India seeks greater reform of global lending bodies

Reforms will enable enhanced capital flows and infrastructure investment in developing markets

PTI/Ammar Zaidi | May 17, 2010



India on Monday sought comprehensive reform of international financial institutions to enable enhanced capital flows and infrastructure investment in developing markets, which it said will strengthen recovery from the worst global economic crisis since 1945.

"We need to continue our efforts for a comprehensive reform of the international financial institutions to make them more inclusive," external affairs minister S M Krishna said addressing the 14th G-15 Summit here.

The G-15, a group of 17 developing countries from Asia, Africa, and Latin America, was set up to foster cooperation and provide input for other international groups.

India's call for comprehensive financial reforms comes within a month of the World Bank member-nations approving greater say to developing nations in how the multilateral lending agency is run.

India's voting rights in the Bank increased to 2.91 per cent from 2.77 per cent, while that of China went up to 4.42 per cent from 2.91 per cent.

Krishna said while it may appear that the immediate global economic and financial crisis is behind us, it was early to say if the world was on a long term recovery path.

"Sustainable recovery of the global economy will depend on several factors, including how the developed economies fare, enhanced investment for infrastructure development, stable capital flows to the developing markets, appropriate macro-economic adjustments and avoiding complacency in the area of financial sector reforms," he said.

India is now the seventh largest member of the World Bank in terms of voting power, after the US, Japan, China, Germany, France and the United Kingdom, and to that extent enjoys powers to decide how the banks funds are disbursed. The extra voting rights will also enable India to seek additional assistance from the Bank.

India, already the single largest borrower from the bank, has borrowed an average USD 2.3 billion from the World Bank over the last four financial years of the lending institution.

The country has separately said it requires USD one trillion to prop up its crumbling infrastructure.

Also, the developing nations must work together to ensure "a balanced outcome of the Doha Round which addresses the concerns of the developing countries," Krishna said, referring to the global trade talks that commenced in 2001 but have been stalled over differences between developed and emerging economies on opening up various sectors for trade.

The Doha round seeks to lower trade barriers around the world, but developing countries are seeking safeguards to their agriculture sector from dumping of cheap farm goods from developed nations.

Estimates suggest that a successful conclusion of the Doha round of World Trade Organisation talks could boost world trade by USD 300 billion a year.

Most of the G-15 members are also rallying together in the WTO under a grouping named G-20 to push for safeguards.

The 14th Summit of G-15 provides an opportunity to review the progress and revitalise the grouping, he said. "We should make it an effective platform, not only for South-South cooperation but, equally importantly, for policy articulation in the global discourse in the areas of trade, money and finance, equitable development, food and energy security, climate change and other issues of concerns to our people."

India offered to share its developmental experiences with the other developing countries.

"India stands ready to cooperate with other members of the group to undertake new projects for deepening and expanding our cooperation," he said.

"We need to consolidate ourselves as partners in development, willing to world towards creating a global environment of enhanced understanding and cooperation that is conducive to inclusive and sustainable development," he said.

"We need to work on greater involvement of our business community and civil society in the G15 process."

Krishna is representing India at the Summit where Presidents of Algeria, Brazil, Senegal, Zimbabwe, Venezuela, Sri Lanka and Iran are participating.

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