NEW DELHI: The International Monetary Fund is keen to implement quota reforms that will give more voting rights to economic powers like India and China, managing director Christine Lagarde has said.
“Change is in the air,” Lagarde said at an event organized by IMF and the Indian Council for Research on International Economic Relations in Delhi. “I will certainly be a strong advocate of that.”
The multilateral agency’s board of governors had in 2010 approved a set of quota reforms, which include a shift of over 6% voting rights from overrepresented to under- represented members. India has a voting share of 2.34% at IMF.
“Both India and China have already ratified the quotas (voting rights) to increase their representation in IMF,” Lagarde told a news conference later in the day. “I know they will be keen to rally support around the organisation to have the requisite number of country votes to implement the reforms.”
Lauding India’s 7% GDP growth, Lagarde complimented Finance Minister Pranab Mukherjee’s fiscal consolidation measures. “We are encouraged to see a continued path towards fiscal consolidation. Efforts to reform the tax code and cap subsidies at 2% of GDP are good measures,” she said commenting on the 2012-13 Budget.
She, however, emphasised on the need to ensure a “favourable” business climate in India to at tract domestic and international private investments, particularly in infrastructure. According to IMF projections, the Indian economy is expected to grow at 7% in 2012 and 7.3% the year after.
The IMF chief also hinted at a possible revision in growth forecasts of several countries at its meeting in April.
“The global economic picture is certainly more positive than three months ago…some revisions in global economic outlook are likely in April,” Lagarde said while maintaining that the situation is still fragile and fraught with difficulties.
She also warned that an increase in oil prices could become a threat to global economy. “Everybody is now talking about oil prices. If the price of oil suddenly increases, either supply driven or due to geopolitical agitations, it will affect everyone including India,” Lagarde said.
According to IMF estimates, continued stress on oil supply from Iran could push prices up by 20%-30% if other oil producing countries are not “quick to pick up the baton”.