Prime Minister Narendra Modi on Saturday advocated continuous reforms in the quota system at the International Monetary Fund (IMF) to better reflect global economic realities, apart from ensuring India and other emerging economies enjoy a greater say in the functioning of the multilateral body.
The Prime Minister said even now IMF quotas “do not reflect the global economic realities”, though long-pending quota revisions agreed to in 2010 have begun to be implemented.
“Reform of global institutions has to be an ongoing process. It must reflect changes in the global economy, and the rising share of emerging economies…. Change in quotas is not an issue of increasing the ‘power’ of certain countries.
It is an issue of fairness and legitimacy,” Modi said at the Advancing Asia conference, organised by the IMF in the capital. He, however, added he was happy the IMF has decided to finalise the next round of quota changes by October 2017.
Modi added that the latest quota reforms announced in January suggested greater weight attached to emerging economies in the global economy. After the changes announced in January, India’s quota in the IMF inched up to 2.7% from 2.4%, with the country moving up three places to become the eighth largest member of the IMF. India’s voting share rose to 2.6% from 2.3%. Although the IMF reforms were agreed upon by its 188 members in 2010 following the global financial meltdown, the delay in its implementation was caused by the fact that the US Congress was unwilling to approve the changes, fearing its grip over the IMF will ease. The US voting share was to marginally fall to 16.5% from 16.7%.
Four emerging market nations–Brazil, China, India, and Russia–will be among the 10 largest members of the IMF.
The US tops the chart, with Japan, France, Germany, Italy and the UK being the other members in the top 10 group.
In comments that some analysts think are perhaps aimed at China, Modi said: “Our rapid economic growth is also very distinct in Asia. We have never tried to gain in trade at the expense of our partners. We do not follow ‘beggar thy neighbour’ macro-economic policies. We have never undervalued our exchange rate. We add to world and Asian demand by running current account deficits. We are, therefore, good Asian and good global economic citizens, and a source of demand to our trading partners.”
The PM also stressed India has always practised the policy of peaceful coexistence. Three out of every five people in the world live in Asia, and its share in global output and trade is now close to one-third. Its share in global foreign direct investment is about 40% and its economic growth is higher than the developed nations, he added, highlighting the fact that Asia is the “ray of hope for global economic recovery”.
India and the IMF also signed an agreement to set up a training and technical assistance Centre towards capacity development of the multilateral body in Delhi for the south Asian region.