International financial institutions IMF, World Bank. WTO, their role and impact on Indian economy

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[<–2/”>a >su_heading]World Bank[/su_heading]

The International Bank for Reconstruction and Development (IBRD), commonly referred to as the World Bank, is an international financial institution whose purposes include assisting the development of its member nation’s territories, promoting and supplementing private foreign Investment and promoting long-range balance Growth in international trade.

The World Bank was established in December 1945 at the United Nations Monetary and Financial Conference in Bretton Woods, New Hampshire. It opened for business in June 1946 and helped in the reconstruction of nations devastated by World War II. Since 1960s the World Bank has shifted its focus from the advanced industrialized nations to developing third-world countries.

Organization and Structure:

The organization of the bank consists of the Board of Governors, the Board of Executive Directors and the Advisory Committee, the Loan Committee and the president and other staff members. All the powers of the bank are vested in the Board of Governors which is the supreme policy making body of the bank.

Capital Resources of World Bank:

The initial authorized capital of the World Bank was $ 10,000 million, which was divided in 1 lakh Shares of $ 1 lakh each. The authorized capital of the Bank has been increased from time to time with the approval of member countries.Member countries repay the share amount to the World Bank in the following ways:

  1. 2% of allotted share are repaid in gold, US dollar or Special Drawing Rights (SDR).
  2. Every member country is free to repay 18% of its capital share in its own currency.
  3. The remaining 80% share deposited by the member country only on demand by the World Bank.

Objectives:

The following objectives are assigned by the World Bank:

 

  1. To provide long-run capital to member countries for economic reconstruction and development.

 

  1. To induce long-run capital investment for assuring Balance of Payments (BoP) equilibrium and balanced development of international trade.

 

  1. To provide guarantee for loans granted to small and large units and other projects of member countries.

 

  1. To ensure the implementation of development projects so as to bring about a smooth transference from a war-time to peace economy.

 

  1. To promote capital investment in member countries by the following ways;

 

(a) To provide guarantee on private loans or capital investment.

 

(b) If private capital is not available even after providing guarantee, then IBRD provides loans for productive activities on considerate conditions.

 

Functions:

 

World Bank is playing main role of providing loans for development works to member countries, especially to underdeveloped countries. The World Bank provides long-term loans for various development projects of 5 to 20 years duration.

 

The main functions can be explained with the help of the following points:

 

  1. World Bank provides various technical Services to the member countries. For this purpose, the Bank has established “The Economic Development Institute” and a Staff College in Washington.

 

  1. Bank can grant loans to a member country up to 20% of its share in the paid-up capital.

 

  1. The quantities of loans, interest rate and terms and conditions are determined by the Bank itself.

 

  1. Generally, Bank grants loans for a particular project duly submitted to the Bank by the member country.

 

  1. The debtor nation has to repay either in reserve currencies or in the currency in which the loan was sanctioned.

 

  1. Bank also provides loan to private investors belonging to member countries on its own guarantee, but for this loan private investors have to seek prior permission from those counties where this amount will be collected.

[su_heading]International Monetary Fund(IMF)[/su_heading]

The major roles of the International Monetary Fund are as follows:

  1. To promote international monetary cooperation through a permanent institution which provides the machinery for consultation and collaboration on international monetary problems.
  2. To facilitate the expansion and balanced growth of international trade, and to contribute thereby to the promotion and maintenance of high levels of EMPLOYMENT and real income and to the development of the productive resources of all members as primary objectives of economic policy.
  3. To promote exchange stability, to maintain orderly exchange arrangements among members, and to avoid competitive exchange depreciation.
  4. To assist in the establishment of a multilateral system of payments in respect of current transactions between members and in the elimination of Foreign Exchange restrictions which hamper the growth of world trade.
  5. To give confidence to members by making the general resources of the Fund temporarily available to them under adequate safeguards, thus providing them with opportunity to correct maladjustments in their balance of payments without resorting to measures destructive of national or international prosperity.
  6. In accordance with the above, to shorten the duration and lessen the degree of disequilibrium in the international balances of payments of members.“Articles of Agreement: ARTICLE I—Purposes,” International Monetary Fund

[su_heading]World Trade Organization(WTO)[/su_heading]

The important Objectives of WTO are:

1. To improve the standard of living of people in the member countries.

2. To ensure full employment and broad increase in effective demand.

3. To enlarge production and trade of goods.

4. To increase the trade of services.

5. To ensure optimum utilization of world resources.

6. To protect the Environment.

7. To accept the Concept of Sustainable Development.

Functions:

The main functions of WTO are discussed below:

1. To implement rules and provisions related to Trade Policy review mechanism.

2. To provide a platform to member countries to decide future strategies related to trade and tariff.

3. To provide facilities for implementation, administration and operation of multilateral and bilateral agreements of the world trade.

4. To administer the rules and processes related to dispute settlement.

5. To ensure the optimum use of world resources.

6. To assist international organizations such as, IMF and IBRD for establishing coherence in Universal Economic Policy determination.

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International financial institutions (IFIs) have played a significant role in the Indian economy since the 1950s. The first IFI to provide assistance to India was the International Bank for Reconstruction and Development (IBRD), which is part of the World Bank Group. The IBRD provided India with a loan of $100 million in 1951 to help finance the country’s First Five-Year Plan.

Since then, IFIs have provided India with billions of dollars in loans and grants. The World Bank Group has been the largest provider of IFI assistance to India, followed by the Asian Development Bank (ADB) and the International Monetary Fund (IMF).

IFIs have provided assistance to India for a variety of purposes, including:

  • Infrastructure-2/”>INFRASTRUCTURE-development/”>Infrastructure Development: IFIs have provided loans for the construction of roads, bridges, power Plants, and other infrastructure projects.
  • Social sector development: IFIs have provided loans for Education, Health, and other social sector programs.
  • POVERTY reduction: IFIs have provided loans to help India reduce poverty and improve the lives of the poor.
  • Economic Reforms: IFIs have provided loans to help India implement economic reforms, such as trade Liberalization-2/”>Liberalization and Privatization.

IFIs have imposed a number of conditions on their loans to India. These conditions have typically been designed to ensure that the loans are used for their intended purposes and that India implements economic reforms. Some of the most common conditions imposed by IFIs include:

  • Fiscal discipline: IFIs have required India to reduce its Fiscal Deficit and government debt.
  • Monetary Policy: IFIs have required India to adopt a tight monetary policy to control Inflation.
  • Trade liberalization: IFIs have required India to reduce tariffs and other trade barriers.
  • Privatization: IFIs have required India to privatize state-owned enterprises.

The impact of IFIs on the Indian economy has been mixed. Some studies have found that IFI assistance has had a positive impact on economic growth, while others have found that the impact has been negative. There is also evidence that IFIs have had a positive impact on poverty reduction, but the impact has been limited.

IFIs have been criticized for a number of reasons. Some critics argue that IFIs have imposed too many conditions on their loans, which has made it difficult for the government to implement its own policies. Others argue that IFIs have not done enough to help the poor in India.

Despite these criticisms, IFIs continue to play an important role in the Indian economy. They are likely to continue to do so in the future, as India seeks to finance its development and implement economic reforms.

In recent years, there has been a growing debate about the role of IFIs in the developing world. Some critics argue that IFIs have imposed too many conditions on their loans, which has made it difficult for developing countries to implement their own policies. Others argue that IFIs have not done enough to help the poor in developing countries.

In the case of India, IFIs have played a significant role in the country’s economic development. IFIs have provided India with billions of dollars in loans and grants, which have helped to finance the country’s infrastructure development, social sector development, and poverty reduction programs. However, IFIs have also imposed a number of conditions on their loans, which have made it difficult for the Indian government to implement its own policies.

In the future, it is likely that IFIs will continue to play a role in the Indian economy. However, it is also likely that the debate about the role of IFIs will continue.

International Monetary Fund (IMF)

  • What is the IMF?
    The International Monetary Fund (IMF) is an international organization that was founded in 1944 to promote international monetary cooperation, exchange stability, and orderly exchange arrangements.

  • What is the role of the IMF?
    The IMF’s role is to provide financial assistance to countries that are experiencing economic difficulties, to promote economic stability, and to foster international trade.

  • How does the IMF work?
    The IMF provides financial assistance to countries that are experiencing economic difficulties by lending them Money. The IMF also provides technical assistance to countries that are trying to improve their economic policies.

  • What is the impact of the IMF on the Indian economy?
    The IMF has had a significant impact on the Indian economy. The IMF has provided financial assistance to India on several occasions, and it has also provided technical assistance to the Indian government. The IMF’s assistance has helped India to improve its economic policies and to achieve economic growth.

World Bank

  • What is the World Bank?
    The World Bank is an international financial institution that provides loans to developing countries for capital programs.

  • What is the role of the World Bank?
    The World Bank’s role is to fight poverty and improve living standards for people in the developing world. The World Bank does this by providing loans, grants, and technical assistance to developing countries.

  • How does the World Bank work?
    The World Bank Group is made up of five institutions: the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA), and the International Centre for Settlement of Investment Disputes (ICSID). The IBRD and IDA provide loans to developing countries, while the IFC and MIGA provide investment and risk management services. ICSID provides a forum for resolving investment disputes between foreign investors and host governments.

  • What is the impact of the World Bank on the Indian economy?
    The World Bank has had a significant impact on the Indian economy. The World Bank has provided loans to India for a variety of projects, including infrastructure, education, and health. The World Bank’s assistance has helped India to improve its infrastructure, to increase access to education, and to improve health outcomes.

World Trade Organization (WTO)

  • What is the WTO?
    The World Trade Organization (WTO) is an international organization that regulates international trade.

  • What is the role of the WTO?
    The WTO’s role is to promote free trade and to ensure that trade is conducted fairly. The WTO does this by negotiating trade agreements, by settling trade disputes, and by providing technical assistance to developing countries.

  • How does the WTO work?
    The WTO is made up of 164 member countries. The WTO’s decisions are made by consensus, which means that all member countries must agree to a decision before it can be adopted. The WTO’s rules are enforced by the WTO’s Dispute Settlement Body.

  • What is the impact of the WTO on the Indian economy?
    The WTO has had a significant impact on the Indian economy. The WTO’s rules have helped India to increase its exports and to attract foreign investment. The WTO’s rules have also helped India to improve its trade relations with other countries.

  1. The International Monetary Fund (IMF) is an international organization that was founded in 1945 to promote international monetary cooperation, exchange stability, and orderly exchange arrangements. The IMF’s main functions are to lend money to countries in financial difficulty, to promote trade, and to provide technical assistance to governments.
  2. The World Bank is an international financial institution that provides loans to developing countries for capital programs. The World Bank was founded in 1944 at the Bretton Woods Conference to help finance the reconstruction of Europe after World War II. The World Bank Group comprises two development institutions: the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). The IBRD provides loans to middle-income and creditworthy low-income countries, while IDA provides grants and low- or no-interest loans to the poorest countries.
  3. The World Trade Organization (WTO) is an international organization that regulates and facilitates international trade. The WTO was founded in 1995 as a successor to the General Agreement on Tariffs and Trade (GATT), which was established in 1947. The WTO’s main functions are to ensure that trade flows smoothly, to negotiate trade agreements, and to settle trade disputes.

The following are some of the ways in which international financial institutions have impacted the Indian economy:

  • The IMF has provided loans to India during times of financial difficulty. This has helped to stabilize the Indian economy and prevent a financial crisis.
  • The World Bank has provided loans to India for capital programs, such as infrastructure development. This has helped to improve the Indian economy and create jobs.
  • The WTO has helped to reduce tariffs and other trade barriers between India and other countries. This has made it easier for Indian businesses to export their goods and services, which has helped to boost the Indian economy.

However, there have also been some criticisms of the impact of international financial institutions on the Indian economy. Some critics argue that the IMF’s loans have come with too many conditions, which have made it difficult for India to implement its own economic policies. Others argue that the World Bank’s loans have been used to finance projects that have not benefited the poor. And still others argue that the WTO has not done enough to protect the interests of developing countries, such as India, in trade negotiations.

Overall, the impact of international financial institutions on the Indian economy has been mixed. On the one hand, these institutions have provided much-needed financial assistance and helped to improve the Indian economy. On the other hand, some of the conditions attached to these loans have been controversial, and the WTO has not always been successful in protecting the interests of developing countries.