Indian Finance Minister Arun Jaitley has asked the International Monetary Fund (IMF) to enhance its resources in order to ensure ‘future-proofing’ of the global economy against repetition of financial crisis.
As global headwinds continue to hit the Indian and other emerging markets hard, Jaitley said that the South Asian country is following the ‘Reform to Transform’ policy to protect its economy. Speaking at a recent meeting of the International Monetary and Financial Committee (IMFC), the minister also said that India, which is implementing various economic reform programmes, wants advanced economies to be “mindful” of the adverse effects of their policies on the rest of the world.
Jaitley highlighted India’s balanced macroeconomic environment. He said that India’s strong growth prospects have made the country a ‘bright’ spot in the global scenario. He gave full credit to the Narendra Modi government for maintaining a steady economic growth, stressing that the Indian economy maintained a growth rate of 7.6% in the just concluded 2015-16 financial year (as against 7.2% in the previous fiscal). “The growth performance is more credible given that it has been achieved despite contraction in our exports due to slowdown in global economy and two consecutive years of monsoon shortfall,” he told the audience.
The finance minister told the IMF that India was very much concerned about declining export growth mainly because of a slowdown in global demand. According to Jaitley, the subdued growth and low productivity in Advanced Economies (AEs) are affecting the global recovery. Moreover, Emerging Market Economies (EMEs) and the global financial system are facing elevated risks.
Meanwhile, the minister asked the IMF to support crisis-affected and low-income countries with a credible multilateral safety net, saying that these countries require necessary financing to prevent contagion. “The IMF is in unique position to take this responsibility, but needs to be strengthened further through reforms in its governance. At the same time, the IMF should also examine adequacy of its own resources and whether they are sufficient for ‘future proofing’ the global economy against recurrence of financial crisis,” insisted Jaitley.
He once again requested the global lender to increase its developmental fund to USD 100 billion a year from the current USD 50-60 billion, stressing that it would be crucial for the IMF to enhance the share and become the voice of developing nations.