Challenging club rules

At one level, FM P Chidambaram?s argument about India being left out of a new round of increased voting power in the IMF as ?hopelessly flawed? is valid.

At one level, Finance Minister P Chidambaram’s argument about India being left out of a new round of increased voting power in the IMF as “hopelessly flawed” is valid. Some 23 countries led by India voted this week at the annual meetings held in Singapore against the IMF reforms that increased voting shares of China, Turkey, South Korea and Mexico. India, in a role somewhat reminiscent of its position in the UN Security Council and the WTO, sounded articulate and righteous as the Finance Minister spoke up for poor nations and for a broader, deeper representation in the power structure.

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But at another level, the government would do well to remember that the IMF is a club, not a democratic republic where a majority rules. A club, almost by definition, is one in which the mystique of co-option or elevation lies in subtle assertion rather than protest. Thanks to its growing economic might and sturdy track record in security engagements, India is already a ‘strategic partner’ of the US and is also getting to sup with the G-8 elite as an observer among developed countries. In contrast, however, India’s efforts to increase its clout in the IMF have not quite clicked, howsoever forthright our arguments have been. The IMF, as a club ruled by the rich, links voting rights to a nation’s financial contribution, its GDP in dollar terms and openness of markets. India wants the effective purchasing power of the rupee to be counted in, alongside its own compulsions in hastening slowly on some market reforms.

To be fair, India’s voice in the IMF is one of elegant protest that stops short of shrillness. But we would still need to remember the old saying: “If you need to ask for the price, you can’t afford the yacht”. All things happen in good time, and sustained 8 per cent economic growth can do more for India than the finest of arguments.