N.K. Singh questioned the multilateral body for its failure to detect the 2007-08 global financial crisis
Singh’s criticism of IMF’s approach comes in the wake of its chief economist saying that IMF's next revision of India’s growth forecast may be a 'significant downward revision'
New Delhi: Fifteenth Finance Commission (FFC) chief N.K. Singh on Friday questioned the way the International Monetary Fund (IMF) scrutinizes the policies of the rich and poor nations, saying a selective approach does not inspire confidence in the institution and could render it irrelevant.
Singh’s criticism of IMF’s approach comes in the wake of its chief economist Gita Gopinath saying earlier this month that its next revision of India’s growth forecast in January is likely to be a “significant downward revision".
Singh questioned the multilateral body for its failure to detect the 2007-08 global financial crisis that led to a dramatic meltdown of the US economy, thus impairing financial systems severely. “How did the Fund not spot a crisis of this scale, much less prompt the US to take timely corrective action? How is it also that the rule of the game in terms of conditionalities of both for structural loans and for financial accommodation have more stringent conditions for the developing world than other countries in say Europe like Greece or Spain where these rules are more flexibly applied," Singh said in his speech on "multilateralism — its decline and recovery" in Surat. He said that a disorderly international system will not be in anyone’s interest.
The FFC chief also said such approach could render the multilateral body irrelevant today. “Such discriminatory approach cannot inspire long term confidence, both in terms of their technical competence or in terms of an impartial approach. A lot of this, of course, emanates from the unequal say in the management and the running of the institution," he said.
Singh emphasized on the need for Asia getting a greater say in the decision making of IMF, saying it currently assigns higher weightages to Europe and United States, which inadequately reflects changing power configurations, particularly of Asia and China.
“Institutions of mutual cooperation must reflect contemporary realities in seeking to deal with the problems and opportunities of today with the rules of the game which were meant for yesterday. Failing which they will invariably become irrelevant," he said. Singh also said that the larger flows of private capital and foreign investment flows diminishes the financial clout of multilateral financial institutions like the IMF.