The United States has offered to support India’s push for a greater say in International Monetary Fund and the World Bank to reflect the growing economic might of emerging nations.
India has been leading the pitch for the US to ratify a 2010 reform package of the IMF, which would allow emerging countries to have a greater say in decisions on aid that the IMF and World Bank hand out.
Washington, which has been blocking the reform package, changed its stance after PM Narendra Modi’s recent hard-sell about India’s growing significance in the global economic order, sources said. “The US support shows the greater importance Washington attaches to India, a natural ally by all means,” a source said.
Quotas — which are denominated in special drawing rights (SDRs), the IMF’s unit of account — largely determine a member’s voting power in the multilateral body’s decisions. The current quota formula is a weighted average of GDP (weight of 50 %), openness (30%), economic variability (155), and international reserves (5%). For instance, the quota reform, once implemented, will increase India’s voting share from the current 2.44% to 2.75%, and will make it the eighth largest quota holder at the IMF, up from the present 11th position.
The US support is significant as it comes months ahead of both the G-20 summit in November and the 15th quota review of the IMF in January 2015.