A supplementary demand of grant of Rs.69,575 crore was presented in the Parliament on Friday for increasing the quota reforms of India in the International Monetary Fund (IMF). The additional demand introduced by the government to increase the voting rights of India at the IMF.
The Long pending IMF quota reforms finally came into effect. India along, with many emerging and developing economies has been demanding these changes for a very long time, to improve government Architecture of the International Financial Institutions.
Quota reforms in IMF will give more say to countries like India in decision making
It aims to ensure an equal and democratic participation from developing countries in the institution. These reforms as decided under the 14th general review of quotas include, realigning more than 6 percent of quota shares to developing countries from the US and European countries.
India voting rights have increased from 2.34% to 2.44% and China’s 6% to 3.8%, as per the new division. On the other hand, US voting shares will marginally drop from 16.7% earlier to 16.5% now.
As a result, the four of BRICS countries, Brazil Russia, India and China, will become the ten largest shareholders of the fund.
Other reforms include doubling a permanent capital resource, which will increase the financial strength of the IMF. The first time the executive directors in the IMF board will be entirely elected rather than appointed.
Although, the reforms were approved by the IMF’s boards of governors in 2010, in the absence of approval by the US and the implementation of the reforms was delayed.
This development will reinforce the credibility and legitimacy in the multilateral financial institution.
It becomes necessary in the way of growing interest in regional bodies like new development bank by the BRICS countries and China-led Asian Infrastructure Investment Bank.
Emerging markets in the developing countries are now hopeful for the review of the existing quota formula following their current position in the world economy. It will make the IMF more representatives ensuring an equal and democratic participation.