nternational     onomi        r anisations         ndia       16.3
                                                                                     The Board of Governors of the IMF consists
        InternatIonal Monetary Fund
                                                                                of one Governor and one Alternate Governor
     The International Monetary Fund (IMF) came                                 from each member country. For India, Finance
     up in 1944 whose Articles came into force on the                           Minister is the Ex-officio Governor while the
     27 December, 1945 with the main functions as                               RBI Governor is the Alternate Governor on the
     exchange rate regulation, purchasing short-term                            Board.
     foreign currency liabilities of the member nations                              The day-to-day management of the IMF
     from around the world, allotting special drawing                           is carried out by the Managing Director who is
     rights (SDRs) to the member nations and the                                Chairman (currently, Ms Christine Lagarde) of the
     most important one as the bailor to the member                             Board of Executive Directors. Board of Executive
     economies in the situation of any BoP crisis.                              Directors consists of 24 directors appointed/
           The main functions4 of the IMF are as given                          elected by member countries/group of countries
     below:                                                                     —is the executive body of the IMF. India is
           (i) to facilitate international monetary                             represented at the IMF by an Executive Director
                 cooperation;                                                   (currently Arvind Virmani), who also represents
          (ii) to promote exchange rate stability and                           three other countries in India’s constituency, viz.,
                 orderly exchange arrangements;                                 Bangladesh, Sri Lanka and Bhutan.
         (iii) to assist in the establishment of a                              inDiA’s QuotA & rAnking
                 multilateral system of payments and
                 the elimination of foreign exchange                            IMF reviews members’ quotas once in every
                 restrictions; and                                              five years—last done in December 2010—here,
                                                                                India consented for its quota increase. After this
         (iv) to assist member countries by temporarily
                                                                                India’s quota (together with its 3 constituency
                 providing financial resources to correct
                                                                                countries) has increased to 2.75 per cent (from
                 mal-adjustment in their balance of
                                                                                2.44 per cent) and it has become the 8th (from
                 payments (BoPs).
                                                                                11th) largest quota holding country among the
                                                                                24 constituencies. In absolute terms, India’s
               (ii) For the reconstruction of war-devastated Europe, a fund     quota has increased to SDR 13,114.4 million
                    was to be set up, on the basis of this plan for Relief and  (from SDR 5,821.5 million) which is an increase
                    Reconstruction (in place of it the US-sponsored Marshall
                    Plan took care of the needs of Europe).                     of approximately US $ 11.5 billion or Rs. 56,000
              (iii) There was a proposal of creating Commodity Buffer Stock     crore). While 25 per cent of the quota is to be paid
                    to be operated by an International Trade Organization       in cash (i.e., in ‘Reserve’ currency), the balance 75
                    (ITO). This stock of primary goods was to be used to
                    stabilise their prices in the international market.         per cent can be paid in securities.5
                    The operation of this ITO making purchases when                  Once a member nation has signed the EFF
                    the world prices were low and selling when the prices       (Extended Fund Facility) agreement with the IMF,
                    became high. The buffer stock operations, however,
                    were to be helpful to the poor countries, Keynes was
                    primarily interested in stabilising the input prices of the
                    rich countries. (Though the charter of the ITO was
                    drawn up and other formalities completed, it was never         5.  These securities are non-interest bearing note purchase
                    born because of US opposition.) For further readings               agreements issued by the RBI which can be encashed
                    see D. Salvatore, International Economics, 742–43; B.              by the IMF anytime as per its requirement. They do not
                    Dasgupta, Globalisation : India’s Adjustment Experience            entail any cash outgo unless the IMF calls upon India
                    (New DelhI: Sage, 2005), p. 48.                                    to encash a portion of these notes. The ‘Reserve’ ( paid
        4.    Basic Facts About the United Nations (New York: United                   in ‘cash’) asset portion of the quots is counted as a part
              Nations, 2000), pp. 55–137.                                              of country’s ‘Reserves’.