PM Modi is a favoured leader in both Brics and the West, says economist Jim O’Neill

Former Goldman Sachs economist Jim O’Neill says Prime Minister Narendra Modi has skilfully positioned India between the BRICS bloc and the West, giving New Delhi an influential role ahead of the summit. He also argues that stronger India-China trade, deeper structural reforms in India and changes to domestic savings patterns in the US and China are key to addressing global economic imbalances.

Prime Minister Narendra Modi has emerged as a “favoured leader” among both BRICS countries and the West, a position that former Goldman Sachs chief economist Jim O’Neill described as a significant achievement amid growing geopolitical tensions.

Speaking in an exclusive conversation with Firstpost, O’Neill said Modi’s ability to maintain direct channels with US President Donald Trump, Russian President Vladimir Putin and Chinese President Xi Jinping could be particularly important as India hosts the BRICS summit.

“I think it’s been very skilful of Prime Minister Modi to be in that position,” O’Neill said. “He is a sort of favoured leader from both the other BRICS countries and also from the West, and it’s quite an achievement because that’s not the easy thing to do these days.”

O’Neill said the manner in which India hosts the summit, including what Modi and his team communicate publicly and privately, would be closely watched. In particular, he pointed to discussions around a proposed BRICS payment system.

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He noted that comments from the Reserve Bank of India appearing more favourable towards the idea had surprised him, given what he described as India’s traditionally more cautious position compared with some other BRICS countries.

“If India is now wanting to take an important lead role in it, then I think that gives it a whole lot more credibility,” he said.

China-India trade could accelerate global commerce

On the future of world trade amid rising protectionism, particularly following the acceleration of tariff measures under Trump, O’Neill argued that domestic demand in the world’s largest economies remains the more important driver.

He said it was “superficial” to attribute the slowdown in global trade primarily to protectionist measures.

According to O’Neill, weak Chinese domestic demand has been a more significant factor. If China were to boost domestic demand and simultaneously pursue stronger trade relations with India, he said, global trade could accelerate sharply regardless of political rhetoric around protectionism.

“If the Chinese decide to boost domestic demand growth, and if China were to undertake stronger, deliberately positive trade relationships with India and vice versa, you would see a dramatic acceleration in world trade,” he said.

India can grow faster with deeper reforms

Assessing the Indian economy, O’Neill said the country’s demographic position remains a major advantage, although he argued that India could achieve even stronger growth through additional structural reforms.

He highlighted education and health management as two areas where greater progress could increase the number of healthy and educated people participating in the workforce.

“If you could raise the number of educated and healthy people in the workforce, India has the potential to be growing by more than 10 per cent still,” he said.

O’Neill cautioned that India’s demographic advantage would not last indefinitely, with signs already emerging that the country’s demographic profile is beginning to change.

Nevertheless, he said India remains in the latter part of what he called a demographic “sweet spot”, in which growth of around 10 per cent could theoretically be achieved if accompanied by further reforms.

Even growth of 6–7 per cent, he added, remains “pretty spectacular” compared with many other major economies and explains why India is becoming an increasingly important contributor to global GDP.

US-China trade imbalance is rooted in domestic savings

On China’s large trade surpluses and the US response through tariffs, O’Neill said the problem is simultaneously a trade, currency and structural issue.

At its core, he argued, trade and current account imbalances reflect differences between domestic savings and investment.

“The actual mathematical fact is the US doesn’t save enough, so it requires foreign capital,” he said. “And if you depend on foreign capital, that means you’re going to be running trade and current account deficits.”

O’Neill argued that tariffs cannot fundamentally resolve the imbalance unless they significantly suppress domestic demand and imports.

Instead, bilateral trade patterns can simply change. A lower US trade deficit with China could be accompanied by a larger Chinese surplus with other countries, leaving the broader global imbalance largely intact.

He said the longer-term solution would require China to reduce its high savings rate, strengthen domestic demand and allow significant appreciation of the renminbi, while the US would need to increase domestic savings.

“That’s the only way you’re going to solve these things,” O’Neill said, adding that “everybody knows it, except for the politicians.”

BRICS unlikely to resolve West Asia crisis

On the West Asia crisis and the ongoing Iran war, O’Neill was sceptical that the BRICS summit itself would produce a breakthrough.

He pointed out that BRICS meetings had taken place over several years while the Russia-Ukraine war continued, highlighting the limitations of the grouping in resolving major geopolitical conflicts.

“I can’t imagine that this summit is going to do anything to resolve that crisis, unfortunately,” he said.

However, he added that influential countries, including BRICS members, could potentially contribute to efforts to find a resolution.

O’Neill said wars would eventually end when the countries involved concluded that doing so was in their mutual interest, but he did not expect the West Asia conflict to become the summit’s primary focus.