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Our Bureau

Rakesh Mohan suggests new quota formula

Mumbai April 14 India has reiterated its stand for realignment of IMF quota system that will ensure greater voting rights for India and other "under-represented members."

Dr Rakesh Mohan, Deputy Governor, RBI, and leader of the Indian delegation to IMF, on Saturday suggested a new quota formula that will rebalance the system in line with the global economic realities.

IMF quota is the subscriptions paid by member countries.

The amount is based broadly on its relative size in the world economy, which also determines the members' voting rights. Normally, it is paid in Special Drawing Rights, the account unit of IMF.

In his statement at the meeting of the International Monetary and Financial Committee in Washington, Dr Mohan said the "fundamental reform (in quota system) has to come by giving greater share to the under-represented counties while that of over-represented countries would need to come down."

The challenge today is to achieve this reform through a new simple transparent and liner quota formula.

"We believe this is possible if we work towards a new system that seeks to achieve two outcomes.

First, such formula must result in the rebalancing of quota shares in keeping with the economic changes that have taken place globally. Second, is the objective that quota shares of low income countries are protected to the fullest extent possible."

These twin outcomes can only be met if, in new formula, GDP is computed entirely on purchasing power parity basis, he said.

Dr Mohan also expressed India's commitment to economic reforms, fiscal prudence and monetary stability in accordance with the fiscal responsibility legislation.

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Demand for more voting rights for India at IMF

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