India and the IMF

India and the IMF have had a friendly relationship, which has been
beneficial for both. The IMF has provided India with loans over the
years and this has helped the country to grow. The IMF has also
praised India for it has been able to maintain average growth rate of
its economy.

The meaning of International Monetary Fund (IMF):

International Monetary Fund (IMF) is an administrative unit that is

international in nature and whose objective is to regulate and
administer the financial system of the world. The IMF does this by
observing the payments balance and exchange rates of the world.
International Monetary Fund also offers technical and financial help
to the member nations. Its head office is in Washington D.C, USA.

India's relations with the International Monetary Fund:

India and the IMF has a positive relationship. The IMF has provided
financial assistance to India, which has helped in boosting the
country's economy. The IMF praised the country for it was able to
avoid the Asian Financial Crisis in 1999 and was also able to maintain
the average rate of growth of its economy. The Managing Director of
International Monetary Fund Rodrigo De Rato visited India in May
2005. In 2005, the IMF said that the budget of India is very positive
for it points that the economy of the country will grow at the rate of
6.7%. International Monetary Fund said that the reasons behind the
economy growth of India are that the RBI has been able to control
inflation and has also handled its monetary policies very skillfully.
The IMF has suggested that India can become a financial super power
by bringing in more reforms in its economic policies that will increase
its growth rate to 8%.

India has attacked changes to the

voting structure of the International
Monetary Fund (IMF) after it saw its
share of the vote decrease.

Its comments came after the 184 IMF

nations agreed a deal on Monday to give
India's economy is growing
some emerging economies a bigger vote.
quickly
While China, South Korea, Turkey and Mexico all saw their voting quotas
rise, India's declined.

India said the reforms were "hopelessly flawed". The IMF has now pledged
to overhaul its voting system by 2008.

New formula

Indian Finance Minister Palaniappan Chidambaram said it would "hold the

IMF to its promise" of a complete reform of the voting system within two
years.

"We may have lost the vote but we have not lost the argument," he said.

Under the temporary reforms agreed at the IMF's annual meetings in

Singapore on Monday, India saw its voting quota drop slightly to 1.91%
from 1.95%.

Mr Chidambaram said the reform formula used to determine Monday's

changes - including a country's GDP and market openness - did not
accurately reflect the economic might of emerging economies such as India.

India wants the next formula to take into account the need of large
developing economies to protect their farmers and young industries from
foreign competition.

October 17, 2007

Program and Performance Budgeting Enthusiasm in India -- IMF

Training Course

An IMF training course in Pune for senior

civil servants from India and around the region went into the varied
experiences with this “second generation” budget reform. Making
program and performance budgeting (PPB) work in the context of
capacity constraints and politicians familiar only with traditional line
item budgeting led to lively discussions with the 29 participants from
India’s central and state governments, and invited representatives of
other countries' ministries of finance.

The FAD's PFM 2 Division provided the training course in Pune from
October 1-5, 2007. The team of presenters included Messrs. Holger
van Eden and Justin Tyson (FAD), Mr. Jack Diamond (FAD panel of
experts), and Mr. Aru Rassapan from the Center for Development &
Research in Evaluation (CeDRE) in Malaysia. Mr. Sang Dae Choi
(World Bank) provided a lecture through video-link on the Korean
experience with introducing performance budgeting

India and IMF

This is with reference to "India turns creditor to IMF" (Business Line,

June 29). The new report arouses enthusiasm.

While many of the developing countries continue to be indebted to

the IMF, it is really delightful to note that India has obtained a place
in the "financial transaction plan" by way of its strong BOP and
foreign exchange reserves position.

This, indeed, sends very positive signals to the global community. The
gaining strength of the Indian rupee in recent times amidst the euro-
dollar competition places the Indian economy in a safe mode. The
present dip in the forex reserves on account of transfers to IMF under
the FTA scheme can be disregarded as it can be easily replenished
soon through fresh inflows.

India Reports I.M.F. Loan

A top Indian official said today that the International Monetary Fund
had agreed to lend India $2.5 billion.

The proposed loan is among the largest that the I.M.F. has given to
India in recent times and follows a declaration by Prime Minister
Chandra Shekhar that he had authorized senior officials to negotiate
such assistance in Washington.

The Commerce Minister, Subramanian Swamy, was quoted today by

the newspaper Economic Times as saying at a meeting of
industrialists that the loan agreement will be signed on Jan. 23.
Mr. Swamy said that the Government would not cut back industrial
imports because this would hurt overall growth. He advocated
increased exports to improve India's foreign exchange reserves and
trade deficit.

It has been reported that of the total loan, about $800 million will be
disbursed from the institution's compensatory contingency financing
facility and the rest as a standby credit.

Separately, Iran was reported to have agreed to supply India with one
million tons of crude oil. The oil will be supplied in the next three
months and Iran has offered 90 days' credit and "attractive prices,"
The Times of India said.

The loans provided by IMF to India:

SDR 3,260,405,000 in 1992

SDR 3,584,905,000 in 1993

SDR 2,763,180,833 in 1994

SDR 1,966,633,125 in 1995

SDR 1,085,250,003 in 1996

SDR 589,791,667 in 1997

SDR 284,916,664 in 1998

SDR 38,500 in 1999

IMF Lauds India for Avoiding the

Asian Financial Crisis

International Monetary Fund (IMF) has said that a very positive

aspect of India’s recent economic performance is that it avoided

the worst of the Asian financial crisis, and growth has been

maintained at a rate close to the average seen over the past

decade. From a longer term perspective, however, IMF feels it is

important that India does not consider a growth rate of 5% to 6%

to be the best that can be achieved.

IMF feels that there is considerable scope for improving the

allocation of resources through structural reforms, and also for

increasing the rate of investment in the economy. The main

priority for macroeconomic policy continues to be to rein in the

public sector deficit, which has widened to almost 10% of GDP.

“The recent budget implies some modest deficit reduction at the

central government level, but measures will also need to be

taken by state governments and public enterprises to ensure

consolidation for the public sector overall.” There is also a need

to contain rapid monetary growth to reduce risks of a renewed

upturn in inflation.

IMF has projected that the current slowdown in the Indian

economy will continue in 1999-2000 with output at 5.1% as

against the government’s target of 6.5% to 7%. In its forecast for

the year 2000, IMF’s publication the World Economic Outlook

(WEO) also projected a continuation of the external sector

imbalances

with the current account deficit at 2.2% of gross domestic

product (GDP) which is higher than the government’s figure

of 1.7%. IMF has also forecast a rise in consumer prices to 7.9%

in 1999-2000.

The WEO has stated that India could have maintained a growth

rate of 7% to 8% over the past years had it reformed faster.

“While some progress has been made recently, critical reforms -

particularly in the areas of trade liberalization, privatization, and

the strengthening of the financial sector - continue to lag”, WEO

adds.
India PM appoints ex-IMF chief economist as adviser

NEW DELHI, Nov 3 (Reuters) - Indian Prime Minister Manmohan

Singh on Monday appointed former International Monetary Fund
chief economist Raghuram Rajan as an economic adviser.

Indian policymakers are struggling to fend off damage to the

domestic economy from the global financial crisis and on Monday
Singh said his government would take all steps necessary to protect
growth in Asia's third-lagrest economy.

A statement from the Prime Minister's Office said Rajan had been
appointed as an honorary economic adviser to Singh and would hold
the rank of a secretary to the government of India.

The current relationship between IMF and India:

The relationship between the IMF and India has grown strong over
the years. In fact, the country has turned into a creditor to the IMF
and has stopped taking loans from it. India and IMF must continue to
boost their relationship this way, as it will prove to be advantageous
for both.
Abstract

This article explores the historical relationship between the

Government of India (GOI) and the International Monetary Fund
(IMF) as a successful model for the ways in which a developing
country can learn to work with and through multilateral
organizations to promote economic and political development while
sustaining democratic institutions and relative international political
autonomy. In the mid-1960s, India's relations with the USA, IMF,
and World Bank were strained after an attempt by these institutions
to exert 'leverage' over Indian economic policies was exposed to
parliamentary debate and the scrutiny of a free press. By the late
1970s, the GOI charted a new course in its interaction with the IMF.
In 1981, India was awarded the largest IMF loan to a developing
country up to that time. This article will evaluate India's economic
reform strategy in the early 1980s and explain the development of the
concept of 'homegrown conditionality' within the GOI.

VINAY JAIN

SECTION H-76