Washington: Stating that it is ready to contribute about $10 billion (around Rs50,000 crore) to the International Monetary Fund, India has proposed the world body should issue security bonds against the amount as New Delhi is not in favour of making direct contribution.
Planning Commission deputy chairman Montek Singh Ahluwalia, while talking to Indian news agencies on the sidelines of the G-20 ministerial level meeting here, said that the negotiations in this regard were still being carried out and nothing had been finalised yet.
“But our Prime Minister had said in April, and this has been our position for some time, we will be willing to contribute in proportion of the quota. Our view is that the resources being given to the IMF, should be viewed as an interim measure, through the new arrangements to borrow (NAB),” Ahluwalia said.
India’s existing quota share is about 2%. “So if for example the total NAB is $500 billion, which is what was agreed in the leaders summit then India’s share would be $10 billion,” he said.
India’s concern, he said, is that this contribution should be made through the purchase of IMF bonds by the Reserve bank of India and not from the government because then it becomes part of the fiscal deficit.
“So our view is that the IMF should issue securities, which can then become eligible for the countries to invest their reserves. In that case no fiscal position is affected,“ Ahluwalia said.
“It is just that the central bank, in our case the Reserve Bank of India will shift some of its money, which is currently holding US treasury bills or other government bonds, to IMF bonds, which obviously are backed by the same Governments,” he argued.
As the modalities of such a contribution through securities are being discussed, Ahluwalia said: “We have said that assuming this can be shorted out, we are willing to contribute in proportion to quota. If it is deployment of reserve, it does not require any government decision anyway.”
Asserting that India’s importance in the world economy is more than two per cent, 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, India has said that it is willing to increase its contribution, if its shares were to increase. “If they were to increase our share, then obviously we would contribute more, otherwise this becomes the way of funding the IMF and leaving the quotas unchanged,” he said, adding that India was not in the favour of that.
“Our view has been that this is an interim measure,” he said.