


1. Post-WWII International Order:

  • Bretton Woods Institutions: Established post-World War II, institutions like the IMF, World Bank, and WTO were designed under U.S. leadership, representing free-market ideals and Western economic interests.

  • U.S. Dollar Dominance: The U.S. dollar became the global reserve currency, solidifying U.S. financial power and allowing the U.S. to leverage tools like sanctions and SWIFT for political influence.

  • Western-Centric System: Despite the economic benefits for developed nations, many emerging economies in the Global South view these institutions as biased and inequitable, leading to a call for reforms.


2. BRICS Origins and Objectives:

  • Formation of BRICS: BRICS was created to challenge the dominance of Western institutions and represent the interests of developing countries.

  • Reform of Multilateral Institutions: A major BRICS objective is to secure greater representation and voting shares in the IMF and World Bank, which are currently tilted in favor of Western nations.

  • Promote Alternative Development Models: BRICS aims to provide models of development that focus on sustainability, inclusivity, and state-led growth rather than purely market-driven liberalization.


3. De-dollarisation Efforts:

  • Dollar Dominance: The U.S. dollar’s central role in global trade and finance gives the U.S. significant economic and political power, particularly through sanctions and the global SWIFT network.

  • BRICS’ Approach to De-dollarisation:

    • Local Currency Trade: China and Russia conduct over 80% of their trade in renminbi and rouble, respectively, bypassing the dollar.

    • India’s Initiatives: India has begun settling transactions in rupees with countries like Iran, Sri Lanka, and the UAE, particularly in sectors like oil.

    • BRICS New Development Bank (NDB): The NDB issues loans in local currencies, reducing the exposure to dollar fluctuations and offering more cost-effective financing for the Global South.


4. Establishment of Parallel Financial Institutions:

  • New Development Bank (NDB):

    • Created in 2014, NDB aims to provide financing for infrastructure and sustainable development in emerging economies, offering an alternative to the IMF/World Bank system, which many view as biased and conditional.

    • The NDB provides low-interest loans to developing countries for long-term projects, with a focus on infrastructure development and poverty alleviation.

  • Contingent Reserve Arrangement (CRA):

    • The CRA is a liquidity support mechanism designed to assist BRICS countries during times of financial crisis, acting as a safety net to reduce reliance on the IMF.


5. Alternative Development Models:

  • State-Led Development: Unlike the Western liberal model, which emphasizes market liberalization, BRICS advocates for state-led growth, particularly through infrastructure development.

  • Focus on Sustainability: BRICS promotes sustainable development that addresses both economic growth and social equity, aiming for an inclusive model that focuses on poverty alleviation and environmental protection.

  • Inclusivity and Equity: The group challenges the traditional neoliberal development model that often prioritizes profits over social welfare, calling for people-centered development.


6. Empowering the Global South:

  • Voice for Marginalized Nations: BRICS provides a platform for countries from the Global South to challenge the dominance of Western countries in setting global rules.

  • Frustration with the Status Quo: Many BRICS nations share a common frustration over the existing global system, where decisions often ignore the issues faced by developing countries, such as inequitable trade, debt, and financial instability.


BRICS, through its efforts to de-dollarise, create parallel financial institutions, and promote inclusive development models, represents a challenge to the Western-led liberal international order. The grouping offers an alternative to institutions like the IMF and World Bank, which are seen as disproportionately benefiting developed nations. By advocating for a more equitable global economic system, BRICS empowers the Global South and seeks to ensure that emerging economies have a larger role in shaping international economic policies.


However, the success of these efforts will depend on continued cooperation among BRICS members and their ability to garner support from other developing nations. BRICS is gradually reshaping global governance, aiming for a multipolar world where power and influence are more equitably distributed.


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