By Soumitra Bose/Mukesh Kumar Sinha
At a Glance – IMF-founder India and the IMF today : India in Narendra Modi Governance is partaking of timeless adage : ‘Better late than never’. With this spirit for the all round benefit of the country and the countrymen’s all round progress matching global standards, present Government is wholesale ‘in’ in International Monetary Fund (IMF). This is ironical considering India joined the IMF on December 27, 1945, as one of the IMF’s original members. ( Can U believe that?!? Do U, You Countrymen, now understand why India was {and still is} always Developing Country packed with all round under-development phenomena?).
If India would not be in erstwhile-now-fully-expunged USSR lobby (synonymous with non-development, deprivation, denial of rights/status/voice in the name of Communism cum Socialism cum equality cum egalitarianism, segregation from Developed World, forced oppression, inculcating suppression) for decades and instead be in US lobby (meaning continuous development lobby), India would be topmost in IMF today and would have exploited IMF to the fullest and developed the country in all sectors to the fullest matching US.
Thanks to the Powers that ruled India for so many years, they kept India all round deprived and made India penurious in all spheres, sectors. Indians as result of that are penurious, parsimonious.
(Make 2015 ‘Year of Action and Political Leadership’ : to India, IMF Chief Christine Lagarde. “The year 2015 must be the ‘year of rapid, continuous, hinderless, unobtrusive, relentless action’ when policymakers (in India) redouble efforts to tackle deep-seated economic weaknesses and show greater political leadership on infrastructure investment, trade agreements, and climate change, IMF chief Christine Lagarde advises)
India-IMF facts at a glance : · For India’s Governor, quota, and voting power in the IMF,
- For India’s Executive Director in the IMF and constituency,
- India accepted the obligations of Article VIII of the IMF Articles of Agreement on current account convertibility on August 20, 1994.
India subscribes to the IMF’s Special Data Dissemination Standard. Countries belonging to this group make a commitment to observe the standard and to provide information about their data and data dissemination practices.
Financial Assistance -While India has not been a frequent user of IMF resources, IMF credit has been instrumental in helping India respond to emerging balance of payments problems on two occasions. In 1981-82,
India borrowed SDR 3.9 billion under an Extended Fund Facility, the largest arrangement in IMF history at the time. In 1991-93, India borrowed a total of SDR 2.2 billion under two stand by
arrangements, and in 1991 it borrowed SDR 1.4 billion under the Compensatory Financing Facility. Further information on India’s financial position in the Fund,
Technical Assistance – In recent years, the Fund has provided India with technical assistance in a number of areas,
including the development of the government securities market, foreign exchange market reform, public expenditure management, tax and customs administration, and strengthening statistical systems in connection with the Special Data Dissemination Standards. Since 1981 the
IMF Institute has provided training to Indian officials in national accounts, tax administration, balance of payments compilation, monetary policy, and other areas.
Countries’ goal is to work with the Fund to stabilize the global economy by cooperating in practices which achieve that aim. Ideally, these countries are willing to forfeit some of their sovereign authority if it is necessary to strengthen the global economy.
In return, the IMF helps its members by:· Surveying global economic conditions.
- Advising member countries on methods to improve their economy.
- Providing short-term loans to avoid currency instability.
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Since the IMF does lend money, it is often confused with the World Bank . The Bank’s purpose is to lend money to developing countries for specific projects that will fight poverty. The IMF, on the other hand, only provides loans if it will help prevent a global economic crisis. Its overall goal is to prevent these crises through guidance to, and cooperation among, its members.
By now it is surely crystal clear that India is topmost in the priority list of IMF priorities, thanks to US egging it to the fullest.
The IMF is governed by a India-interested Board consisting of the finance minister or central bank leader of each member countries. They meet annually, in conjunction with the World Bank. Another committee, the International Monetary and Financial Committee, or the IMFC, meets twice a
year to review the international monetary system and make recommendations (for India). The day-to-day (India-specific) work of the IMF is carried out by the Executive Board, who appoints the IMF’s Managing Director to a renewable five-year term.
IMF Providing Short-term Loans to India:The Fund provides loans to help its members tackle balance of payments problems, stabilize their economies, and restore sustainable growth. Unlike the World Bank and other development agencies, the IMF does not finance projects.
Traditionally, most IMF borrowers were developing countries which have only limited access to international capital markets, partly because of their economic difficulties. Since IMF lending
signals that a country’s economic policies are on the right track, it reassures investors and can act as a catalyst for attracting funds from other sources.
This shifted in 2011, when the eurozone crisis prompted the IMF to provide short-term loans to developed markets to bail out Greece. This was within the IMF’s charter, however, since it prevented an even worse global economic crisis.
(History of the IMF:The International Monetary Fund (IMF), like the World Bank, was conceived at the Bretton
Woods Conference that sought to rebuild Europe after World War II. Unlike the Bank, its goal was to help countries maintain the value of their currencies without resorting to trade barriers and high interest rates. These were seen as a major cause of the Great Depression.)
Specific example of IMF affinity for India : By 1985, India had started having balance of payments problems. By the end of 1990, it was in a serious economic crisis. The then government was close to default, its Reserve Bank of India had refused new credit and foreign exchange reserves had been reduced to such a point that India could barely finance three weeks’ worth of imports which lead the Indian government to airlift national gold reserves as a pledge to the
IMF in exchange for a loan to cover balance of payment debts.With India’s foreign exchange reserves at $1.2 billion in January 1991 and depleted by half
by June, barely enough to last for roughly 3 weeks of essential imports, India was only weeks way from defaulting on its external balance of payment obligations.Government of India’s immediate response was to secure an emergency loan of $2.2 billion from the International Monetary Fund by pledging 67 tons of India’s gold reserves as collateral. The Reserve Bank of India had to airlift 47 tons of gold to the Bank of England and 20 tons of gold to the Union Bank of Switzerland to raise $600 million. National sentiments were outraged and there was public outcry when it was learned that the government
had pledged the country’s entire gold reserves against the loan. Interestingly, it was later revealed that the van transporting the gold to the airport broke down on route and panic followed. A chartered plane ferried the precious cargo to London between 21 May and 31 May 1991, jolting the country out of an economic slumber.The Chandra Shekhar government had collapsed a few months after having authorized the airlift. The move helped tide over the balance of payment crisis and kick-started P.V.Narasimha Rao’s economic reform process. Rao took over as Prime Minister in June, and roped in Manmohan Singh as Finance Minister. The Narasimha Rao government ushered in several reforms that are collectively termed as liberalisation in the Indian media. Although, most of these reforms came
because IMF required those reforms as a condition for loaning money to India in order to overcome the crisis. There were significant opposition to such reforms, suggesting they are an “interference with India’s autonomy”. Then Prime Minister Rao’s speech a week after he took office highlighted the necessity for reforms, as New York Times reported, “Mr. Rao, who was sworn in as Prime Minister last week, has already sent a signal to the nation—as well as the IMF—that India faced no “soft options” and must open the door to foreign investment, reduce
red tape that often cripples initiative and streamline industrial policy. Mr. Rao made his comments in a speech to the nation Saturday night.” The foreign reserves started picking up with the onset of the liberalisation policies and peaked to $314.61 billion at the end of May 2008.The Licence Raj or Permit Raj was the elaborate system of licences, regulations and accompanying red tape that were required to set up and run businesses in India between 1947 and 1990.
The Licence Raj was a result of India’s decision to have a planned economy where all aspects of
the economy are controlled by the state and licences are given to a select few. Up to 80 government agencies had to be satisfied before private companies could produce something and, if granted, the government would regulate production.
Reforms since the mid-1980s have significantly reduced regulation, but Indian labour laws still prevent manufacturers from reducing their workforce without prohibitive burdens.
Its all finally over as India all set to outpace US etc in the nearest future, thanks to IMF.
BOTTOM LINE : Socialism, Theories/lectures/predictions on Development, (grandiloquent) Ideas,
Follow-Me-Models,Lange model,
Mutualism, for India are finally passé. Because IMF’s in lock, stock and barrel.Agrarian, Anarchist, Authoritarian, Democratic, Ethical, Ecological, Guild, Impossibilism, Liberal, Libertarian, Marxian, Owenism, Reformism, Revisionism, Revolutionary,
Social democracy, Syndicalism,Utopian,
Zionist and all other such development-hampering meaningless, non-practical jargon are passé in India. Development is the only word in vogue in India today. It is for it, by it, in it, of it in all senses in fullest sense of the term.
