The Relationship Between India and the International Monetary Fund

2704 words 11 pages
Show More
India & IMF Relations:
A Brief History

India joined International Monetary Fund (IMF) on 27 December, 1945. The relationship between India and the IMF dates back to the time when India needed economic reform packages to strengthen its international reputation and fiscal policy. It is among one of the developing economies that effectively employed the various Fund programmes to fortify its fiscal structure. Through productive engagement with the IMF, India formulated a consistent approach to expand domestic and global assistance for economic reforms. Whenever India underwent balance of payments crises, it sought the help of IMF and in turn the internationally recognized reserve willingly helped India to overcome the difficulties.

The …show more content…

After using the first two installments, in 1984 Prime Minister Indira Gandhi announced that India’s balance of payments situation was strong enough that India could forego using the third tranche of the loan package. India actually prepaid its outstanding debt to the IMF. India had successfully shown that home grown conditionality could be a sustainable practice for economic reform in a democratic society.

Even one year later in 1985, at another IMF Executive Board Meeting, there was much praise for India’s achievements under the IMF loan and its decision not to draw the third tranche. India’s prompt repayment of the loan enhanced its reputation and credit worthiness at the IMF, which served India well when it returned to the IMF in 1991 to arrange a major structural adjustment programme.

Recent Developments

Recently, India purchased IMF gold to lend money to developing countries. This proves that the fiscal reforms set in motion by the previous finance ministers have finally started gaining momentum, transforming India from fiscal borrower to major lender. Some analysts predict that India is purchasing gold to move forward for higher voting share in the IMF. India is also seeking for a considerable say in global fiscal affairs and greater account in the IMF.

In recent developments and according to the News reporting in The Hindu, Union Cabinet has approved India’s contribution up to Rs.15,000 crore (about more than USD 3

Related

  • International Financial Management
    5036 words | 21 pages

    PAPER OF INTERNATIONAL FINANCIAL MANAGEMENT Section A: Objective type Part One: 1). Foreign exchange market in India is relatively very Answer: b). Small 2). Balance of payment is a systematic record of all ___________ during a given period of time. Answer: c). Economic Transactions 3). Merchandise trade balance, services balance & balance on unilateral transfer are the part of _________ account. Answer: a). Current Account 4). Interest rate swaps can be explained as an agreement between ___________….

    Show More
  • International Monetary System
    5868 words | 24 pages

    INTERNATIONAL MONETARY SYSTEM & MULTULATERAL DEVELOPMENT BANKS Meaning International Monetary System refers to the system prevailing in world foreign exchange markets through which international trade & capital movements are financed & exchanges rates are determined. MNCs operate in a global market, buying/selling/producing in many different countries. For example, GM sells cars in 150 countries, produces cars in 50 countries, so it has to deal with hundreds of currencies. What are the mechanics….

    Show More
  • 4220quiz 1-6
    2155 words | 9 pages

    * Question 1 1 out of 1 points | | | According to the International Product Life Cycle Theory, the country(ies) most likely to manufacture a product that has been recently developed (one that is the result of a brand-new design and uses patented technology) and is in its first commercialization year, is (are) ___.Answer | | | | | Selected Answer: | a. the country of innovation only | | | | | * Question 2 1 out of 1 points | | | Argentina can produce one ton of….

    Show More
  • Kashmir Conflict
    4868 words | 20 pages

    Kashmir conflict between the Republic of India and Pakistan. Since the British granted independence to India and Pakistan in 1947 there has been much contention as to where the partition should be in the Kashmir and Jammu region. The newborn states of India and Pakistan (East and West) were created along religious lines in fear of Hindu subjugation of the Muslim minority. Kashmir in this sense is a perplexing issue since it is a poly-ethnic region and the only state within India holding a Muslim….

    Show More
  • Inflation Cause, Effects and Remedies
    11327 words | 46 pages

    nations in the world economy, these disparate results reflected the relative effectiveness of national economic policies. This unfavorable inflationary trend was reversed in most industrial nations during the mid1980s. Austere government fiscal and monetary policies begun in the early part of the decade combined with sharp declines in world oil and commodity prices to return the average inflation rate to about 4 percent. Measures Annual inflation rates in the United States from 1666 to 2004. Inflation….

    Show More
  • Industry Environment Business Strategy Gap Analysis
    6382 words | 26 pages

    Within India lies a huge advantage, it is has one of the biggest IT industries in the world, result of one of the biggest IT booms in history. Considering this advantage, Taj needs to further enhance and explore the utilization of these resources for further brand….

    Show More
  • Global Business Environment - Case Study: Carrefour
    5543 words | 23 pages

    Introduction 3 I. Globalization and Retailing market 4 Market overview 4 Forces driving competition 5 • Buyer power 5 • Supplier power 5 • New entrants 6 • Threats of substitutes 6 • Degree of rivalry 6 II. Carrefour SWOT 7 Strengths 7 Weaknesses 8 Opportunities 8 Threats 9 III. External business environment: Key challenges and implications 10 Political and legal 10 Economic and Financial 11 Social, cultural, and Environmental 11 Technological 12 IV. Conclusion 13 Sources 14 Introduction For….

    Show More
  • Imc Differences of Coca Cola
    5059 words | 21 pages

    1.0 INTRODUCTION: Integrated Marketing Communications (IMC) has emerged as the dominant approach used by companies to plan and execute their marketing communication programs. Many marketers, as well as advertising agencies, are embracing the IMC paradigm and developing integrated campaigns that use a variety ways to communicate with their target audiences. (McArthur and Griffin 1997, Belch & Belch, 2004, Duncan 2005) The shift toward the IMC perspective has been hailed as one of the most significant….

    Show More
  • Inflation and Indonesia
    3618 words | 15 pages

    PESTEL analysis of Indonesia | October 3 2009 | SUBMITTED TO: MR. SUNDERASAN SUBMITTED BY: Hitesh GoyalNirupan ChakravarthiSainath.V MBA 12 and PGPRM-9 | | Introduction: Indonesia is one of the largest countries in South-east Asia, between the Indian Ocean and the Pacific Ocean which contain mainly mountainous and covered with rain forests, swamps and consists over 13000 islands. Jakarta is the capital of Indonesia. Indonesia declared its independence on 17th August 1945 from Japan but Netherlands….

    Show More
  • Accounting and Globalization
    3458 words | 14 pages

    oriented and expand into multinational corporations, there is a growing need to compress financial regulations into a homogeneous unit. To achieve this homogeneity, accounting practices in the modern economic market must strive for a symbiotic relationship with globalization. Because consumer capitalism has spread to non-originating countries, and non-Americanized cultures, the practices of accounting and financial management must standardize their policies. Thus, accounting must be regarded beyond….

    Show More

Popular Essays