B.Com Ist Year International Monetary Fund Question Answer Notes
(3) Discriminatory Treatment: I.M.F. neglect the genuine interests of backward and under-developed countries while gives special concessions to western countries. That is why Fund is referred as the ‘Rich Men’s Club’. The Fund works according to the directions given by rich nations like U.S.A. and U.K.
(4) Failed to Remove Exchange Controls : The Fund was not able to achieve its fundamental objective of pulling down trade. barriers. It is pity that the U.S.A. still clings to the protectionism policy inspite of her tremendous competitive strength.
(5) Failed to Maintain Exchange Stability: The I.M.F.was unable to promote exchange stability in the member countries. The exchange rates of different nations have been changing despite the existence of the Fund.
(6) Failed to Prevent Dollar Shortage : The Fund was unable to prevent dollar shortage. It should have declared dollar as a scarce currency and adopted measures to make the dollar freely available. But it did not take necessary steps.
(7) No Solution of Liquidity Problem : The fund was failed to solve the problem of international liquidity. Due to its limited resources, the Fund found it difficult to meet the foreign exchange requirements of its members. The Fund has tried to improve the liquidity situation by introducing the scheme of SDRs, popularly known as Paper Gold’. Despite, this there has been no significant improvement in the International Liquidity position.
(8) Inadequate Representation to Developing Nations : 90% of the members of the I.M.F. are developing nations but they have acquired only 38% of the total voting rights in the affairs of the Found. Thus, the affairs of the Fund are dominated by the advanced Nations and the interests of the developing nations are neglected by the Fund.
Thus, it becomes clear that Fund has failed to achieve its main objectives. But inspite of the shortcomings, there is no doubt that it is a important step in the pace of international cooperation. It has played a vital role in solving international monetary problems and in formulating international monetary policies.
INDIA AND I.M.F.
India is a founder member of the I.M.F. and has been untuk recently, one of the principal users of I.M.F. financing. It is also a of the largest subscribers to this Fund. India has benefitted from thi membership of I.M.F. as follow :
(1) Membership of World Bank: Being a member of I.M.E. India get the membership of World Bank, which provides long-term assistance for the economic development of our country.
(2) Aid in Crisis Period : India has got financial assistance from the I.M.F. at the time of crisis. India borrowed from the I.M.F. several times to overcome her balance of payments crisis under several lending arrangements.
(3) Economic Consultation : The I.M.F. also served as an expert institution for consultation and guidance in the formation of fiscal and monetary policies. It provide services of experts to India to solve the economic problems.
(4) Relation with International Currencies : With the membership of I.M.F., India’s currency linked with all the important currencies of the world. Now exchange rate of Indian rupee with other currencies can be determined directly. It proves helpful in the International payments.
(5) Importance of India in International Field : India has a significant position in the I.M.F. It is one fo the largest subscriber to this fund. It participates in the policy makings of I.M.F. Thus, it increase the importance of India in the International Economic sphere.
(6) Availability of Foreign Currencies: Being a member of IMF., India can get foreign currencies according to its requirements easily. It has been, one of the principal users of I.M.F. financing.
Conclusion: It becomes clear that India get benefits from the embership of I.M.F. But on the other hand, economic and financial policies persued by the I.M.F.were interfering with and eroding the sovereignty of our country. There was an increasing trend toward ditionality in the lending programmes of the I.M.F. Due to the Pressure of IMF. India devalued her money and adopt the policy O! ition. Therefore, there is need to decide the adjustment Programmes by the government of the country, not by the I.M.F. There should be no dictates from outsides.
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