‘India wants IMF kitty to be doubled to $500 bn a year’

There are two parts to this. As far as getting funds to India is concerned,we have made proposals to the World Bank for enhanced funding...

Published:March 9, 2009 12:38 am

In less than three weeks from now,India will again be in the midst of discussions at the Group of 20 meeting in London. Department of Economic Affairs Secretary Ashok Chawla spoke to Gunjan Pradhan Sinha about the progress since November 2008 when India and China took centrestage at the Washington summit. Excerpts:

•The Prime Minister talked about India and China as growth engines in the G20 meeting in November and sought higher funds from multilateral institutions. Is what we got subsequently substantial enough?

There are two parts to this. As far as getting funds to India is concerned,we have made proposals to the World Bank for enhanced funding of $5.2 billion already. There is not much scope for further funds as far as Asian Development Bank is concerned,since we are one of their largest borrowers.

Coming to the conceptual aspect,it is necessary that international financial institutions should have access to more money. India’s stand is that IMF’s kitty should be raised from $250 billion every year to $500 billion a year. A separate pool needs to be created for countries with surplus funds. Japan has already given $100 billion to the IMF. To instrumentalise this,there should be an increase in the quotas of various countries. As far as ADB is concerned,India wants that its capital be raised by at least 200 per cent so that it leverages more lending power. The ADB currently lends about $9 billion a year and India gets almost 30 per cent of this.

•Recently,India attracted criticism from the United States Trade Representative (USTR) on protectionism. Was it not that India itself warned developed countries against protectionist tendencies?

In the recent past there have been cases where temporary steps have been taken in this direction. These were taken in response to certain injuries to the economy. On the other hand there are also countries within the G20 that do not want their banks to lend other countries.

•Are there are any specific commitments to the G20 that India is working on?

There are no specific commitments as of now but there is a 47-point action plan on which a consensus is being developed among various member countries. This can be implemented only after due deliberations so that steps taken by one member nation do not cross steps taken by another.

•In the second stimulus package,the lending targets of banks had been revised upwards. Do you think it is possible to meet that in the current scenario?

I think it is possible to meet the 24 per cent target. Non-food bank credit growth (year-on-year) was about 29.4 per cent on October 10,2008 compared to a growth of 23.3 per cent on October 12,2007. This decelerated to 24.3 per cent by December 19,2008 as per the RBI’s report.

According to the latest data of the apex bank,this has slipped to 22.7 per cent. But a 24 per cent target for the year can be met after the disbursal of non-food credit in March.

•Given the slow pace of award of infrastructure projects,is there any plan to fine-tune the basic request for qualification structure?

Changes have already been made regarding the number of players that should be shortlisted and what percentage of cross share holding will count as anti-competitive. With the code of conduct being put in place it may not be possible for the government to award more projects. In case line ministries want to do so,they will have to seek the approval of the Election Commission. Project award will pick up once a new government takes charge.

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