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India demands greater say in IMF decision-making process

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Continues to call for `equitable' reforms in IMF

The Finance Minister, Mr P. Chidambaram.
The Finance Minister, Mr P. Chidambaram.

P. S. Suryanarayana

More reforms


India would

continue to press for IMF reforms so that the institution could "reflect the economic strength of countries in the 21st century." Towards this end of making the IMF think out of the Bretton Woods box, India would be "looking forward" to bring about "a new and more equitable formula" based on "relevant criteria."

Singapore, Sept. 19

The Finance Minister, Mr P. Chidambaram, on Tuesday re-asserted India's claims for a greater say in the decision-making process of the International Monetary Fund (IMF) and, in the same breath, affirmed New Delhi's intention to remain "proactive" in the campaign for "equitable" reforms of the institution.

In an interview to

Business Line

, Mr Chidambaram said: "Based on market exchange rate, India stands at either 10 or 11 (among all IMF members). Based on PPP (purchasing power parity), India's rank is four. How can this be ignored? Why should it be ignored? As long as we continue to grow at eight per cent, be a major economy of the world, have high (foreign exchange) reserves, ability to contribute to the IMF, why should we be ignored?"

That point, he said, had been driven home during India's latest effort here, in association with Brazil and Argentina as also Egypt, to try and force the IMF to abandon a "flawed" reform plan regarding its power structure. These countries failed, as the IMF voted on Monday, by a landslide margin, to begin implementing the first stage of a two-year-long reform process. He said India lost the campaign but won the argument.

India would, therefore, continue to press for IMF reforms so that the institution could "reflect the economic strength of countries in the 21st century." Towards this end of making the IMF think out of the Bretton Woods box, India would be "looking forward" to bring about "a new and more equitable formula" based on "relevant criteria."

He cited these national-level indices as the gross domestic product on the purchasing power parity basis, foreign exchange reserves and the growth rate.

He noted that the Group of Seven industrialised nations, especially the US and Germany, had assured India that they would exert their influence and authority on the IMF stage so that a new reform formula could be evolved.

As for raising India's own profile to gain a greater voice in the IMF's inner circles, he said: "It is because we are growing at 8.3 (per cent) that we are walking here with our head held high."

In any case, an eight per cent growth rate was not an option but an imperative for India's economic progress.

Asked about the recent difficulties in India's engagement with the World Bank, Mr Chidambaram said: "There were two loan programmes (of the Bank), which were put under temporary suspension. In both cases, we stood firm. ... and the World Bank lifted the suspension. ... We are (now) willing to put in place any corrective measure to ensure that loans received from the World Bank are spent strictly in accordance with the conditionalities of that loan and without the taint of corruption or any misfeasance."

He traced how India played an important role, during the World Bank's ongoing meetings here, to "mitigate the risk" in its new strategy.

The Bank agreed that "the strategy must be further developed and that the implementation of the strategy must be "with the full involvement of an oversight by the Executive Board.' "

Related Stories:
Setback to India in IMF reform vote
IMF to work for `a broader reform of quotas and voices'

(This article was published in the Business Line print edition dated September 20, 2006)
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