International Monetary Fund – Indian Economy – Free PDF Download

• IMF helps in global currency exchange stability, helps against balance of payment crisis.
• Acts as an reservoir of the currencies of all the member countries from which a borrower nation can borrow the currency of the other nations- using SPECIAL DRAWING RIGHTS mechanism.
• An important decision in IMF should be passed by 85% majority.
• USA has 16.25% voting power so it can effectively block/veto it.

OBJeCTIVe

• Foster global monetary cooperation
• Secure financial stability
• Facilitate international trade
• Promote high employment and sustainable economic growth
• And reduce poverty around the world

FUNCTIONS

• Provides Financial Assistance
• IMF Surveillance
• Capacity Development

IMF AND INDIA

• International regulation by IMF in the field of money has certainly contributed towards expansion of international trade.
• Post-partition period, India had serious balance of payments deficits, particularly with the dollar and other hard currency countries.
• The Fund granted India loans to meet the financial difficulties arising out of the Indo–Pak conflict of 1965 and 1971.
• From the inception of IMF up to March 31, 1971, India purchased foreign currencies of the value of Rs. 817.5 crores from the IMF, and the same have been fully repaid.
• Since 1970, the assistance that India, as other member countries of the IMF, can obtain from it has been increased through the setting up of the Special Drawing Rights (SDRs created in 1969).
• India had to borrow from the Fund in the wake of the steep rise in the prices of its imports, food, fuel and fertilizers.
• In 1981, India was given a massive loan of about Rs. 5,000 crores to overcome foreign exchange crisis resulting from persistent deficit in balance of payments on current account.
• India wanted large foreign capital for various river projects, land reclamation schemes and for the development of communications. Since private foreign capital was not forthcoming, the only practicable method of obtaining the necessary capital was to borrow from the International Bank for Reconstruction and Development (i.e.World Bank).

REPORTS

1. Global financial stability report
2. World economic outlook

Indian Economy | Free PDF

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