India's Planning Commission Deputy Chairman Montek Singh Ahluwalia, while briefing the Indian news agencies on the sideline of the G20 ministerial level meeting in Washington, said India was willing to contribute around $10 billion or Rs.50,000 crore to the International Monetary Fund or IMF to boost the Fund's resources in proportion to its current share.. In turn, India sought IMF to issue security bonds for this amount, as New Delhi is not in favor of making any direct contribution. India also sought an increase in its quota share in the IMF, media reports said.
Ahluwalia added the Prime Minster Manmohan Singh said in April that India was willing to contribute in proportion to the quota, provided the resources being given to IMF should be viewed as an interim measure, through the new arrangement to borrow or NAB. He added that in the longer term the way to fund the IMF was to increase the quota.
India's concern, he said, is that this contribution should be made through the purchase of IMF bonds by the Reserve bank of India or RBI and not from the government, as a direct contribution from the government becomes part of the fiscal deficit.
The IMF, Ahluwalia suggested, should issue securities, which can become eligible for the countries to invest their reserves in, so that no fiscal position is affected. A re-deployment of funds also does not require any government permission.
The RBI, for instance, will shift some of its money currently held US treasury bills or other US government bonds to proposed IMF securities, which are obviously backed by the same government, he said. But the modalities are still being worked out.
When they increase the quota, the share of the developing countries should reflect their economic importance, he said, adding that India' s share should be increased.
Ahluwalia said India's importance in world economy is more than 2%. The IMF uses a complex formula for determining quotas, but if Purchasing Power Parity (PPP) were used as a measure, India's quota would be 4%.
But since a quota review will happen only in January 2011, India, for the present, is willing to contribute in proportion to its existing quota of 2%, making for a contribution of $10 billion in an NAB of $500 billion agreed to at the G-20 summit.
Ahluwalia said: Quota reflects the amount of weight and vote we have and I do not see why we should be contributing more than the share they are giving us to vote.
At the same time, he said that India was willing to raise its contribution, in case its shares were to increase. If they were to increase, then obviously India would contribute more. Otherwise, this becomes a funding leaving the quota. unchanged. He added that India was not in favor of that.
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