The Relationship Between India and the International Monetary Fund
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 relationship between India and IMF provides us a model by which we can observe the influence of emerging economy on the institutional evolution of the fund. In this section we have attempted to analyze the relationship of India with IMF in the 1960’s and the relationship shared in the mid 1980’s.
It has not always shared a cordial relationship with IMF. In the mid-1960s, India’s relations with the USA, IMF, and World Bank were strained after an attempt by these institutions to exert ‘leverage’ over Indian economic policies was exposed. By the late 1970s, the GOI charted a new course in its interaction with the IMF. In 1981, India was awarded the largest IMF loan to a developing country up to that time.
In the mid 1960’s when India was running short of food supply it had approached the United States of America for support. After 1965 the U.S. administration began its short tether policy whereby food aid was approved to India on month to month basis. Indira Gandhi elected Prime Minister of India in mid 1960’s had travelled to US for bargain of better terms with U.S. on food supply. U.S. administration then had bargained for economic reforms and currency devaluation based on its internal assessment. The US pressure for
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 relationship between India and IMF provides us a model by which we can observe the influence of emerging economy on the institutional evolution of the fund. In this section we have attempted to analyze the relationship of India with IMF in the 1960’s and the relationship shared in the mid 1980’s.
It has not always shared a cordial relationship with IMF. In the mid-1960s, India’s relations with the USA, IMF, and World Bank were strained after an attempt by these institutions to exert ‘leverage’ over Indian economic policies was exposed. By the late 1970s, the GOI charted a new course in its interaction with the IMF. In 1981, India was awarded the largest IMF loan to a developing country up to that time.
In the mid 1960’s when India was running short of food supply it had approached the United States of America for support. After 1965 the U.S. administration began its short tether policy whereby food aid was approved to India on month to month basis. Indira Gandhi elected Prime Minister of India in mid 1960’s had travelled to US for bargain of better terms with U.S. on food supply. U.S. administration then had bargained for economic reforms and currency devaluation based on its internal assessment. The US pressure for
Bibliography: a) The Evolution of ‘Homegrown Conditionality’ in India: IMF Relations Praveen k. Chaudhry, vijay l. Kelkar And vikash yadav b) Bloomberg.com c) Imf.org d) Wikipedia.org.