The Relationship Between India and the International Monetary Fund

This can be shown by the US having 17% control of the executive board meaning they have the right to veto as board approval requires 85%. Whereas India has only 2.44% of voting rights compared to the Netherlands who are significantly weaker in terms of economic power who have 2.17% . It can be argued that the way the voting structure works iensures that the IMF would prioritise its creditors and voters, so the EU and USA have a combined total of 49% thus they hold great sway over the institution. This can explain how in terms of loans 79.5% have gone to European countries, with the largest loans going to Greece, Portugal and Ireland to bail out their banks. Another accusation is that the IMF in general tends to create more harm than good when attempting to help countries as shown in the fast track scheme. Where they gave far too much loans to Argentina and they were forced to default . A similar event occurred to create the 1997 East Asia crisis where the IMF encouraged countries affected to borrow their way out of trouble thus making the crisis worse. These events were not prioritised by western country whereas when the Euro crisis hit the west only then did the IMF pour in billions to save essential countries in Europe. The IMF can be considered strongly European for all 11 directors in the IMF’s history have been European. So the IMF can be considered to be working in favour of western interests as

“Despite these and other similarities, however, the Bank and the IMF remain distinct. The fundamental difference is this: the Bank is primarily a development institution; the IMF is a cooperative institution that seeks to maintain an orderly system of payments and receipts between nations. Each has a different purpose, a distinct structure, receives its funding from different sources, assists different categories of members, and strives to achieve distinct goals through methods peculiar to itself.” [1] The World Bank Group, which is headquartered in Washington, D.C., is made up of five institutions: the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA), and the International Centre for Settlement of Investment Disputes (ICSID). Each institution plays a separate but necessary role in the group’s collective mission of lessening global poverty and improving living standards throughout the developing world. “Together, they provide low-interest loans, interest-free credits, and grants to governments and the private sector in developing countries for investments in education, health, infrastructure, communications, and many other purposes, as well as services in support of those investments.”[2]

The IMF is a success in bailing out bondholding banks. The IMF exists to help people, all right—just not the people it claims to be helping, who are poor people in poor countries. It is helping rich people in rich countries get richer on the interest charged on loans on projects which should never have been undertaken.

The International Monetary Fund (IMF) is the world's central organization for international monetary cooperation. It is an organization in which almost all countries in the world work together to promote the common good (IMF 2006). That’s IMF is an international organization that oversees the global financial system by observing exchange rates and balance of payments, as well as offering financial and technical assistance. The primary purpose of IMF is to ensure the stability of the international monetary system in order to sustainable economic growth and rising living standards of the member countries. And IMF also granting short-term loans and promotes free-trade to conserve foreign exchange reserves.

In addition, the policies have been criticized in terms of their effectiveness in meeting the narrow objectives set by the IMF. Under half those accepting IMF loans achieve their balance of payments and inflation objectives, and only one-fifth achieve their growth targets, Hodd (1987:336) This assessment of the financial institutions shows that they do assist in Africa with their balance of payments at that time but in the long run it causes debts for the African states as they will have to pay the loan bank with interest. When the loan is paid with interest, it draws back the states and this means that they will be focusing on paying the IMF loan instead of developing their countries and the problem is that the payment period for this loan is very short which puts pressure for the states to pay back the

India, offers immense growth potential and thus is emerging as favorite investment destinations for many FIIs. According to global fund managers, Indian bonds are likely to outperform in the medium-term because of which FIIs are gradually increasing their investments in India.

and the IMF). In January of 2016 Morocco was reviewed by the IMF committee to

The undemocratic make-up of the IMF 's boards is compounded by a lack of transparency in their operations. Still beyond the reach of the public is any knowledge of how decisions have been reached and what the process and reasoning was behind the decisions. For example, at the IMF, executive board documents are published after five years, executive board minutes are released after 10 years, and other archived material is available after 20 years. The time lag means no decisions can be scrutinized until well after they have been implemented. Even when documents are released, they are only available at the IMF 's offices in Washington DC. This effectively makes even the archives inaccessible to most politicians, groups and individuals outside the US, an appalling situation tor a global institution.

The IMF is currently accountable to and governed by 189 countries, all of which play a part in delivering its primary goals of “promoting international financial stability and monetary cooperation, through its activities of Surveillance, Financial, and Technical Assistance.” (Imforg, 2016)

International Monetary Fund (IMF) and World Bank are both international financial institutes that where formed in July 1944 by the United Nation in Bretton Woods, United States. They are sometimes referred to as The Bretton Woods Institutes. They are both landers of last resort and they both offer loans and help countries design policy programs to solve balance of payments problems when sufficient finance cannot be obtained by the country. IMF offers short and medium term loans whilst World Bank offers long term loans.

The study does not talk about the risks of investing in India at this time nor does it point out the benefits. The purpose of this paper is to show the growth of India’s economy after their government made some drastic reform changes. Changes that needed to be made after the country had persistent problems, such as a lack of financial inclusion, a glacial pace of innovation, the growth of an unregulated shadow financial system, numerous Ponzi schemes and high inflation.

The IMF is financed by quota which is charged and paid by all the nations who are members. This quota is based on the member countries wealth. Which means if a country paying higher contribution they will get greater voting rights in the decision making. If a member has a problem can apply and get a short period grant, but of course just credit against because the IMF is not a charity body. (BBC, 2012) "The largest member of the IMF is the United States, with a current quota of SDR 42.1 billion (about $65 billion), and the smallest member is Tuvalu, with a current quota of SDR 1.8 million (about $2.78 million)" (IMF/Quotas, 2015) This quota system has an impact on the quota

According to their website (www.imf.org), the International Monetary Fund (IMF) is an organization of 188 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world. The organization was created in 1945 and is governed by and accountable to the 188 that make up its near-global membership. Some notable countries that are part of the IMF are the United States, Japan, and China.

India is one of the members of WTO and considers as a developing country. In October 1947, India became the member of GATT. India is considered to be the 10th largest in the world in economy. In 2013, India was considered to be 19th largest merchandise and the 6th largest services exporter in the world. But during 2013-14 which is considered to be the fiscal year, the economic growth has been slowed down.

India is a country which was and still is diverse in terms of cultures, languages, ethics and beliefs. During the 1970-1990 when the British rule had just been over in India, it soon started to face problems in their balance of payments. By the end of 1990, it was in a serious economic crisis. The government was close to bankruptcy, the central bank of India had refused new credit and foreign exchange reserves had been depleted to a point where India could barely finance three weeks’ worth of imports which made the Indian government airlift the nations gold reserves as a pledge to the International Monetary Fund (IMF) in exchange for a loan to cover its balance of payment debts.