 "Narendra Modi")
Emphasising the need for continuous reforms of global institutions, Prime Minister Narendra Modi on Saturday said that International Monetary Fund's (IMF) impending quota reforms will give more say to countries like India in the decision-making process.
Calling India the ‘rare bright spot’ amid global gloom, IMF chief Christine Lagarde urged for further reforms in the Asian economies. She outlined six priorities for the region to counter challenges posed by the fragile global environment at the Advancing Asia conference jointly organized by India and the Fund.
Modi and Lagarde also signed a pact to set up an IMF training and technical assistance Centre in Delhi for the South Asian region towards capacity development. The centre will aim at training officials in dealing with macro-economic and financial issues in the six countries- India, Nepal, Sri Lanka, Maldives, Bangladesh and Bhutan.
Addressing Lagarde, prime minister said that reforms of global institutions must reflect changes in the global economy and the rising share of emerging economies. “Madam Lagarde, the long pending quota revisions agreed in 2010 have finally come into effect… I am very happy that the IMF has decided to finalise the next round of quota changes by October 2017,” said Modi at the second day of the three day conference.
The reforms, pending for several years, were approved by the US Congress in 2015. The 2010 Quota and Governance reforms were approved by the IMF's Board of Governors in December 2010.
Pointing out that the current IMF quotas did not reflect the global economic reality, Modi said that India always had great faith in multilateralism. “All of us need to pursue policies that provide a stable macro economy, enhance growth and further inclusion,” the prime minister added.
Once the reforms come into effect, India’s quota in the IMF would rise to 2.7% from the existing 2.44%. Also, the voting share of India would increase to 2.6% from 2.34%. For the first time, four emerging market (EM) countries of the Brics bloc — Brazil, China, India and Russia — will be among the 10 largest members of IMF. Others in the top 10 are America, Japan, France, Germany, Italy and Britain.
On Friday, Finance Minister Arun Jaitley moved the Supplementary Demand for Grants in the Parliament seeking a grant of Rs 69,575.47 crore towards the subscription to IMF for an increase in the quota.
Under the quota reforms, more than 6% of quota shares would shift to dynamic emerging markets and developing countries. It would also mark the shift in shares from over-represented to under-represented IMF members.
IMF managing director Lagarde said India was a rare bright spot in this current global economic turmoil. "India stands at a crucial moment in its history -- with an unprecedented opportunity for transformation. Important reforms are underway. Think, for example, of 'Make in India' and 'Digital India'. With promise of more reforms to come, India's star shines bright,” she said. Aadhar is a ground-breaking way to deliver targeted subsidies," Lagarde added, a day after the Lok Sabha passed the Aadhar Bill.
This comes a week after the IMF warned of another downgrade to the global growth outlook. Lagarde urged Asian economies to opt for growth friendly monetary and fiscal policies to counter the economic turmoil. "What should be Asia's response?...It is safe to say that structural reforms are key — to boost competitiveness, growth, and jobs," she said.
Central banks in Europe and Japan have opted for negative interest rates to boost consumer demand and emerge from extremely low inflation.
Lagarde outlined six priorities for Asia to realize full potential, including broadening access health and finance services through steps like Jan Dhan Yojana, leveraging fiscal policy impact with instruments like conditional cash transfer programs, empowering women with access to education, providing amenities like water and sanitation and better infrastructure. IMF chief also pitched for greater global trade integration for more sustained growth and tackling challenge of climate change.
