It was a great turn of events when India decided to become a lending nation to the International Monetary Fund, back in the glorious days of 2010. After a long indebtedness in the 90s, many see this new change as welcoming and encouraging. This new development is largely owing to the NAB, or the New Arrangements to Borrow, which refers to a newer fund to “forestall or cope with an impairment of the international monetary system.” Shockingly enough, the combined share of the 4 BRIC nations could rise to only as much as 15%. But, think about this, NAB is just a set of credit arrangements; having a quota outside of it is where much of the power lies. I am quite sure India is keen on increasing its vote share outside of the NAB. Whether or not this will happen depends on a large number of factors, including time. As of now, what’s rummaging the minds of Indians is the current declaration by the country of lending $10bn to the IMF to combat the outcome of the eurozone crisis. We take a look at both the sides of the coin:
‘It would not load the Govt and not stretch its resources further’ –
On one hand, the Indian Government’s view, well-echoed by Times of India, is that the decision to lend $10bn to the IMF is ‘the right step at the right time’. When nations are hit by a financial crisis, which has the plausibility of affecting the global market, it is fitting that other countries are called upon to lend a helping hand. If India plays a role in this system, it will improve its standing in the global arena. Not only this, a huge part of India’s export market lies in the European Union; so, the collapse of the eurozone will prove highly unfavourable for the Indian Economy which will be badly hit. One should also keep in mind the fact that other member countries of the G20 and IMF have made equal or even larger contributions. In such a state, why should India stay behind when it can very well afford to lend the said amount? Moreover, this money will only be used when needed, that is, after the existing resources with the IMF are exhausted. If drawn, the funds will be refunded with interest with the IMF making sure that resources as well the interest are fully protected. If there is question about the weight of the amount, then, the Govt says that the $10bn would be ‘no burden to India’. It would only symbolize India’s willingness and potential to take on greater responsibilities.
‘It beggars belief’ –
This is a collective point of view of many who believe that contributing to the IMF for combating eurozone comes as an unbelievable and, vaguely, unnecessary act. Indian economy and agriculture are on a constant low, obviously hit by the crisis of foreign capital. If offering $10bn does not seem like a burden to the Indian economy, this implies that we have a lot of funds, enough to fuel our slowing economy. In this case, these billions of dollars that we have to spare could as well have gone toward upgrading struggling power plants, improving infrastructure and water supply. There is no reason why all this money cannot be used to lower poverty and illiteracy rates in the country. But, in the anticipation of looking ‘responsible’ enough, we have chosen to help a nation far richer than us.
As far as the argument of the Government that being a part of the BRICS instils this sense of duty is concerned, then it could be helpful knowing that other nations like China have invested in their own economies before donating elsewhere. And if this crisis is going to hurt us, doesn’t it make more sense to conserve our own foreign exchange, it being unlikely that anyone’s going to give us unconditional aid if we fall? Furthermore, when India was in need to help in 1991, we received the IMF money but with conditions. Is it any justice to us now, that we are aiding Eurozone with our money and that too without any conditions? Why so much leeway to bigger and richer nations? Besides, our contribution to saving the Eurozone may seem petty to them, but to us it means a lot of crucial dollars.
My View: Extending help under the pretext of G20 and BRICS is satisfactory, but how will the Government justify the rising concerns of people over where is all the money going? The Indian Government needs to learn from its counterparts on how to upkeep our economy first before going out of our way to help others. Only when we accept responsibility at home, will others seek duty from us.
If the Indian PM is swarming with so much generosity, then why not fund some poorer African nations, for whom such a huge amount would be of much value? They say since the BRICS economy is growing, they need to contribute. Seriously, this calls for a better excuse! And even if India does extend this extra kind helping hand, I want to see how Eurozone responds. Will they stop being condescending to us? Will IMF help us unconditionally in our economic crisis? Will India’s standing really improve in the global scenario? And most importantly, will this lead to improvements for the Indian citizens in any way?
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