1. •The International Monetary Fund (IMF) is an international organization that was conceived on July 22, 1944 originally with 45 members.•Presently it has 187 registered countries as a part of this organization.• Goal is to stabilize exchange rates and assist the reconstruction of the world’s international payment system.• It is a specialized agency of the United Nations but has its own charter, governing structure, and finances.• Upon joining, each member country of the IMF is assigned a quota, based broadly on its relative size in the world economy.• They have concept of SDR as minimum 25% payment by any member country who joins IMF.

2. Provision of M onetary C ooperation to the m em ber countries

3. The fund s aim s at provid ing and establishing m ultilateral paym ents and trad e system in place of bilateral agreem ents

4. It will lend or sell to its m em ber -countries currencies of other countries. This facilitates foreign exchange transactions am ong the m em bers.

5. The fund aim s at provid ing short - termm onetary help to m em ber countries d uring em ergency.

6. To lesson the chances ofd isequilibrium in the international BO P of m em ber countries.

7. To red uce the poverty in m em ber countries and to prom ote high em ploym ent by facilitating sustainable econom ic growth.

8. Another objective of the fund is to help the m em ber countries investtheir long - term fund s in profitable activities.

International reserves (5 percent)Economic variability (15 percent)Openness (30 percent)GDP (weight of 50 percent)9. Quota subscriptions are a central component of the IMF’s financial resourcesQuotas are denominated in Special Drawing Rights (SDRs), the IMF’s unit ofaccount.The IMF uses a quota formula to guide the assessment of a member’s relativeposition.The current quota formula is a weighted average of:

10. GDP is measured as blends of GDP based on market exchange rates (weight of60 percent) and on PPP exchange rates (40 percent)Up to 25 percent must be paid in SDRs or widely accepted currencies (such asthe U.S. dollar, the euro, the yen, or the pound sterling), while the rest is paid inthe members own currency.Largest Member is U.S: SDR 42.1 BillionSmallest Member Tuvalu : SDR 1.8 MillionIndia : SDR 5.8 BillionAs on March 9 SDR rates are: 1 USD = SDR 0.648429

11. (In thousand’s of SDRs)          1 SDR = $1.615

Access to Financing The amount of financing a member can obtain from IMF is also based on Quota.Voting power (Voting Share) determines member’s voting power in IMF decisions.Subscriptions (Quota Share) determines the amount it is required to pay upon joining the Fund. 12. A member’s  Quota describes Financial and Organizational relationship with IMF:

Access may be higher in exceptional circumstances Under Stand-By and Extended Arrangements, a  member can borrow up to  • 200 percent of its quota annually  • 600 percent cumulatively13.

14. For India :Governor = Finance Minister Pranab MukherjeeAlternate Governor = RBI Governor D.Subbarao 

15. IMF v/s The World BankWhat according to you is the major difference???

debt reliefto achieve its eight  MDGs (Millennium  Development Goals)  financial support technical assistance policy advice16.

improving maternal  targets for aid, trade,  health  and debt relief.  reducing child mortality development, with  creation of a global  empowering women  partnership for  promoting gender  sustainability  equality and   ensuring environmental  achieving universal  diseases  primary education  Combating HIV/AIDS  poverty and hunger malaria and other  eradicating extreme  17.

health-related progress much slower, with many countries likely to miss MDGs on child and maternal mortality. Clear progress in reducing hunger and achieving universal primary education and access to clean water. two-thirds of developing countries close to all the MDGs. 2011 Global Monitoring Report:  Global Monitoring Report18.

Policy Support Instrument The Rapid Credit Facility.Non Financial assistance: The Standby Credit Facility The Extended Credit Facility19. Financial assistance:

Ramped up exports to soviet union by  50% at the cost of trade with hard  currency areas. Debt waiver for small farmers shaved  off 1% of GDP. 20. • India still had a fixed exchange rate system which lead to balance of payment crisis.•Reasons

Not go for adjustments and cut itself  from international capital markets and  reduce growth. To go for adjustments and have an  orderly, growth-oriented adjustment  program with external financial support Choices Provided 21.

The Indian economy became an open end economy. Resource allocation shifted from public sector to  privatization.22. • Opted for policies and got bailout package from IMF  for $1.8 Billion.• Had to pledge 20 tons of gold to Union Bank of  Switzerland and 47 tons to Bank of England 

Administrative decisions essential for the  processing of projects got delayed. Political developments interfere with  structural reform process started in 1991. Although a trade off had to be between  growth and adjustment costs such job losses.23.

24. India: Financial Position in the Fund as of February 29, 2012

25. May 2003India contributed $498 million to the IMFs Financial Transaction  Plan, thus turning from a debtor into a lender to the IMF What are the implications of the same???

26. Feb 13 2003: Considering that Indias foreign exchange reserves of  $73 billion could sustain 15 months import, Gordon  said, "it is extremely comfortable.“ "As of now, IMFs role in India is that of surveillance” IMF’s new roles are in surveillance, lending and technical assistance

27. "Reforms in multilateral agencies like IMF and WB are  necessary  to  give  fair  representation  to  the countries that are providing stability to the global economy," BRIC countries are anchoring the global economy at a time when the developed economies are faltering.

28. As multilateral lending agency IMF may need more funds to help countries facing  a  sovereign  debt  crisis  in  Europe,  India  plans  to  pledge  additional support of $4 billion to the fund.This would increase Indias total commitment to the IMF to 

$14 billion, as it had  already  pledged  $10  billion  in  March  this  year  (2011)  for  countries facing a financial crisis.

Large Fiscal Deficit Inclusive growth India doesn’t borrow in foreign currency. Risks and Constraints:Extremely Vibrant Private SectorYoungest Labor Force in the world for the next 50 years29. Positives:&350 million living below the poverty line Debts to the range of 8% of GDP

Change from pull based to push based economy Reforms are required to be made in labour laws and tackling  with unions and other such issues. India’s current need of the hour is Infrastructure projects  which need a more mature debt-markets or corporate-bond  markets.30.

31. The history of Indias engagement with IMF illustrates thatwith premeditated planning it is possible to alleviate amacroeconomic calamity and sustain the rights of reformpackage without negotiating on democratic organizationsor international policy autonomy.