India assured greater say in global financial matters
India and other developing nations have been assured greater say in the affairs of the World Bank and the IMF, even as New Delhi offered $10 billion to address the worst global crisis in six decades.business Updated: Apr 27, 2009 15:30 IST
India and other developing nations have been assured greater say in the affairs of the World Bank and the International Monetary Fund (IMF), even as New Delhi offered $10 billion to address the worst global crisis in six decades.
Attending a host of meetings here over the weekend, Indian interlocutors led by Planning Commission Deputy Chairman Montek Singh Ahluwalia also sought a hike in the country's voting rights at the IMF and committed to make 2010 the 'year of global economic recovery'.
Indian delegates who also included Reserve Bank of India Governor D. Subbarao and Economic Affairs Secretary Ashok Chawla participated at the spring summer meetings of the IMF and World Bank, apart from the discussions among G20 finance ministers and central bank governors.
During the meetings, India proposed a three-point action plan for the World Bank to help fight the global slowdown and commanded the same influence that was visible during the G20 summit in London earlier this month, attended by Prime Minister Manmohan Singh.
"The changing dynamism of the global economy and the evolving weights of developing economies need to be reflected in the governance structure of the World Bank," Chawla said at the meetings.
"This is also necessary if they have to see a role for the (World) Bank in addressing new challenges emerging across the globe - be they climate change, energy or food," he said.
According to Ahluwalia, India has agreed to contribute $10 billion as its share of the additional resources for the IMF, and made it clear it would be willing to contribute more if its voting rights were enhanced beyond the current 2 percent.
The country, however, wanted to make this contribution in the form of securities that can be subscribed to by its central bank rather than direct funding by the government, so as to keep the fiscal deficit in check, he said.
"Our view is that our importance in world economy is more than 2 percent," Ahluwalia said, adding: "If they increase our quota, we would be willing to contribute more in proportion."
The next review of quotas comes up in 2011, and India additionally represents Bhutan, Bangladesh and Sri Lanka.
Chawla also listed the three-point agenda proposed by India for the World Bank to overcome the sharp slowdown that had cast a shadow on rapid economic growth, eradication of poverty and in achieving the Millennium Development Goals (MDG).
These were: A substantial increase in lending, a review of the lending capacity and the capital adequacy, and access to required levels of finance for larger developing countries through increased lending limits.
"All the three issues are important and we need to direct the Bank to start work on all fronts," Chawla said, noting that the lending needs of the developing world were enormous.
According to him, the changing dynamism of the global economy and the evolving weights of developing economies also need to be reflected in the World Bank's governance structure.
"Today, a significant portion of incremental global economic growth is being contributed by developing countries who have the potential to be important drivers of future global economic growth," Chawla said.
"This fact needs to be recognised in the structure of the World Bank."
Subbarao said the crisis has put to test the collective leadership of the world and the competence and relevance of multilateral institutions. "We are grappling with a crisis that has afflicted the entire world whether at the core or in the periphery."
During the meetings, there was a general consensus that the economic downturn was turning into a human and development calamity, which had already driven more than 50 million people into extreme poverty this year.
"There is widespread recognition that the world faces an unprecedented economic crisis, poor people could suffer the most and we must continue to act in real time to prevent a human catastrophe," World Bank chief Robert Zoellick said.
The Bank's policy steering committee, which also met here over the weekend and will again convene in Istanbul in October, also came out with a communique that agreed to accelerate reforms and reach an agreement by the next spring meetings.