IMF Reforms: India gets more voting rights
Long-pending 2010 Quota and Governance Reforms of Reforms in International Monetary Fund (IMF) have finally came into effect. It should be noted that the changes that have been proposed under the reform are the biggest changes in the history of International Monetary Fund since it came into formal existence in 1945 with 29 member countries after Bretton Woods Conference.
Major Reforms Proposed By IMF
- It allows emerging and developing economies to gain more influence in the governance architecture of the International Monetary Fund (IMF) by increasing their power and greater say in IMF. These reforms shifted more than 6% of the quota shares to emerging and developing countries from the US and European countries.
- India’s voting rights have increased by 0.3% from the current 2.3% to 2.6%. China’s voting rights increased by 2.2% from current 3.8% to 6 % as per the new division. Russia and Brazil have also gained from the reforms. The US’s share have decreased marginally from 16.7 per cent to 16.5 per cent.
- The combined quotas or the capital countries contribute doubles to about $659 billion from about $329 billion. The significant resource enhancement will fortify the IMF’s ability to respond to crises more effectively. The reforms would also reinforce its credibility, effectiveness and legitimacy.
- The doubling of quotas means that the shares (roles) of advanced European and Gulf countries have been reduced and that of emerging nations particularly China has been increased.
- China will have the 3rd largest IMF quota and voting share after the US and Japan. While, India, Russia and Brazil will also be among the top 10 members of the IMF. The voting power and quota shares of the IMF’s poorest member countries will also be protected
- Now under the reform, for the first time its IMF’s Executive Board would consist entirely of elected Executive Directors. This would do away with the category of appointed Executive Directors as currently members with the five largest quotas appoint an Executive Director.
Currently, India has voting rights of 2.34 per cent at the IMF, which has 188 members. In terms of quota, India has a share of 2.44 per cent. Presently US, Japan, France, Germany, Italy, United Kingdom, Canada and Saudi Arabia are among the top ten members of the IMF and the countries with the 5 largest quotas appoint an Executive Director that means the developed and economically strong nations have been indirectly ruling the global financial body.
Background of the reforms
IMF reforms were agreed upon by its 188 members in 2010, in the aftermath of the global financial meltdown, but it's implementation was delayed due to time taken by the US Congress to approve the changes which finally approved the reforms in December 2015 thus paving the way for the implementation of the reforms.