India's voice in IMF to increase

New Delhi, Sep 11 (PTI) India's voice in the
International Monetary Fund is set to increase, with the
country Thursday giving approval to the proposed restructuring
of quotas in the multilateral agency.

With the Cabinet clearing the proposed amendment in IMF's
Articles of Agreement, India's quota is slated to go up from
1.91 percent to 2.44 percent in the world body.

As such, India's voting rights are also scheduled to
increase from 1.88 percent to 2.34 percent, enabling it to
have a greater say in the functioning of the Fund.

"It's a good development that India's participation
level has been increased. Quota has been increased for the
first time in International Monetary Fund. Our voice will be
stronger in IMF," Information and Broadcasting Minister P R
Dasmunsi told reporters after the Cabinet meeting here.

India will also have to make a necessary expenditure
towards capital payments to the Fund since its quota is likely
to increase from 4,158.2 million special drawing rights (SDRs)
to 5,821.5 million SDRs.

SDRs are an international type of monetary reserve
currency, created by the Fund, and their value fluctuate
relative to the basket of major currencies.

The amendment to the IMF's Articles of Agreement require
approval by 60 percent of the membership, having 85 percent of
the total voting power. Additionally, the individual quota
increase also needs to be approved by the relevant member
country.

Each member country of the I.M.F. is assigned a quota,
based broadly on its relative size in the world economy. A
member's quota determines its maximum financial commitment to
the IMF and its voting power, and has a bearing on its access
to IMF financing.

Total quotas at the end of March 2008 were SDR 217.3
billion (about USD 357.3 billion).

To address the concerns of developing countries about
equal voting rights and representation, the I.M.F. this year
began a review of the quota shares.

The IMF's executive board endorsed the quota reform on
March 28 this year, which was okayed by its Board of Governors
in April.

At that time, Finance Minister P Chidambaram had
welcomed India's improved voice in the Fund, saying, "India
views the current round of quota and voice reform as only the
first step in a process that needs to be carried forward. We
would welcome a periodic realignment of quota shares as the
global economy gets re-structured over time."

Besides India, quota shares were increased for 53
countries, mainly emerging nations. The aggregate shift in
quota shares for these 54 members is 4.9 percentage points.

These countries saw their quotas rising in the range of
12 percent to 106 percent this year from the original quota
levels prevailing at the time when the IMF decided to review
them in 2006.

While India , Brazil and Mexico had a 40 percent increase
in their quota, China's quota was hiked by 50 percent and
Korea's quota surged the most at 106 percent.

Only last week, the Fund formed a committee of eminent
persons, headed by South African Finance Minister Trevor
Manuel, including Nobel laureate Indian economist Amartya
Sen, to advise on any modification that might enable the body
to fulfill its global mandate more effectively.

The panel will assess the adequacy of IMF's current
framework for decision-making.