New Delhi: Voting rights of emerging-market economies such as India and China have increased at the International Monetary Fund (IMF), which has finally notified governance quota reforms adopted in 2010.

The reforms were held up as the US Congress was reluctant to ratify the proposal, fearing a decline in is hold over the institution. It approved the move last month with a set of conditions.

India’s share at IMF has now increased to 2.75% from 2.44%, making it the eighth-largest shareholder in the multilateral agency, climbing three notches.

The ratification of the 2010 reforms also clears the way for the institution to begin the next round of review of its quotas to discuss the size and composition of IMF resources and the distribution of quota shares among the Fund’s membership.

In a joint statement during his visit to London last week, finance minister Arun Jaitley and the UK chancellor of the exchequer George Osborne welcomed the ratification of the reforms. “We are pleased that the US Congress has agreed to ratify the 2010 reforms of IMF quota and governance, which will make the IMF a stronger and more legitimate institution," they said.

The iron grip of the US and the EU over the IMF and the World Bank, and their unwillingness to make these institutions more representative by giving more say to developing countries, in sync with their growing economic clout, has frustrated the latter over the years.

This has led to the creation of new financial institutions such as the New Development Bank by the BRICS (Brazil, Russia, India, China and South Africa) countries and the Asian Infrastructure Investment Bank spearheaded by China.

“I commend our members for ratifying these truly historic reforms," IMF managing director Christine Lagarde said.

She noted that a more representative, modern IMF will ensure that the institution is able to better meet the needs of its members in a rapidly changing global environment.

“Today marks a crucial step forward and it is not the end of change as our efforts to strengthen the IMF’s governance will continue," she said.

The reforms significantly increase the IMF’s quota resources and its ability to respond to crises more effectively.

The combined quotas (or the capital that the countries contribute) of the IMF’s 188 members will increase to a combined SDR 477 billion (about $659 billion) from about SDR 238.5 billion (about $329 billion).

SDRs, or special drawing rights, are the international reserve of assets under the IMF, from which it lends to countries in times of financial crisis.

Its value is currently based on a basket of four major currencies, and the basket will be expanded to include the Chinese renminbi (RMB) as the fifth currency, effective 1 October 2016.

With the implementation of the reforms, more than 6% of the quota shares have shifted to emerging-market and developing countries and also from over-represented to under-represented IMF members.

As a result, Brazil, China, India and Russia are now among the 10 largest members of the IMF. The other top 10 members are the US, Japan, France, Germany, Italy and the UK.

According to Arvind Virmani, a former Indian representative at the IMF, now that the 14th round quota reforms have been finally implemented, India should seek to restart the stalled next round of review in which the country raised more fundamental questions about the formula used in calculating the quotas.

“The 2010 review has only tinkered around with the 50-year old formula. Under the next round of review, we had proposed many changes, including giving greater weightage to GDP in purchasing power parity terms while deciding the quota of a country," Virmani added.